Tech Talk for Monday October 28th 2019

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Pre-opening Comments for Monday October 28th

U.S. equity index futures were higher overnight. S&P 500 futures were up 9 points in pre-opening trade. The Index is scheduled to open above its previous inter-day all-time high at 3,027.98.

Microsoft added $3.37 to an all-time high at $144.10 after winning the JEDI contract from the U.S. Defense Department worth $10 billion.

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Tiffany jumped $31.46 to $130.00 after receiving a proposed takeover from LVMH at $120 per share. The proposed takeover is valued at $14.5 billion.

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Restaurants International gained $0.30 to $68.75 after reporting higher than consensus third quarter earnings.

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Walgreen Boots gained $0.56 to $55.98 after reporting higher than consensus fiscal fourth quarter earnings.

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EquityClock’s Daily Market Comment

Following is a link:

http://www.equityclock.com/2019/10/25/stock-market-outlook-for-october-28-2019/

 

The Bottom Line

World equity markets continued moving higher last week after entering their period of seasonal strength. Recent concerns have been discounted including an earnings recession by major U.S. companies until the fourth quarter this year, growing efforts by the Democrats to impeach Donald Trump, continuing trade uncertainties between China and the U.S. and growing Middle East tensions. Despite uncertainties, broadly based U.S. equity indices are testing all-time highs. Seasonal influences remain positive for most equity markets until the first week in January

 

Observations

Seasonal influences this year continue to follow their historic pattern. Seasonal influences on U.S. and Canadian equity markets turn positive in the second half of October. Seasonal influences for equity markets in other developed nations turn positive in early 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) continued moving higher last week.

Medium term technical indicators for Canadian equity markets were mixed/slightly lower again last week.

Most short term technical indicators for U.S. markets and sectors (20 day moving averages, short term momentum indicators) maintained overbought levels last week.

Short term technical indicators for Canadian markets and sectors were mixed again last week

Third quarter corporate reports continue to flood in this week: Another 156 S&P 500 companies are scheduled to report this week including six Dow Jones Industrial companies. About 40% of S&P 500 companies have reported to date: 80% have exceeded consensus earnings estimates and 64% have exceeded revenue estimates. Consensus now calls for a 3.7% drop in third quarter earnings and a 2.8% increase in third quarter revenues.

Beyond third quarter results, analysts continue to reduce earnings and revenue estimates for S&P 500 companies. According to FactSet, fourth quarter earnings are expected to increase 0.7% (down from 1.5% last week) and fourth quarter revenues are expected to increase 3.0% (down from 3.2% last week). For all of 2019, earnings are expected to increase 0.6% (down from 0.7% last week) and revenues are expected to increase 4.0%. First quarter 2020 earnings are expected to increase 6.0% (down from 6.7%) and revenues are expected to increase 4.7 % (down from 4.8% last week). Second quarter 2020 earnings are expected to increase 7.3% (down from 7.7%) and revenues are expected to increase 5.2%. Earnings for all of 2020 are expected to increase 9.9% (down from 10.4%) and revenues are expected to increase 5.3%.

 

Economic News This Week

October ADP Employment Report to be released at 8:15 AM EDT on Wednesday is expected to slip to 120,000 from 135,000 in September.

First estimate of third quarter real U.S. GDP to be released at 8:30 AM EDT on Wednesday is expected to slip to an annualized rate of 1.6% versus 2.0% in the second quarter.

Bank of Canada Monetary Policy Statement is released at 10:00 AM EDT on Wednesday. Overnight lending rate is expected to remain unchanged at 1.75%.

FOMC statement to be released at 2:00 AM EDT on Wednesday is expected to announce another 0.25% reduction in the Fed Fund rate.

Weekly Initial Jobless Claims to be released at 8:30 AM EDT are expected to increase to 215,000 from 212,000 last week.

September Personal Income to be released at 8:30 AM EDT on Thursday is expected to increase 0.3% versus a gain of 0.4% in August. September Personal Spending is expected to increase 0.2% versus a gain of 0.1% in August.

Canadian August real GDP to be released at 8:30 AM EDT on Thursday is expected to increase 0.2% versus a gain of 0.2% in July.

October Chicago PMI to be released at 9:45 AM EDT on Thursday is expected to improve to 48.5 from 47.1 in September.

October Non-farm Payrolls to be released at 8:30 AM EDT on Friday are expected to slip to 90,000 from 136,000 in September. October Unemployment Rate is expected to increase to 3.6% from 3.5% in September. Average Hourly Earnings are expected to increase 0.2% versus a gain of 0.4% in September.

September Construction Spending to be released at 10:00 AM EDT on Friday is expected to increase 0.2% versus an advance o f0.1% in August.

October Manufacturing ISM to be released at 10:00 AM EDT on Friday is expected to increase to 48.8 from 47.8 in September.

 

Selected Earnings News This Week

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Trader’s Corner

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for October 25th 2019

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Green: Increase from previous day

Red: Decrease from previous day

 

Commodities

Daily Seasonal/Technical Commodities Trends for October 25th 2019

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Green: Increase from previous day

Red: Decrease from previous day

Sectors

Daily Seasonal/Technical Sector Trends for October 25th 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

Intel $INTC, a Dow Jones Industrial stock moved above $53.33 extending an intermediate uptrend following release of higher than consensus third quarter revenues and earning. Strength in Intel triggered a move to new recent highs by $SOXX and $SMH

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Silver stocks are responding to strength in silver prices. Nice breakout by Hecla Mining $HL above $2.10 extending an intermediate uptrend.

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Technology SPDRs $XLK moved above $82.52 to an all-time high extending an intermediate uptrend.

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Financial SPDRs $XLF moved above $28.57 extending an intermediate uptrend.

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Retail SPDRs $XRT moved above $44.10 extending an intermediate uptrend.

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Base Metals ETN $DBB moved above $15.30 completing a double bottom pattern. Units are one third weighted each in copper, zinc and aluminum. Base metal stocks are moving higher in response.

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S&P 500 SPDRs $SPY moved above $301.24 to an all-time high extending an intermediate uptrend.

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Alphabet $GOOG, a NASDAQ 100 stock moved above 1,265.55 extending an intermediate uptrend. Testing its all-time high at $1289.27

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Frontier iShares $FM moved above $28.36 completing a base building pattern.

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NASDAQ 100 Index $NDX moved above $8027.18 to an all-time high extending an intermediate uptrend

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The Canadian Technician

Greg Schnell discusses new highs. Following is a link:

https://www.youtube.com/watch?v=Hv2cuoc5_5g&feature=youtu.be

 

S&P 500 Momentum Barometers

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Percent of S&P 500 stocks trading above their 50 day moving average increased last week to 66.53 from 66.13. Percent remains intermediate overbought, but continues to trend up.

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Bullish Percent Index for S&P 500 stocks increased last week to 62.40 from 59.00. The Index has reached intermediate overbought levels, but has yet to show signs of peaking.

 

TSX Momentum Barometers

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Percent of TSX stocks trading above their 50 day moving average slipped last week to 42.79 from 46.67. Percent remains intermediate neutral and drifting lower.

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Bullish Percent Index for TSX stocks slipped last week to 60.09 from 60.51. The Index remains intermediate overbought and drifting lower.

 

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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