Tech Talk for Monday July 8th 2019

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Pre-opening comments for Monday July 8th

U.S. equity index futures were lower this morning. S&P 500 futures were down 7 points in pre-opening trade.

Apple dropped $3.08 to $201.15 after Rosenblatt Securities downgraded the stock to Sell from Neutral. Target is $150.

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Deutsche Bank slipped $0.11 to $7.06 after announcing a major restructuring program.

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Verizon dropped $0.60 to $57.71 after Citigroup upgraded the stock to Buy from Neutral.

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Best Buy (BBY $71.89) is expected to open higher after Guggenheim initiated coverage with a Buy rating and a $80 target price.

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EquityClock’s Daily Market Comment

Following is a link:

http://www.equityclock.com/2019/07/07/stock-market-outlook-for-july-8-2019/

The Bottom Line

Continue to hold favoured equities for now, but prepare to take seasonal profits on the first signs of significant short term technical weakness. World equity markets moved higher again last week. Most equity markets are intermediate overbought, but have yet to show signs of peaking. History is repeating. Most equity markets have a history of moving higher from late June to mid-July. Thereafter, equity markets have a history of entering into a period of increased volatility and a downward bias into mid-October. Expected events beyond mid-July this year suggest that the time to take seasonal profits is rapidly approaching. Events of concern include lower year-over-year quarterly earnings reports by major corporations that will confirm an earning recession (i.e. two consecutive year-over-year quarterly earnings declines), increasing political uncertainty (i.e. Federal election in Canada that likely will lead to a minority government, a likely attempt by the Democrats to impeach Donald Trump following the Mueller testimonies in mid-July) and unsettled trade negotiations.

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Observations

Favourable seasonal influences on equity indices, commodities and sectors from June 28th to July 17th arrived on schedule this year.

Technical action by individual S&P 500 stocks remained bullish last week. Number of stocks breaking intermediate resistance totaled 46 while number of stocks breaking support totaled 1. The Up/Down ratio advanced last week to (259/142=) 1.82 from 1.47.

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 higher last week. They changed to intermediate overbought from 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) turned higher last week

Short term technical indicators for Canadian markets and sectors also turned higher last week.

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

Forecasts for S&P 500 revenues 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 and second quarter revenues are expected to increase 3.8% (versus 3.9% last week). Eighty eight companies have issued negative second quarter guidance and 26 companies have issued positive guidance. Third quarter earnings are expected to drop 0.5% (versus a drop of 0.3% last week) and revenues are expected to increase 3.8% (versus 4.0% last week). Fourth quarter earnings are expected to increase 6.3% (versus 6.7% last week) and fourth quarter revenues are expected to increase 4.4% (versus 4.5% last week). For all of 2019, earnings are expected to increase 2.6% (versus 2.8% last week) and revenues are expected to increase 4.4% (versus 4.5% last week). First quarter 2020 earnings are expected to increase 9.9% (versus 10.3% last week) and revenues are expected to increase 5.8 %.(versus 6.0% last week) Second quarter 2020 earnings are expected to increase 13.2% (versus 13.3% last week) and revenue are expected to increase 6.6% (versus 6.8% last week).

Revenue and earnings declines by S&P 500 companies were prompted partially by a 1.29% increase in the U.S. Dollar Index last week. Analysts marked down projections for international operations accordingly.

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Economic News This Week

Focus this week is on Federal Reserve Chairman Jerome Powell’s testimony in front of Congressional finance committees on Wednesday and Thursday.

June Canadian Housing Starts to be released at 8:15 AM EDT on Tuesday are expected to increase to 209,000 from 202,300 in May.

May Wholesale Inventories to be released at 10:00 AM EDT on Wednesday are expected to increase 0.4% versus a gain of 0.4% in April.

U.S. Monetary Policy Testimony by Federal Reserve Chairman Jerome Powell is presented to the House of Representative at 10:00 AM EDT on Wednesday and to the Senate at 10:00 AM EDT on Thursday

Bank of Canada Statement to be released at 10:00 AM EDT on Wednesday is expected to maintain the Overnight Lending Rate at 1.75%

FOMC Meeting Minutes are released at 2:00 PM EDT on Wednesday.

June Consumer Price Index to be released at 8:30 AM EDT on Thursday is expected to be unchanged versus a gain of 0.1% in May. Excluding food and energy, June Consumer Price Index is expected to increase 0.2% versus a gain of 0.1% in May.

Weekly Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to increase to 222,000 from 221,000 last week.

June Producer Price Index to be released at 8:30 AM EDT on Friday is expected to increase 0.1% versus a gain of 0.1% in May. Excluding food and energy, the Producer Price Index is expected to increase 0.2% versus a gain of 0.2% in May.

 

Earnings News This Week

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Trader’s Corner

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for July 5th 2019

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Green: Increase from previous day

Red: Decrease from previous day

 

Commodities

Daily Seasonal/Technical Commodities Trends for July 5th 2019

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Green: Increase from previous day

Red: Decrease from previous day

 

Sectors

Daily Seasonal/Technical Sector Trends for July 5th 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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Hap Sneddon on BNN Bloomberg’s Market Call on Friday

Following are links:

 

Top Picks

https://www.bnnbloomberg.ca/market-call/hap-sneddon-s-top-picks~1723820

Past Picks

https://www.bnnbloomberg.ca/market-call/hap-sneddon-s-past-picks~1723668

Market Outlook

https://www.bnnbloomberg.ca/market-call/hap-sneddon-s-market-outlook~1723667

 

StockTwits released on Friday @EquityClock

Technical action by S&P 500 stocks to 10:00: Quietly bullish. Intermediate breakouts: $IVZ $USB No breakdowns.

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Brazil ETF $EWZ moved above $45.15 extending an intermediate uptrend.

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‘Tis the season for Brazil equities and indices to move higher between now and January! $EWZ $BVSP

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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:

 

· SPEAKERS

· SCHEDULE

· SPECIAL EVENTS

· PAID EVENTS

  • Master Classes 

· 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

 

Momentum Barometers

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Percent of S&P 500 stocks trading above their 50 day moving average increased last week to 82.20 from 73.80. Percent remains intermediate overbought.

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Bullish Percent Index for S&P 500 stocks increased last week to 74.80 from 70.60. The Index remains intermediate overbought.

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Percent of TSX stocks trading above their 50 day moving average increased last week to 66.24 from 52.56. Percent changed to intermediate overbought from intermediate neutral on a move above 60.

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Bullish Percent Index for TSX stocks increased last week to 60.33 from 59.92. The Index changed to intermediate overbought from intermediate neutral on a move above 60.

 

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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6 Responses to “Tech Talk for Monday July 8th 2019”

  1. Ana Says:

    Really disappointed to see what has happening in the USA.

    Really disappointed to see what is happening in Canada, too.

    $SPX feels like we are starting the path toward the lower Bollinger Band, definitely of the daily, maybe of the weekly. Give it a couple of days to start galloping down.

  2. bruce Says:

    ana
    apparently mr. trump is smarter than the 7 board of govenors on the FRB as he insists they dont know what theyre doing and should be lowering interest rates to further stimulate an economy that is already at near record low employment……..

  3. Ana Says:

    #2. bruce,

    It will not matter what Trump says soon. He will be in jail.

  4. Larry/ON Says:

    Direction – We could just see a dip down to the 2950 area on SPX or the 9day MA. I would not stick my neck out too far in hoping for a significant continuation of this bull run yet there is nothing to suggest it is over either. Have to keep some powder dry. I can’t help but acknowledge the logic of Tech Talk’s analysis for the next few months on the “Bottom Line” but I disagree with the speculation of a push for a Trump impeachment. Pelosi doesn’t want it and it will never succeed in the Senate. Once it fails in the Senate Trump will declare victory over a despicable Democrat impeachment attempt and use it for support. The smart ones in the Democratic party know enough to let the people decide in Nov 2020.

  5. Ana Says:

    #4. Larry/ON

    You are a few news cycles behind.

    Trump will be in jail, impeachment will not end the investigation into his activity.

  6. Larry/ON Says:

    Re 5 – Ana I would not at all be disappointed if Trump ended up in a jail cell. I can’t believe that the “leader of the free world” is a serial abuser of women who likely committed crimes for which he should have been jailed years ago. The prosecution needs to happen after he loses the election. The way the US constitution is interpreted the courts cannot prosecute a sitting president. Only Congress can do that and the Republicans who are in control of the Senate will not abandon Trump at the risk of putting their own reelection in peril. Mueller would have to provide testimony that would be absolutely damning that it could not be swept under the rug for Trump’s support in the Senate to cave-in. I don’t think will be that clear cut. There will be room for denial and obfuscation.

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