Tech Talk for Friday July 26th 2019

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Pre-opening Comments for Friday July 26th

U.S. equity index futures moved higher this morning. S&P 500 futures were up 5 points in pre-opening trade.

Index futures were virtually unchanged following release of U.S. second quarter real GDP at 8:30 AM EDT. Consensus is growth at a 2.0% rate versus growth at a 3.1% rate in the first quarter. Actual was growth at a 2.1% rate,

Amazon dropped $21.32 to $1953.50 after reporting lower than consensus second quarter earnings.

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Alphabet advanced $98.13 to $1234.07 after reporting higher than consensus second quarter earnings. The company also announced a $25 billion share repurchase program.

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Starbucks gained $5.79 to 96.70 after reporting higher than consensus second quarter revenues and earnings. The company also raised guidance.

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Intel added $2.34 to $54.50 after reporting higher than consensus second quarter earnings.

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EquityClock’s Daily Market Comment

Following is a link:

http://www.equityclock.com/2019/07/25/stock-market-outlook-for-july-26-2019/

Note seasonality chart on Durable Goods Orders.

 

S&P 500 quarterly reports to date

After 185 reports released to date, earnings on a year-over-year basis have dropped 3.49%, a loss that is significantly greater than expected. Following is a link to a Market Watch article giving more information

https://www.marketwatch.com/story/sp-500-earnings-outlook-gets-more-negative-after-over-one-third-of-the-companies-report-2019-07-25?mod=mw_latestnews

 

Don Vialoux on Wolf on Bay Street

Listen to the radio broadcast on Radio 640 between 7:00 and 8:00 AM EDT tomorrow (Saturday)

 

Notes developed for the interview

Most equity markets for developed nations enter into a corrective period from mid-July to mid-October. The weakest one month period in the year historically is from mid-September to mid-October

The corrective period from mid-July to mid-October corresponds to a period of increased volatility (i.e.VIX)

Increased volatility is related to lower volume in equity markets during the summer holidays plus a penchant by analysts to lower revenue and earnings estimates prior to release of third quarter results.

On average, the correction sees North American equity indices moving 1%-3% lower during the mid-July to mid-October period.

What about this year?

U.S. and Canadian equity indices reached a short term peak on or about July 15th

VIX Index recently bottomed near 12%.

Responses to quarterly results by U.S. and Canadian companies are expected to be muted. Earnings by S&P 500 companies have entered into an earnings recession: Earnings on a year-over-year basis declined slightly in the first quarter, are estimated down 2.0% in the first quarter and are estimated down 1.5% in the third quarter.

Earnings by U.S. companies with international operations are particularly vulnerable due to currency translation on a year-over-year basis with the U.S. Dollar Index moving from 91.0 to 97.0.

Volatility in equity markets is expected to be greater than average this year mainly due to evolving U.S. political events: China/U.S. trade negotiations, impeachment discussions, anti-trust investigations of major technology companies and Middle East sabre rattling. In Canada, a federal election of a minority government could prompt greater volatility.

Strategy: Short term investors can take short term profits on strength on most trading positions. The exception is the precious metal sector, a sector with a history of moving higher from mid-July to mid-October. Longer term investors can relax and enjoy the holiday period despite greater volatility.

 

StockTwits released yesterday @EquityClock

Allergan $ALGN, a NASDAQ 100 stock moved below $263.70 on news of a withdrawal of one of its breast augmentation devices. setting an intermediate downtrend.

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Global X Uranium ETF $URA moved below $11.15 extending an intermediate downtrend.

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Suncor $SU.CA, a TSX 60 stock moved below $40.03 extending an intermediate downtrend.

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Enbridge $ENB.CA, a TSX 60 stock moved below $45.35 extending an intermediate downtrend.

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Brookfield Asset Management $BAM.A.CA $BAM, a TSX 60 stock moved above $64.84 Cdn. to an all-time high extending an intermediate uptrend.

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Trader’s Corner

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for July 25th 2019

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Green: Increase from previous day

Red: Decrease from previous day

 

Commodities

Daily Seasonal/Technical Commodities Trends for July 25th 2019

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Green: Increase from previous day

Red: Decrease from previous day

 

Sectors

Daily Seasonal/Technical Sector Trends for July 25th 2019

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Green: Increase from previous day

Red: Decrease from previous day

 

S&P 500 Momentum Barometer

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The Barometer dropped 5.20 to 75.20 yesterday. It remains intermediate overbought and rolling over.

 

TSX Momentum Barometer

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The Barometer dropped 5.44 to 61.37 yesterday. It remains intermediate overbought and showing signs of rolling 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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10 Responses to “Tech Talk for Friday July 26th 2019”

  1. Larry/ON Says:

    Earnings Reports Going Forward – The reports so far have been from areas of the market that have higher likelihood of positive reports (Tech, Financials). Going forward energy and health care companies will be reporting which will put a negative cast on the market. A lot is riding in the next week with the Fed making its’ rate decision which should be a 25bps cut.

  2. bruce Says:

    gary

    Armstrong has another private blog update if you would be so kind to share it with us……tnx…

  3. Ron/BC Says:

    So here we are 3 months later and the XIU.to still can’t clear $25. Just like reaching the top of an icy hill and spinning your tires. Price needs to clear $25 and hold to suggest strength. Meanwhile like the old saying goes, “Even if you just sit there you still get run over.”

    https://stockcharts.com/h-sc/ui?s=XIU.TO&p=D&yr=2&mn=0&dy=0&id=p53356485680&a=673066204

  4. Larry/ON Says:

    The market continues to surprise to the upside. Classic stealth bull-market grinding higher with doubters all along the way and no euphoria. Every pull-back scares a portion of investors out of their holdings and the smart money picks them up.

    Don’t know why anyone would bother with the Cdn market when you can invest in the best economy in the world next door.

  5. KC Says:

    Hi Ron/BC,

    Noticed VET.TO dropped below long term support today. Any further thoughts on risking an entry into VET ? I also noticed their earnings release is next week. Do you think its not a safe bet entering into it before the earnings date ?

    Thanks,
    KC

  6. Ron/BC Says:

    Kc
    Not at a computer now but it’s never good to see a major bottom break down. A reversal back through that low is needed to see a possible reversal back up. Lots of stocks not doing well now.

  7. KC Says:

    Ron/Bc,

    thanks for the response. Hope to hear a bit more of your thoughts when your fingers are on a keyboard and not on a club. 🙂

  8. Gary Says:

    #2 Bruce
    In all my years of analysis, quite honestly, I have never witness the entire world starting to correlate and align with such chaos. Yes this will make for perhaps the most dramatic WEC since 1985. But it is something aligning which with the ECM and the lastest stats show that the 2nd quarter in the United States the GDP growth slowed by 2.1%. We are headed into the bottom of this ECM and then this is also correlating with the solar cycle which also begins in 2020 and should be at least a drop of 33% in solar activity which could reach a Panic Cycle decline of 50% going into 2025 or near the peak of this next 8.6-year wave.

    June was the high in the Euro and July has been a Panic Cycle as the Euro collapsed to a new low for the year during July. We have support athe the 11155 level and should July close below this, given we are trading at 11129, then a retest of the January 2017 low of 10341 becomes likely.

    In gold, the maket made a high in July reaching 145440 while the June low was 131090. We still see the numbers for the month as critical and a Directional Change comes back into play in August.

    Interestingly, the Dow, like gold, also made a new high on July 16th reaching 27398.68. Here too, we also see a Directional Change coming in August.

    Just follow Socrates and the numbers are the only way to play this. Opinion will not amount to mush at this juncture in this chaos.

  9. bruce Says:

    tnx Gary……..

  10. FishFat Says:

    Transcontinental (TCL/a.to)
    I mentioned Transcontinental on July 04th. The price continues to trade with the range of $14.00- $15.45. But of interest on the weekly chart is a “Hammer” candlestick that has formed at support. The hammer candlestick suggests a potential trend reversal. There is also positive divergence of the MACD, which is bullish. The declining 26 week-EMA indicates there is a strong downtrend in place. So the first bounce after the hammer may fail and the market may pullback to test support at the base of the hammer – but, I expect to see a flattening of the EMA and a good potential for a trend reversal.
    http://schrts.co/nVJuperV

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