Tech Talk for Tuesday October 15th 2019

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Pre-opening Comments for Tuesday October 15th

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

Johnson & Johnson gained $2.56 to $133.28 after reporting higher than consensus third quarter earnings. The company also raised guidance.

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JP Morgan added $2.14 to $118.59 after reporting higher than consensus third quarter earnings. The company also raised guidance.

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Goldman Sachs dropped $2.71 to $203.11 after reporting lower than consensus third quarter earnings.

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UnitedHealth Group added $4.91 to $225.50 after reporting higher than consensus third quarter earnings. The company also raised its guidance.

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EquityClock’s Daily Market Comment

Following is a link:

http://www.equityclock.com/2019/10/11/stock-market-outlook-for-october-15-2019/

Note seasonality chart on Canadian Employment.

 

The Bottom Line

World equity markets moved higher last week as they ended their period of elevated volatility to mid-October and entered their period of seasonal strength that normally lasts to early January. Recent concerns have been discounted including 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 and growing Middle East tensions. Focus last week was encouraging news on a preliminary trade agreement between the U.S. and China

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Observations

Seasonal influences this year are following their historic pattern. Seasonal influences on U.S. and Canadian equity markets tend to turn positive as they enter the second half of October. Seasonal influences for equity markets in other developed nations also tend to turn positive in early October.

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Short term technical indicators show that the U.S. Dollar Index have started to roll over: The Index dropped below its 20 and 50 day moving averages on Friday. Short term momentum indicators (Daily Stochastics, RSI and MACD) turned down from overbought levels. Weakness in the U.S. Dollar Index is bullish for U.S. equity prices (It helps sales and earnings for U.S. companies with international operations) and is particularly bullish for commodity prices and related equities.

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The U.S. Dollar Index has a history of moving lower relative to the S&P 500 Index between now and yearend

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Note the increase in technical ratings below for the CRB Index, Materials SPDRs (XLB), Copper as well as Base Metals ETFs (e.g. XBM, ZMT)

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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 higher last week.

Medium term technical indicators for Canadian equity markets were virtually unchanged last week.

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 were mixed last week

Third quarter corporate reports start to pour in this week: Twenty three S&P 500 companies have reported to date. Another 52 S&P 500 companies are scheduled to report this week including seven Dow Jones Industrial companies.

Analysts continue to reduce earnings and revenue estimates for S&P 500 companies. According to FactSet, third quarter earnings on a year-over-year basis are expected to drop by 4.6% (down from a drop of 4.1% last week) and revenues are expected to increase 2.7% (down from 2.8% last week). Fourth quarter earnings are expected to increase 2.3% (down from 2.6% last week) and fourth quarter revenues are expected to increase 3.5% down from 3.6% last week). For all of 2019, earnings are expected to increase 1.1% (down from 1.2% last week) and revenues are expected to increase 4.1%. First quarter 2020 earnings are expected to increase 7.3% (down from 7.6%) and revenues are expected to increase 5.3 % (down from 5.5% last week). Second quarter 2020 earnings are expected to increase 8.6% (down from 8.7%) and revenues are expected to increase 5.9% (down from 6.3%). Earnings for all of 2020 are expected to increase 10.6% from and revenues are expected to increase 5.6% (down from 5.7%).

 

Economic News This Week

October Empire State Manufacturing Survey to be released at 8:30 AM EDT on Tuesday is expected to slip to 1.00 from 2.00 in September

September Retail Sales to be released at 8:30 AM EDT on Wednesday are expected to increase 0.3% versus a gain of 0.4% in August. Excluding food and energy, consensus for September Retail Sales is expected to increase 0.2% versus no change in August.

September Canadian Consumer Price Index to be released at 8:30 AM EDT on Wednesday is expected to drop 0.2% versus a drop of 0.1% in August.

September Housing Starts to be released at 8:30 AM EDT on Thursday are expected to slip to 1.320 million units from 1.364 million units in August.

October Philly Fed to be released at 8:30 AM EDT on Thursday is expected to slip to 8.0 from 12.0 in August.

Weekly Initial Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to increase to 215,000 from 210,000 last week.

September Capacity Utilization to be released at 9:15 AM EDT on Thursday is expected to slip to 77.7 from 77.9 in August. September Industrial Production is expected to slip 0.1% versus a gain of 0.6% in August.

 

Selected Earnings News This Week

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Trader’s Corner

Note significant upgrades in seasonality ratings

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for October 11th 2019

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Green: Increase from previous day

Red: Decrease from previous day

 

Commodities

Daily Seasonal/Technical Commodities Trends for October 11th 2019

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Green: Increase from previous day

Red: Decrease from previous day

 

Sectors

Daily Seasonal/Technical Sector Trends for October 11th 2019

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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

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StockTwits released on Friday @EquityClock

Wal-mart $WMT, a Dow Jones Industrial stock moved above $119.86 to an all-time high extending an intermediate uptrend.

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Regeneron Pharma $REGN, a NASDAQ 100 stock moved above $299.98 completing a double bottom pattern.

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Nvidia $NVDA, a NASDAQ 100 stock moved above $188.40 extending an intermediate uptrend.

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Mexico ETF $EWW moved above $43.89 setting an intermediate uptrend.

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Chile ETF $ECH moved above $38.37 setting an intermediate uptrend.

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U.S. equity indices helped by a breakout by Apple to an all-time high. $AAPL

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Home Depot $HD, a Dow Jones Industrial stock moved above $235.49 to an all-time high extending an intermediate uptrend.

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South Korea iShares $EWY moved above $58.12 setting an intermediate uptrend.

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Couche Tard $ATD.B.CA, a TSX 60 stock moved below $39.46 completing a double top pattern

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Allergan $AGN, an S&P 100 stock moved above $169.40 setting an intermediate uptrend.

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With the stronger than average labour market activity in September, the year-to-date change is now showing the strongest pace since 2002. $MACRO $FXC #CAD #CDNecon

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Technical Scoop

Compliments of David Chapman of www.EnrichedInvesting.com

David discusses “Trade peace, precious downswing, rate jump, positive spread, market volatility

Following is the link:

http://enrichedinvesting.com/wp-content/uploads/2019/10/Trade-peace-precious-downswing-rate-jump-positive-spread-market-volatility.pdf

 

StockTwits released yesterday @EquityClock

Turkey ETF $TUR moved below $23.71 completing a double top pattern.

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Chinese buying lots of soybeans! Soybean ETN $SOYB moved above $16.00 extending an intermediate uptrend.

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S&P 500 Momentum Barometers

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Percent of S&P 500 stocks trading above their 50 day moving average jumped last week to 63.53 from 53.71. Percent changed from intermediate neutral to intermediate overbought on a move above 60.00, but has yet to show signs of peaking.

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Bullish Percent Index for S&P 500 stocks increased last week to 56.00 from 53.60. The Index remains intermediate neutral.

 

TSX Momentum Barometers

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Percent of TSX stocks trading above their 50 day moving average increased last week to 50.00 from 49.78. Percent remains intermediate neutral.

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Bullish Percent Index for TSX stocks slipped last week to 61.80 from 62.66. 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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7 Responses to “Tech Talk for Tuesday October 15th 2019”

  1. Ana Says:

    $SPX Futures

    Maybe this:

    https://invst.ly/kj9wh

  2. Ron/BC Says:

    Ana
    A Rising Wedge I see. Very bearish pattern especially at the big 3000 level.

  3. bruce Says:

    ana
    does the fact we are nearing the apex of your triangle diminish the impact of any breakout either way?……..

  4. Ana Says:

    #2. Ron/BC
    Thank you for your comment. That is what I am counting on.

    #3. bruce
    Hoping we drop, fast and furious.

    Loaded two more bear position at the end of the day.

  5. Ana Says:

    #3. bruce,

    I should be running for Prime Minister, because I did not answer your question. I have no idea about the impact of any breakout because we are at the apex of the triangle. Just “wishing and hoping and thinking and praying”! Ha Ha Ha

  6. Ron/BC Says:

    Ana
    The $SPX “DAILY” chart is not that bearish but is approaching major price resistance at the 3020 level.

    https://stockcharts.com/h-sc/ui?s=%24SPX&p=D&yr=0&mn=6&dy=0&id=p59984567012&a=693577605

  7. Ana Says:

    #6. Ron/BC

    Yes, there is room to head up to the upper line of the triangle.

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