Tech Talk for Monday July 29th 2019

Daily Reports Add comments

Pre-opening Comments for Monday July 29th

U.S. equity index futures were mixed this morning. S&P 500 futures were up 1 point in pre-opening trade.

Mylan jumped $3.37to $21.80 after the company announced a deal to merge with Pfizer’s Upjohn division.

clip_image001[1]

Cooper Tire (CTB $30.47) is expected to open lower after lower than consensus second quarter revenues and earnings. The company also lowered guidance.

clip_image002[1]

Goldman Sachs is expected to open higher after Oppenheimer raised its target price to $321 from $316.

clip_image003

Chipotle advanced $15.14 to $795.00 after Goldman Sachs initiated coverage with a Conviction Buy rating. Target is $1000.

clip_image004[1]

 

EquityClock’s Daily Market Comment

Following is a link:

http://www.equityclock.com/2019/07/26/stock-market-outlook-for-july-29-2019/

Note seasonality chart on the U.S. Dollar Index

 

The Bottom Line

Strange, but true. Most equity markets in the developed world moved sideways last week and remained below highs set earlier this month. Meanwhile, markets in emerging markets moved lower (e.g. India, Chile, South Africa). Notable exceptions were U.S. equity indices: The S&P 500 Index and the NASDAQ Composite Index closed at all-time highs. A closer look revealed that two heavy weight stocks, Microsoft and Alphabet were the main reason for the all-time highs. Gains by these two stocks accounted for 44 points of the 49 point gain recorded by the S&P 500 Index last week. With the exception of these two indices, most equity indices (including the Dow Jones Industrial Average) remained below highs set earlier this month and are intermediate overbought. Equity markets have a history of entering into a period of increased volatility at this time of year with a downward bias into mid-October. Potential events triggering seasonal weakness this year include lower year-over-year second quarter earnings reported by major corporations, negative earnings guidance for third quarter earnings (e.g. Of report by S&P 500 companies released to date, 28 companies lowered third quarter guidance while only 10 raised guidance), growing efforts by the Democrats to impeach Donald Trump, growing Middle East tensions and unsettled trade negotiations.

 

Observations

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

Medium term technical indicators in Canada moved slightly higher last week. Percent of TSX stocks trading above their 50 day moving average remain intermediate overbought. 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) moved higher last week

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

Frequency of quarterly U.S. reports peaks this week. Another 168 S&P 500 companies and 7 Dow Jones Industrial Average companies are scheduled to release results. Frequency of reports by major Canadian companies continues to ramp up.

Forecasts for S&P 500 earnings moved slightly lower again last week. According to FactSet, 44% of S&P 500 companies have reported to date: Second quarter earnings are expected to drop 2.6% on a year-over-year basis (versus 2.7% last week) and second quarter revenues are expected to increase 4.0% (versus 3.8% last week). Third quarter earnings are expected to drop 1.9% (versus a drop of 1.4% last week) and revenues are expected to increase 3.2%. Fourth quarter earnings are expected to increase 4.9% (versus 5.4% last week) and fourth quarter revenues are expected to increase 4.0%. For all of 2019, earnings are expected to increase 1.7% (versus 2.3% last week) and revenues are expected to increase 4.4%. First quarter 2020 earnings are expected to increase 9.2% (versus 9.5% last week) and revenues are expected to increase 5.9 %. Second quarter 2020 earnings are expected to increase 12.6% (versus 12.0% last week) and revenue are expected to increase 6.6% (versus 6.7% last week).

Strength in the U.S. Dollar Index from 91.0 in the second quarter last year to 97.0 in the second quarter this year is dampening second quarter results by S&P 500 companies. According to FactSet, companies with more than 50% of revenues from international operations are expected to report a 2.4% drop in revenues and a 13.6% drop in earnings based on results received to date

clip_image001

Canadian companies with international operations will realize a benefit from currency conversion, particularly companies that sell products in U.S. Dollars (think commodities). The Canadian Dollar dropped from an average of U.S. 0.78 cents in the second quarter last year to U.S. 0.75 in the second quarter this year.

clip_image002

 

Economic News This Week

June Personal Spending to be released at 8:30 AM EDT on Tuesday is expected to increase 0.3% versus a gain of 0.4% in May. June Personal Income is expected to increase 0.4% versus a gain of 0.5% in May.

July ADP Private Employment Report to be released at 8:15 AM EDT on Wednesday is expected to see an increase to 150,000 from 102,000 in June.

May Canadian GDP to be released at 8:30 AM EDT on Wednesday is expected to increase 0.1%versus a gain of 0.3% in April.

July Chicago PMI to be released at 9:45 AM EDT on Wednesday is expected to increase to 50.0 from 49.7 in June.

FOMC statement on the economy is released at 2:00 PM EDT on Wednesday. Consensus calls for a reduction in the Fed Fund Rate to 2.25% from 2.50%. Press conference is offered at 2:30 PM EDT.

Weekly Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to increase to 213,000 from 206,000 last week.

June Construction Spending to be released at 10:00 AM EDT on Thursday is expected to increase 0.4% versus a decline of 0.8% in May.

July Manufacturing ISM to be released at 10:00 AM EDT on Thursday is expected to increase to 52.7 from 51.7 in June.

July Non-farm Payrolls to be released at 8:30 AM EDT on Friday are expected to drop to 165,000 from 224,000 in June. July Unemployment Rate is expected to slip to 3.6% from 3.7% in June. July Hourly Earnings are expected to increase 0.2% versus a gain of 0.2% in June.

June U.S. Trade Deficit to be released at 8:30 AM EDT on Friday is expected to slip to $54.60 billion from $55.50 billion in May.

June Canadian Trade Balance to be reported at 8:30 AM EDT on Friday is expected to post a deficit of $400 million versus a surplus of 760,000 million in May.

June Factory Orders to be released at10:00 AM EDT on Friday are expected to increase 0.8% versus a decline of 0.7% in May.

July Michigan Consumer Sentiment to be released at 10:00 AM EDT on Friday is expected to remain unchanged from June at 98.4 in June.

 

Selected Earnings News This Week

clip_image004

 

Trader’s Corner

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for July 26th 2019

clip_image006

Green: Increase from previous day

Red: Decrease from previous day

 

Commodities

Daily Seasonal/Technical Commodities Trends for July 26th 2019

clip_image008

Green: Increase from previous day

Red: Decrease from previous day

 

Sectors

Daily Seasonal/Technical Sector Trends for July 26th 2019

clip_image010

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

clip_image012

 

StockTwit released on Friday @EquityClock

S&P/TSX Information/Technology iShares $XIT.CA moved above $27.10 to an all-time high extending an intermediate uptrend.

clip_image013

George Weston $WN.CA, a TSX 60 stock moved above $103.66 extending an intermediate uptrend.

Editor’s Note: Much of the gain in WN is attributed to the gain by Loblaw Companies

clip_image014

clip_image015

 

S&P 500 Momentum Barometers

clip_image016

Percent of S&P 500 stocks trading above their 50 day moving average increased last week to 78.20 from 76.00. Percent remains intermediate overbought and showing early signs of rolling over.

clip_image017

Bullish Percent Index for S&P 500 stocks slipped last week to 72.40 from 73.20. The Index remains intermediate overbought and showing early signs of rolling over.

 

TSX Momentum Barometers

clip_image018

Percent of TSX stocks trading above their 50 day moving average increased last week to 61.64 from 59.05. Percent is intermediate overbought.

clip_image019

Bullish Percent Index for TSX stocks increased last week to 65.27 from 64.85. 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

Sponsored By...



5 Responses to “Tech Talk for Monday July 29th 2019”

  1. Larry/ON Says:

    Energy Stocks – House of Pain. Falling knife. Don’t touch them until you have concrete technical bottoming. I keep an eye on XOP (US Oil and Gas Expl and Prod). Another 10% needs to drop to get to the 2016 low which could be support. One of the best performing oil stocks out of a beaten sector is RDS/A. The Canadian energy sector is an apocalyptic wasteland.

  2. Ron/BC Says:

    Here is the XEG.to Energy ETF that is well hated and been in an overall downtrend for years. Price is now approaching the long term $8 support ‘area’ again. Will be a big test to see if the technicals change here.

    https://stockcharts.com/h-sc/ui?s=XEG.TO&p=D&yr=5&mn=0&dy=0&id=p47670461743&a=673066454

  3. Larry/ON Says:

    AMZN – Dropped to the 50dayMA and trying to hold and STO down to 20 – I would keep an eye on this stock to see if support holds and it rebounds or more downside and whether it bleeds into the rest of the tech sector. Some high flyers like ADBE and SHOP are down but trying to rebound
    Semis – Holding up which is a positive sign
    Buy on the dip seems to be creeping into the market after the morning downturn.

  4. still_learning Says:

    NTR

    Ron/BC,
    How’s the golf going, more specifically the chipping? Did the left-hand low work for you on short chips?
    Bernie

  5. Ron/BC Says:

    Still_Learning NTR

    MY chipping and pitching are still not consistant. I hate the pitching iron and have gone back to my 9 iron. Was using my hybrid for awhile out of frustration. But glad you mentioned the left hand low for that as it has worked well before. Forgot about it as I stopped putting left hand low as it was hard on my neck. Will try it again for pitching and chiping. The hybrid is great for shorter drives.

Entries RSS Comments RSS Log in