Tech Talk for Monday July 1st 2019

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Pre-opening Comments for Monday July 1st

Equity indices around the world moved higher in overnight trading. They responded to a resumption of trade negotiations between the U.S. and China. The S&P 500 Index futures gained 32.75 points to 2,977.00 implying a move by the Index at the open to an all-time high above the previous high at 2,964.15.

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Other indices recording significant gains in overnight trading included the Shanghai Composite Index (up 2.22%), the Nikkei Average (up 2.13%), the DAX Index (up 1.23%) and the CAC Index (up 0.83%). The DAX Index broke to a 15 month high at 12,553

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Energy equities are expected to open higher after Russia and Saudi Arabia agreed to extend their OPEC output targets for the next 6-9 months. Iran agreed to support the strategy. OPEC is scheduled to meet today. Crude Oil futures jumped $1.68 to $60.15 per barrel in pre-opening trade.

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EquityClock’s Daily Market Comment

Following is a link:

http://www.equityclock.com/2019/06/28/stock-market-outlook-for-july-1-2019/

Note seasonality charts on Canadian GDP, S&P 500 Index and TSX Composite Index.

The Bottom Line

Encouraging political news over the weekend is expected to have a positive impact on world equity markets early this week. The U.S. and China have agreed not to raise additional tariffs and to resume trade negotiations. Their action comes at a critical time for world equity indices: The S&P 500 Index, Dow Jones Industrial Average, TSX Composite Index, DAX Index and CAC Index closed on Friday just below intermediate highs. Strength this week could trigger significant upside technical action at a time when volumes normally are below average due to holiday.

 

Observations

Seasonal influences on equity indices, commodities and sectors turn favourable during the next three weeks. Note changes in seasonality ratings below.

Technical action by individual S&P 500 stocks remained bearish last week. Number of stocks breaking intermediate resistance totaled 24 while number of stocks breaking support totaled 20. The Up/Down ratio advanced last week to (236/161=) 1.47 from 1.48.

Medium term technical indicators for U.S. equity markets (e.g. Percent of stocks trading above their 50 day moving average, Bullish Percent Index) moved higher again last week. They remain intermediate overbought. See charts near the end of this report

Medium term technical indicators in Canada also moved slightly lower last week. They remain intermediate neutral. See charts near the end of this report.

Most short term technical indicators for U.S. markets and sectors (20 day moving averages, short term momentum indicators) remained elevated at overbought levels last week and showing early signs of deterioration

Short term technical indicators for Canadian markets and sectors remained elevated at overbought levels last week and also showing early signs of deterioration

Short term political concerns in the U.S. remain elevated. Issues include tariff wars between the U.S., Mexico and China, increased tensions with Iran and anti-Trump hearings initiated by the Democrat controlled House of Representatives. Release of the Mueller report continues to elevate political rhetoric.

Forecasts for S&P 500 sales and earnings moved slightly lower again last week. According to FactSet, second quarter earnings are expected to drop 2.6% on a year-over-year basis (versus 2.5% last week) and second quarter revenues are expected to increase 3.9%. Eighty seven companies have issued negative second quarter guidance and 25 companies have issued positive guidance. Third quarter earnings are expected to drop 0.3% (versus unchanged last week) and revenues are expected to increase 4.0%. Fourth quarter earnings are expected to increase 6.7% (versus 6.8% last week) and fourth quarter revenues are expected to increase 4.5%. For all of 2019, earnings are expected to increase 2.8% (versus 3.0% last week) and revenues are expected to increase 4.5%. First quarter 2020 earnings are expected to increase 10.3% (versus 10.7% last week) and revenues are expected to increase 6.0 %.(versus 6.1% last week) Second quarter earnings are expected to increase 13.3% and revenue are expected to increase 6.8%.

Changes in currency trends continue to have a significant impact on commodity and equity market. Many Canadian investors holding equity investments in U.S. Dollars saw values in Canadian Dollars decline last week when the Canadian Dollar relative to the U.S. Dollar advanced another 0.72 cents U.S.

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Economic News This Week

June ADP Private Employment to be released at 8:15 AM EDT on Wednesday is expected to increase to 140,000 from 27,000 in May.

May U.S. Trade Deficit to be reported at 8:30 AM EDT on Wednesday is expected to increase to $53.5 billion from $50.80 billion in April.

May Canadian Trade Deficit to be released at 8:30 AM EDT on Wednesday is expected to increase to $1.60 billion from $0.97 billion in April.

June Services ISM to be released at 10:00 AM EDT on Wednesday is expected to slip to 56.0 from 56.9 in May.

May Factory Orders to be released at 10:00 AM EDT on Wednesday are expected to decline 0.5 versus a drop of 0.8% in April

June Non-farm Payrolls to be released at 8:30 AM EDT on Friday are expected to increase to 160,000 from 75,000 in May. June Unemployment Rate is expected to remain unchanged from May at 3.6%. June Hourly Earnings are expected to increase 0.3% versus a gain of 0.2% in May.

June Canadian Employment to be released at 8:30 AM EDT on Friday is expected to increase 5,000 versus a gain of 27,700 in May. June Unemployment Rate is expected to increase to 5.5% from 5.4% in May

 

Earnings News This Week

Earnings reports on both sides of the border are sparse this week. No S&P 500 and TSX 60 companies are scheduled to report.

 

Trader’s Corner

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for June 28th 2019

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Green: Increase from previous day

Red: Decrease from previous day

 

Commodities

Daily Seasonal/Technical Commodities Trends for June 28th 2019

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Green: Increase from previous day

Red: Decrease from previous day

 

Sectors

Daily Seasonal/Technical Sector Trends for June 28th 2019

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Green: Increase from previous day

Red: Decrease from previous day

 

Technical Scores

Calculated as follows:

Intermediate Uptrend based on at least 20 trading days: Score 2

          (Higher highs and higher lows)

Intermediate Neutral trend: Score 0

          (Not up or down)

Intermediate Downtrend: Score -2

          (Lower highs and lower lows)

 

Outperformance relative to the S&P 500 Index: Score: 2

Neutral Performance relative to the S&P 500 Index: 0

Underperformance relative to the S&P 500 Index: Score –2

Above 20 day moving average: Score 1

At 20 day moving average: Score: 0

Below 20 day moving average: –1

Up trending momentum indicators (Daily Stochastics, RSI and MACD): 1

Mixed momentum indicators: 0

Down trending momentum indicators: –1

Technical scores range from -6 to +6. Technical buy signals based on the above guidelines start when a security advances to at least 0.0, but preferably 2.0 or higher. Technical sell/short signals start when a security descends to 0, but preferably -2.0 or lower.

Long positions require maintaining a technical score of -2.0 or higher. Conversely, a short position requires maintaining a technical score of +2.0 or lower

 

Changes Last Week

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StockTwits released on Friday @EquityClock

McDonalds $MCD, a Dow Jones Industrial stock moved above $206.39 to an all-time high extending an intermediate uptrend.

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Material SPDRs $XLB moved above $58.15 extending an intermediate uptrend.

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Coffee ETN $JJOFF moved above $10.58 extending an intermediate uptrend.

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Technical action by S&P 500 stocks to 10:00: Bullish. Intermediate breakouts: $MCD $STZ $AMG $NTRS $DOV $EA No breakdowns

Editor’s Note: After 10:00 AM EDT, breakouts included KSU, MAR, HII, T, CERN, VLO and KEY

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Platinum ETN $PPLT moved above $78.04 completing a double bottom pattern.

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Canada #GDP up 0.7% (NSA) in April, slightly weaker than the 0.9% increase that is average for the spring month. $MACRO #CDNecon #CAD

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Don and Jon Vialoux at the Toronto MoneyShow

Once again Jon and I are presenting at the MoneyShow this September. Following is a link giving background:

 

    T H E

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· SPEAKERS

· SCHEDULE

· SPECIAL EVENTS

· PAID EVENTS

· EXHIBIT HALL

· HOTEL

· ATTEND FREE

 

September 20 – 21, 2019 | Toronto

Questions? Call: 1-800-970-4355

 

Panel Workshop Details

Sep. 21, 2:45 PM – 3:30 PM EST

Saturday

Improving Investment Returns by Combining Seasonal, Fundamental, and Technical Analysis

The end of September is the opportune time to review your investment portfolio prior to start of the traditional period of seasonal strength for equity markets in October. Which markets, sectors and securities have the best technical and fundamental profiles this year? Join the father-and-son team of Don and Jon Vialoux for an update.

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Donald Vialoux

Founder

Tech Talk

 

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Jon Vialoux

Founder

EquityClock.com

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Momentum Barometers

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Percent of S&P 500 stocks trading above their 50 day moving average increased last week to 73.80 from 69.54. Percent remains intermediate overbought.

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Bullish Percent Index for S&P 500 stocks increased last week to 70.60 from 68.00. The Index remains intermediate overbought.

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Percent of TSX stocks trading above their 50 day moving average dropped last week to 52.56 from 61.57. Percent changed to intermediate neutral from intermediate overbought on a move below 60.00 and has rolled over.

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Bullish Percent Index for TSX stocks slipped last week to 59.92 from 61.57. The Index changed to intermediate neutral from intermediate overbought and has rolled over.

 

Disclaimer: Seasonality and technical ratings offered in this report and at

www.equityclock.com are for information only. They should not be considered as advice to purchase or to sell mentioned securities. Data offered in this report is believed to be accurate, but is not guaranteed

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2 Responses to “Tech Talk for Monday July 1st 2019”

  1. dutchcanuck Says:

    The Canadian 10yr vs 2 yr bondspread has finally gone negative -.0bp. So now the yield curve has inverted.
    I do not consider the 10yr vs the 30day note as significant even tho it inverted much earlier.
    BOC needs to lower interest rates to try and reverse this.
    Consider we have negative bond rates in the world ie Germany, Austria, Sweden etc. Yes, this is where you pay the government to keep your money.
    These negative rates lessen the impact of the negative yield curve somewhat.
    All-in-all a recessionary impact on the economy/stock market is now more likely in 2020.

  2. Larry/ON Says:

    SEMIS – Major profit-taking on the gap higher. Overall market went two steps forward and maybe needs one step back. I continue to like MSFT and ADBE. GOOGL is intriguing – really in the dog house. I’m wondering when interest will return to that stock because when it does the percentage move higher could be tremendous but it could continue to lag for some time until some kind of catalyst occurs like a positive earnings report.

    Trump and Xi just kicked the can down the road. Trump has to think about the 2020 election so he can’t get too hawkish on a trade war anymore and put no deadline on negotiations. Trump wants economic growth now. The real fight might be post-election.

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