Tech Talk for Monday July 22nd 2019

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Pre-opening comments for Monday July 22nd

U.S. equity index futures moved higher this morning. S&P 500 futures were up 9 points in pre-opening trade.

Walt Disney gained $1.40 to $141.25 after its latest movie, the relaunched “The Lion King” booked $185 million sales over the weekend in the U.S.

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Crude Oil added $0.64 to $56.27 after Iran captured a British licenced tanker near the Straits of Hormuz late on Friday.

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Halliburton gained $0.35 to $22.10 after reporting higher than consensus second quarter earnings.

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Micro advanced $1.35 to $46.87 after Goldman Sachs upgraded the stock to Buy from Neutral. Target was raised to $56 from $40.

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EquityClock’s Daily Market Comment

Following is a link:

http://www.equityclock.com/2019/07/19/stock-market-outlook-for-july-22-2019/

Note seasonality chart on Canadian Retail Sales.

The Bottom Line

Seasonal weakness in world equity indices appeared on schedule last week. Most equity markets are intermediate overbought and have started to roll over. At this time of year, equity markets have a history of entering into a period of increased volatility with a downward bias into mid-October. Events trigger seasonal weakness this year include lower year-over-year second quarter earnings reports by major corporations (including 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 next week), growing Middle East tensions and unsettled trade negotiations.

 

Observations

Seasonal weakness in U.S and Canadian equity indices appeared on schedule last week

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Technical action by individual S&P 500 stocks was mixed last week. Number of stocks breaking intermediate resistance totaled 40 while number of stocks breaking support totaled 24. The Up/Down ratio advanced last week to (273/137=) 1.99 from 1.96.

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 lower last week. They remain intermediate overbought. See charts near the end of this report

Medium term technical indicators in Canada were mixed last week. Percent of TSX stocks trading above their 50 day moving average moved lower while Bullish Percent Index for TSX stocks moved higher. 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) continued moved lower last week

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

Frequency of quarterly reports increases this week. Another 144 S&P 500 companies and 10 Dow Jones Industrial Average companies are scheduled to release results. Frequency of reports by major Canadian companies ramps up.

Forecasts for S&P 500 revenues and earnings moved slightly lower again last week. According to FactSet, 16% of S&P 500 companies have reported to date: Second quarter earnings are expected to drop 2.7% on a year-over-year basis (versus 3.0% last week) and second quarter revenues are expected to increase 3.8% (versus 3.7% last week). Six companies have issued negative second quarter guidance and 5 companies have issued positive guidance. Third quarter earnings are expected to drop 1.4% (versus a drop of 0.8% last week) and revenues are expected to increase 3.2% (versus 3.3% last week). Fourth quarter earnings are expected to increase 5.4% (versus 6.0% last week) and fourth quarter revenues are expected to increase 4.0% (versus 4.2% last week). For all of 2019, earnings are expected to increase 2.3% (versus 2.4% last week) and revenues are expected to increase 4.4% (versus 4.3% last week). First quarter 2020 earnings are expected to increase 9.5% (versus 9.8% last week) and revenues are expected to increase 5.9 % (versus 5.8% last week). Second quarter 2020 earnings are expected to increase 12.0% (versus 13.2% last week) and revenue are expected to increase 6.7% (versus 6.6% last week).

The VIX Index has a history of reaching a seasonal low on July 17th for an upside move to mid-October. A bounce by the VIX Index last week from 12.24% level to 14.34% suggests that history is about to repeat.

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Economic News This Week

June Existing Home Sales to be released at 10:00 AM EDT on Tuesday are expected to increase to 5.34 million units from 5.34 million units in May.

June New Home Sales to be released at 10:00 AM EDT on Wednesday are expected to increase to 659,000 units from 626,000 units in May.

June Durable Goods Orders to be released at 8:30 AM EDT on Thursday are expected to increase 0.7% versus a drop of 1.3% in May. Excluding Transportation Orders, June Durable Goods Orders are expected to increase 0.2% versus a gain of 0.4% in May.

Weekly Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to increase to 217,000 from 216,000 last week.

Second quarter real GDP to be released at 8:30 AM EDT on Friday is expected to grow at a 1.8% rate versus growth at a 3.1% rate in the first quarter.

 

Selected Earnings News This Week

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Trader’s Corner

 

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for July 19th 2019

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Green: Increase from previous day

Red: Decrease from previous day

 

Commodities

Daily Seasonal/Technical Commodities Trends for July 19th 2019

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Green: Increase from previous day

Red: Decrease from previous day

 

Sectors

Daily Seasonal/Technical Sector Trends for July 19th 2019

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Green: Increase from previous day

Red: Decrease from previous day

 

Keith Richard’s Blog

Keith asks, “Arbitration opportunity”? See:

https://www.valuetrend.ca/arbitrage-opportunity/

 

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

Metals & Mining SPDRs $XME moved above $28.55 setting an intermediate uptrend.

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Technical action by S&P 500 stocks to 10:00: Bullish. Intermediate breakouts: $ETFC $STT $BK $ALB

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Editor’s Note: After 10:00 AM EDT, intermediate breakouts included DFS and CMI. Breakdowns included LKQ and REG.

Canada Retail Sales up 13.5% (NSA) in May, stronger than the 10.0% increase that is average for the spring month. $MACRO #CAD #CDNecon

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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

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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

 

S&P 500 Momentum Barometers

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Percent of S&P 500 stocks trading above their 50 day moving average dropped last week to 76.00 from 85.20. Percent has rolled over from an intermediate overbought level.

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Bullish Percent Index for S&P 500 stocks slipped last week to 73.20 from 74.00. The Index remains intermediate overbought and showing early signs of rolling over.

 

TSX Momentum Barometers

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Percent of TSX stocks trading above their 50 day moving average slipped last week to 59.05 from 60.26. Percent changed to intermediate overbought to intermediate neutral on a drop below 60.00 and has rolled over.

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Bullish Percent Index for TSX stocks increased last week to 65.00 from 60.33. The Index remains intermediate overbought.

 

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 22nd 2019”

  1. KC Says:

    G’Morning Ron/BC,

    Hope you’re having a good summer so far. I suspect you’re out on the course a lot.

    Would love to hear your TA on VET.TO and USO if you have some time, please.

    Thanks much!

  2. KC Says:

    Ron/BC,

    With respect to VET.TO, wondering if you think we will more likely see breakdown of 8 yr support or a bounce.

    Cheers,

  3. Larry/ON Says:

    SEMIS and Cloud Stocks doing well. Transports up. Earnings have been better than expected.
    GOOGL – negative chatter about upcoming earnings
    MSFT – If you hold just one stock this is it. Jim Cramer was raving about the Q it just had
    V – reports tomorrow. Consumer spending has been strong in the US and fintech companies have been doing very well. Has a decent chance of a pop on earnings.
    SP500 – Hanging in
    Debt Ceiling deal almost done – Positive
    Possible Upcoming US-China trade meeting in the news
    What we will have when the market closes at 4pm – Who Knows?

  4. Larry/ON Says:

    Easy Money vs Hard Money – Everyone is looking for “turnaround stories” where stocks have been beaten up due to negative fundamentals that perhaps might change. Unless you have access to information that most people don’t have your chance of making money on a trade is limited – that’s the Hard Money. The Easy Money is the company that is consistent in its’ earnings and growth and has a chart that is ascending. Why go for the Hard Money when you can go for the Easy Money? I would put VET.TO in the Hard Money category. It was recently downgraded and is likely full of stock holders who would like to sell their shares to get their money out on any rise. You would need large scale institutional buying on a longer term bet to turn around that kind of stock and you need to wait for some high volume up days.
    Energy Stocks are the dogs of the market right now and have not risen as they should when the commodity has risen. Unless you know what you are doing on a day trade or swing trade stay away from energy stocks.

  5. Ron/BC Says:

    KC
    RE:#1
    Yes I’ve been busy golfing etc and enjoying the weather. But it is getting way too hot here lately. Reminds me of Arizona and I don’t like much heat. At least the West Coast doesn’t have the humidity some places do. Here is VET.to. Oddly enough I’ve been watching this stock as it approaches long term major support at about 25.23. Joseph Schachter seemed to be very bullish on this stock awhile back and he is supposed to be the guru on Oil stocks apparently. If I was a believer in stories I’d buy it here. But it is close enough to major long term price support for a technical buy with a stop somewhere below 25. Looking at the ratio chart above VET.to is underperforming USO but commodity stocks do tend to have a higher beta than than the commodity so in a downtrend the stocks tend to do worse.

    I’m not as impressed with USO. The 20ema is below the 50ema & instead of crossing over the 50ema it rolled over after tagging it. And the 50ema is below the 200ema. So all the trends are still bearish. Price though is testing a familiar area at 11.50 with Stochastics below 20 suggesting a bounce off this price point. Much better support at 10.50, so if 11.50 breaks down the technicals at the 10.50 area might be improved. The 50,200,1 MACD is weak and not reflecting the last bounce back much like the XIU.to, which is not a good sign.

    https://stockcharts.com/h-sc/ui?s=VET.TO&p=D&yr=9&mn=0&dy=0&id=p35418734430&a=673066570

    https://stockcharts.com/h-sc/ui?s=USO&p=D&yr=1&mn=0&dy=0&id=p10044023828&a=673066321

  6. FishFat Says:

    I was in western Canada and noticed an article that appeared in the July 09, 2019 edition of the Calgary Herald newspaper (Financial Post section), titled Institutional Managers Exploiting Rise of Robots by Justina Lee & Yakob Peterseil, – the article makes the statement:

    “Some 60 per cent of assets in US equities are housed in passive products, while quant strategies comprise another 20 percent, according to JPMorgan Chase & Co. All told, index and exchange-traded funds, quants and options-related strategies dominate all but 10 percent of the US stock trading, the bank calculates.”

    It would appear that stock picking has dropped out of favour. That is a concern because what the article describes to me is not an efficient market. The rise of ETF’s and index investing is creating a market on autopilot. I wonder if these passive market conditions are contributing to the extended bull run.

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