Tech Talk for Monday August 12th 2019

Daily Reports Add comments

Pre-opening Comments for Monday August 12th

U.S. equity index futures moved lower this morning. S&P 500 futures were down 16 points in pre-opening trade. Index futures responded partially to a decline in second half earnings estimates for S&P 500 companies by Goldman Sachs and Citigroup due to possible impact of a trade war between the U.S. and China.

Canfor (CFP $8.80) is expected to open higher after Jim Pattison’s company offered to purchase remaining shares at $16.00 per share.

clip_image001

Transat (TRZ $11.79) is expected to open higher after Air Canada raised its offer to acquire the company from $13 to $18 per share.

clip_image002

IBM (IBM $136.13) is expected to open higher after JP Morgan raised its target price to $152 from $147.

clip_image003[1]

Sysco gained $2.61 to $72.60 after reporting higher than consensus second quarter revenues.

clip_image004

 

EquityClock’s Daily Market Comment

Following is a link:

http://www.equityclock.com/2019/08/09/stock-market-outlook-for-august-12-2019/

Note seasonality charts on Canada’s Employment

 

The Bottom Line

The traditional period of summer weakness in world equity markets continued last week. Equity markets have a history of entering into a period of increased volatility at this time of year with a downward bias from mid-July to mid-October (plus or minus a week). Supplemental concerns this year include an earnings recession by major U.S. companies until the fourth quarter this year (particularly companies with extensive international operations), growing efforts by the Democrats to impeach Donald Trump, growing Middle East tensions and unsettled trade negotiations between the U.S. and China.

clip_image002

 

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) moved lower again last week and are trending down See charts near the end of this report

Medium term technical indicators in Canada also moved lower again last week. Percent of TSX stocks trading above their 50 day moving average are trending down. 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 in the last half of the week.

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

Frequency of quarterly U.S. reports drops again this week. Another 11 S&P 500 companies and two Dow Jones Industrial Average company are scheduled to release results. Frequency of quarterly reports by major Canadian companies also slows this week.

Forecasts for S&P 500 earnings and revenues into mid 2020 moved slightly lower again last week despite a modest increase in second quarter projections. According to FactSet, 90% of S&P 500 companies have reported second quarter results to date: Second quarter earnings are projected to drop 0.7% on a year-over-year basis (versus 1.0% last week) and second quarter revenues are expected to increase 4.1%. Third quarter earnings are expected to drop 3.1% (versus a drop of 2.2% last week) and revenues are expected to increase 3.1%. Fourth quarter earnings are expected to increase 3.9% (versus 4.5% last week) and fourth quarter revenues are expected to increase 4.0%. For all of 2019, earnings are expected to increase 1.5% (versus 1.9% last week) and revenues are expected to increase 4.3% (versus 4.4% last week). First quarter 2020 earnings are expected to increase 8.5% (versus 9.0% last week) and revenues are expected to increase 5.6 % (versus 5.7% last week). Second quarter 2020 earnings are expected to increase 9.9% (versus 10.7% last week) and revenue are expected to increase 6.4% (versus 6.5% last week).

Strength in the U.S. Dollar Index from an average of 94.5 in the third quarter last year to just below 98.0 last week continues to dampen earnings and sales projections for S&P 500 companies. According to CNBC, 37% of earnings by S&P 500 companies and over 70% of earnings by S&P Technology companies come from operations outside of the U.S.

clip_image003

Conversely, weakness in the Canadian Dollar from an average of U.S. 0.77 cents in the third quarter last year to U.S.75.5 cents adds to the earnings of Canadian companies either with large international exposure (think Canadian banks) or with sales in U.S. Dollars (think industrial commodities priced in U.S. Dollars).

 

Economic News This Week

July U.S. Consumer Price Index to be released at 8:30 AM EDT on Tuesday is expected to increase 0.3% versus a gain of 0.1% in June. Excluding food and energy, July Consumer Price Index is expected to increase 0.2% versus a gain of 0.3% in June.

Weekly Initial Jobless Claims to be released at 8:30 AM EDT on Thursday is expected to reach 212,000 versus 209,000 last week.

U.S. July Retail Sales to be released at 8:30 AM EDT on Thursday are expected to increase 0.3% versus a gain of 0.4% in June. Excluding auto sales, July Retail Sales are expected to increase 0.4% versus a gain of 0.4% in June.

August Empire State Manufacturing Survey to be released at 8:30 AM EDT on Thursday is expected to increase to 1.85 from 4.30 in July.

August Philly Fed Index to be released at 8:30 AM EDT on Thursday is expected to drop to 10.0 from 21.8 in July.

Second quarter U.S. Non-farm Productivity to be released at 8:30 AM EDT on Thursday is expected to grow at a 1.5% rate versus growth at a 3.4% rate in the first quarter.

July Capacity Utilization Rate to be released at 9:15 AM EDT on Thursday is expected to remain unchanged from June at 77.9%. July Industrial Production is expected to increase 0.1% versus no change in June.

June Business Inventories to be released at 10:00 AM EDT on Thursday are expected to increase 0.1% versus a gain of 0.3% in May.

July U.S. Housing Starts to be released at 8:30 AM EDT on Friday are expected to increase to 1.259 million units from 1.253 million units in June.

August Michigan Consumer Sentiment Index to be released at 10:00 AM EDT on Friday is expected to slip to 97.5 from 98.4 in July.

 

Selected Earnings News This Week

clip_image005

 

Trader’s Corner

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for August 9th 2019

clip_image007

Green: Increase from previous day

Red: Decrease from previous day

 

Commodities

Daily Seasonal/Technical Commodities Trends for August 9th 2019

clip_image009

Green: Increase from previous day

Red: Decrease from previous day

 

Sectors

Daily Seasonal/Technical Sector Trends for August 9th 2019

clip_image011

Green: Increase from previous day

Red: Decrease from previous day

The Canadian Technician

Following is a link to Greg Schnell’s weekly comment released at StockCharts.com on Saturday.

https://www.youtube.com/watch?v=6cP8Lf4lRII&feature=youtu.be

 

Hap Sneddon on BNNBloomberg

Hap is scheduled to appear on Market Call at 12:00 noon on Monday. Following is the link:

https://www.bnnbloomberg.ca/

 

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_image013


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

image

 

· SPEAKERS

 

· SCHEDULE

  • Summary of Events
  • Full Schedule
  • Opening Ceremonies

· SPECIAL EVENTS

  • Canandian MoneySaver Day
  • All Stars of Options Trading
  • Cannabis Investment Symposium
  • World of ETF Investing

· PAID EVENTS

  • Master Classes

· EXHIBIT HALL

  • Overview
  • Participating Companies
  • Exhibit Contact

· 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.

 

clip_image015

Donald Vialoux

Founder

Tech Talk

 

clip_image016

Jon Vialoux

Founder

EquityClock.com

 

S&P 500 Momentum Barometers

clip_image017

Percent of S&P 500 stocks trading above their 50 day moving average slipped last week to 43.29 from 48.60. Percent remains intermediate neutral.

clip_image018

Bullish Percent Index for S&P 500 stocks dropped last week to 50.20 from 61.40. The Index changed to intermediate neutral from intermediate overbought on a drop below 60.00.

 

TSX Momentum Barometers

clip_image019

Percent of TSX stocks trading above their 50 day moving average slipped last week to 51.50 from 56.22. Percent remains intermediate neutral.

clip_image020

Bullish Percent Index for TSX stocks slipped last week to 60.57 from 64.02. 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...



2 Responses to “Tech Talk for Monday August 12th 2019”

  1. Paula Says:

    Berne,
    Thanks for #11 last night. This was bugging me for awhile. I’mean glad I asked and you had the answer.

  2. Ron/BC Says:

    Sooooo,is everyone having fun yet? Here is the $SPX. Price broke below the 2940 support area which had been the big breakout price point and sold off to the 2815 support area which was also the 200ema. The big rebound ran up in classic fashion to the breakdown point at 2940 which is now resistance has typically sold off once again. Price must now hold above 2822 or if it breaks down below that level will continue having lower highs and lower lows to an ultimate low. Price needs to re-clear 2940-2950 area to put this correction behind it. Meanwhile the price action is very bearish.

    https://stockcharts.com/h-sc/ui?s=%24SPX&p=D&yr=1&mn=0&dy=0&id=p30240245806&a=673066103

Entries RSS Comments RSS Log in