Tech Talk for Monday August 19th 2019

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Pre-opening Comments for Monday August 19th

U.S. equity index futures moved higher this morning. S&P 500 futures were up 28 points in pre-opening trade. Index futures are responding to overnight strength in Far East markets. The Shanghai Composite gained 2.1% following hints of easier monetary policy by the Peoples Bank of China.

Lululemon gained $2.01 to $179.84 after B.Riley FBR increased its target price to $176 from $165.

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Estee Lauder jumped $13.03 to $192.25 after reporting higher than consensus fiscal fourth quarter earnings. The company also raised guidance.

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L Brands (LB $20.36) is expected to open lower after B.Riley FBR lowered its target price to $30 from $41.

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Lions Gate Entertainment added $0.18 to $11.25 after Imperial Capital upgraded the stock to Outperform form In Line.

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EquityClock’s Daily Market Comment

Following is a link:

http://www.equityclock.com/2019/08/18/stock-market-outlook-for-august-19-2019/

Note seasonality chart on U.S. New Housing Starts.

Market Call Tonight on BNNBloomberg at 6:00 PM EDT

Guest analyst tonight is Jeff Parent from CastleMoore.

 

The Bottom Line

The traditional period of summer weakness in world equity markets continued last week despite a favourable bounce by world equity markets on Friday. 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.

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Observations

The VIX Index remained at elevated levels again last week, in line with its historical trend between mid-July and mid-October

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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/Bullish Percent Index 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 lower last week despite the recovery on Friday.

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

A new forecast by FactSet for quarterly S&P 500 earnings and revenues was unavailable this week. According to FactSet, second quarter earnings are projected to drop 0.7% on a year-over-year basis and second quarter revenues are expected to increase 4.1%. Third quarter earnings are expected to drop 3.1% and revenues are expected to increase 3.1%. Fourth quarter earnings are expected to increase 3.9% and fourth quarter revenues are expected to increase 4.0%. For all of 2019, earnings are expected to increase 1.5% and revenues are expected to increase 4.3%. First quarter 2020 earnings are expected to increase 8.5% and revenues are expected to increase 5.6 %. Second quarter 2020 earnings are expected to increase 9.9% and revenue are expected to increase 6.4%

The U.S. Dollar Index strengthened again last week, not good for U.S. companies with major international operations that report integrated sales and earnings in U.S. Dollars

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Economic News This Week

July Canadian Consumer Price Index to be released at 8:30 AM EDT on Wednesday is expected to increase 0.2% versus a drop of 0.2% in June (1.7% year-over-year versus 2.0% year-over-year).

July Existing Home Sales to be released at 10:00 AM EDT on Wednesday is expected to increase to 5.40 million units from 5.27 million units in June.

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

Weekly Initial Jobless Claims to be released at8:30 AM EDT on Thursday are expected to slip to 216,000 from 220,000 last week.

Jackson Hole Symposium is scheduled to start on Thursday.

June Canadian Retail Sales to be released at 8:30 AM EDT on Friday are expected to drop 0.2% versus a slip of 0.1% in May.

July New Home Sales to be released at 10:00 AM EDT on Friday are expected to increase to 647,000 from 646,000 in June.

 

Earnings News This Week

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Trader’s Corner

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for August 16th 2019

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Green: Increase from previous day

Red: Decrease from previous day

 

Commodities

Daily Seasonal/Technical Commodities Trends for August 16th 2019

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Green: Increase from previous day

Red: Decrease from previous day

 

Sectors

Daily Seasonal/Technical Sector Trends for August 16th 2019

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Green: Increase from previous day

Red: Decrease from previous day

 

The Canadian Technician

Following is a link to Greg Schnell’s weekly video released on Sunday:

https://www.youtube.com/watch?v=4YE-0baoA44&feature=youtu.be

 

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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S&P Momentum Barometers

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Percent of S&P 500 stocks trading above their 50 day moving average dropped last week to 37.27 from 43.29. Percent changed to intermediate oversold from intermediate neutral on a move below 40.00.

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Bullish Percent Index for S&P 500 stocks dropped last week to 46.60 from 50.20. The Index remains intermediate neutral and trending down.

 

TSX Momentum Barometers

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Percent of TSX stocks trading above their 50 day moving average dropped last week to 44.40 from 51.50. Percent remains intermediate neutral and trending down.

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Bullish Percent Index for TSX stocks dropped last week to 58.58 from 60.57. The Index changed to intermediate neutral from intermediate overbought on a move below 60.00 and trending down.

 

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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21 Responses to “Tech Talk for Monday August 19th 2019”

  1. Larry/ON Says:

    50 Day MA Resistance – We stalled right there twice this month. Interestingly the 50 day is still rising but will soon flatten. Many people including myself thought we would see profit taking on Friday. Opposite happened which is real market strength. It seems logical that we will retest 50day resistance soon.

  2. Larry/ON Says:

    Semis – Gapped higher to the highest level in August after consolidating above and below the 50day MA. A consistent pattern of higher lows and higher highs in a trading channel going back one year.

  3. Larry/ON Says:

    RON/BC – Please have a look at the chart of GOOGL – Looks like it is set for a run up to the 1240 range.

  4. Ron/BC Says:

    The $SPX remains trapped between 2815 support and 2940 resistance and needs to clear and hold above 2940 to suggest a rise to a double top or beyond. Meanwhile like the old saying goes, “Buy Support & Sell Resistance.” If that’s all I had ever done with the market I’d be rich…………..

    https://stockcharts.com/h-sc/ui?s=%24SPX&p=D&yr=1&mn=0&dy=0&id=p41702228512&a=682178007

  5. Ron/BC Says:

    Larry/ON

    GOOGL in spite of having a very volatile erratic price chart GOOGL is presently respecting a multi month uptrendline. Price looks like it would like to run up to the 1270-1290 double top. Nice looking recent trend. As long as that uptrendline holds I wouldn’t bet against it.

    https://stockcharts.com/h-sc/ui?s=GOOGL&p=D&yr=2&mn=0&dy=0&id=p72280284890&a=683265403

  6. Denyse Says:

    Does anyone know what happened to KNT? What a slide…

  7. Ana Says:

    $SPX Futures

    https://invst.ly/btcbr

  8. Mary Says:

    Larry/ON, Ron B/C, Ana

    Anyone holding overnight or selling into the strength. Appreciate your thoughts.

  9. Ana Says:

    #8. Mary,

    I am counting on the wedge to hold. Also thinking it will break to the downside once it is finished. Thinking it will take a few days to play out. But that is just my viewpoint!

    Posting with a broken toe! Who knew a little broken toe would be so painful and slow me up so much!

  10. Mary Says:

    Ana:

    Hope you recover soon to enjoy whats left of the summer. Not sure what you mean by counting of the wedge to hold. However, I sold half my position. I am good at reading charts but they seem to be turning up but few days ago they did the same and then tanked. Thanks for your response.

  11. Mary Says:

    Should read… I am NOT good at reading charts…..

  12. Larry/ON Says:

    RE 8 Mary – I am fully invested. I think you have to maintain a core that you don’t sell and for me that is at lowest 80% of my portfolio. This market can easily trick you into selling stocks after which you end up having seller’s remorse when they go back up. The key is to only hold the highest quality stocks that you have absolute confidence in. For me that would be number one MSFT and number two GOOGL (thanks RON/BC for your chart). V would be number three and T is one I wish I kept and am waiting for a drop.
    Interesting today is CWB on the turn around in energy sector shares. I won’t touch the energy sector but if it is rising it is good for the overall market. EQB is another one that is amazing.

  13. Bernie Says:

    Ana,

    Re: #9
    Didn’t know you were a golfer. Must have been quite the backspin on your wedge flop shot to have to wait that long for your ball to stop rolling on that downslope.

    Put your feet up, relax and take a break from the market. Your little toe will thank you for it. Perhaps park your money into Mawer Balanced Fund and read a good book on dividend growth investing while you’re on hiatus.

    Get well soon!

  14. Mary Says:

    Ana

    Ha! Stupid me, never knew you golf.

    Bernie

    #13
    Thanks for the explanation.

  15. Roy Says:

    Hello Bernie
    Re # 13
    Which Mawer fund are you referring to and what kind of returns have you been getting annually?
    Mawer Global Balanced Fund MAW130 16.2965 0.09 16.3843
    Mawer Balanced Fund MAW104 30.5756 0.17 30.7486

  16. Ron/BC Says:

    Mary

    I’m in cash and working on a condo deal. Bought one finally at a good price and just got interim financing approval as I’m selling the one I’m in. Hopefully I’ll be sold and cashed out so I wont need interim financing to pay for the one I bought as it costs a flat fee of 1% of the mortgage money you’ll need when buying. So far so good with the first 2 steps. Just got to sell mine now to make it all work. But the broad market as per the $SPX still hasn’t cleared and held above its breakdown point at 2940. All the B.S. in the world can’t change that fact as it is major price resistance and right where the big short sellers are waiting to short it. Gotta blow them away first before any upside past there can occur. And this is the time of year very bad things happen to the market.

  17. Bernie Says:

    Roy,

    Re: #15
    Both are good. Linked are the returns after fees and expenses. MAW104 has been around since 1988. Only 3 down years: -2.25% (1994), -16.11% (2008), -0.30% (2018). https://www.morningstar.ca/ca/report/fund/performance.aspx?t=0P0000ZDI7&FundServCode=MAW130@7&lang=en-CA
    https://www.morningstar.ca/ca/report/fund/performance.aspx?t=0P0000714D&FundServCode=MAW104@7&lang=en-CA

  18. Mary Says:

    Larry/ON

    I admire your stamina. It takes nerves of steel to stay 80% invested. May I ask what part of ON you live.

    Ron/BC

    I wish you much success with your real estate investing. Market is pretty hot in the GTA. The banker told me earlier today lots of buyers taking huge mortgages. Appreciate your thoughts on the market. I only invest 30% of my money in the market, I am mainly in GIC or linked GIC. Today I sold part of my holdings.

  19. Ana Says:

    #13. Bernie,

    Lovely metaphor! I taught golf to grades 11 and 12 when I was a physical education teacher. I know what all clubs “should” do and the mechanics of a stroke, but unfortunately that is as far as it goes with golf. I have never had the time to devote any time to golf.

    So disappointed that I broke my toe. It is the little piggy that had roast beef! Slammed it into a open door, when the lights were not on! It was just by rushing around the house, getting ready to travel to Saskatchewan. I am usually so conscientious about safety and am always extra careful when I am doing things. I even cleaned out the gutters on the front of my home, using a ladder on the back of a half ton truck. Did a great job and no injuries. Then I break a toe when I am rushing around the house! Live and learn!

    Thank you for the advice!

  20. Ana Says:

    #14. Mary,

    Bernie was using a metaphor for a “wedge” club in golf. This is the wedge shape I was referring to:

    https://invst.ly/btj-3

    Watching this carefully.

  21. Bernie Says:

    Mary,

    I’m sorry if you took me seriously in my comment #13. Just trying to lighten up the conversation.

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