Tech Talk for Monday November 18th 2019

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Pre-opening Comments for Monday November 18th

U.S. equity index futures were lower this morning. S&P 500 futures slipped 2 points in pre-opening trade.

The Shanghai Composite Index advanced 17.86 points to 2,909.20 after the Bank of China lowered its overnight lending rate.

Ford gained $0.10 to $9.05 after announcing the launch of its all-electric Mustang Mach E.

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Tesla added $1.73 to $353.90 after Deutsche Bank raised its target price from $260 to $290

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Altria added $0.04 to $48.01 after Stifel Nicolaus raised its target price to $54 from $0.

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EquityClock’s Daily Market Comment

Folllowing is a link:

http://www.equityclock.com/2019/11/15/stock-market-outlook-for-november-18-2019/

Note seasonality charts on U.S. Retail Trade and Industrial Production.

The Bottom Line

World equity markets continued moving higher last week in line with their historic period of seasonal strength. Recent concerns have been discounted including an earnings recession by major U.S. companies until the first quarter next year, growing efforts by the Democrats to impeach Donald Trump, continuing trade uncertainties between China and the U.S. and growing Middle East and Hong Kong tensions. Despite uncertainties, broadly based European, emerging markets and U.S. equity indices are testing and moving to one year highs, and in some instances, to 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 turned positive in the second half of October. Seasonal influences for equity markets in other developed nations turned 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) remain intermediate overbought, but have yet to show signs of peaking.

Medium term technical indicators for Canadian equity markets also are intermediate overbought, but continued moving higher 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 remained overbought levels last week.

Third quarter corporate reports continue to wind down this week: Another 15 S&P 500 companies are scheduled to report this week including one Dow Jones Industrial company (Home Depot). About 92% of S&P 500 companies have reported to date: Reports by major Canadian companies continue this week, but are past their peak. Consensus for S&P 500 companies now calls for a 2.3% drop in third quarter earnings and a 3.1% increase in third quarter revenues.

Beyond third quarter results, analysts continue to reduce earnings estimates for S&P 500 companies. According to FactSet, fourth quarter earnings are expected to decrease 1.4% (versus a drop of 1.1% last week) and fourth quarter revenues are expected to increase 2.5% (down from 2.6% last week). For all of 2019, earnings are expected to be unchanged (down from a gain of 0.1% last week) and revenues are expected to increase 3.9% (down from 4.0% last week). First quarter 2020 earnings are expected to increase 5.1% (down from 5.3%) and revenues are expected to increase 4.5 %. Second quarter 2020 earnings are expected to increase 6.4% (down from 6.6%) and revenues are expected to increase 4.9% (down from 5.0). Earnings for all of 2020 are expected to increase 9.7% and revenues are expected to increase 5.5%.

 

Economic News This Week

October Housing Starts to be released at 8:30 AM EST on Tuesday are expected to increase to 1.320 million units from 1.256 million units.

October Canadian Consumer Price Index to be released at 8:30 AM EST on Wednesday is expected to increase 2.1% on a year-over-year basis from 1.9% in September. Excluding food and energy, October Canadian Consumer Price Index is expected to increase 1.9% on a year-over year basis, unchanged from September.

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

Weekly Initial Jobless Claims to be released at 8:30 AM EST on Thursday are expected to dip to 215,000 from 225,000 last week.

November Philly Fed Index to be released at 8:30 AM EST on Thursday is expected to increase to 7.0 from 5.6 in October.

October Existing Home Sales to be released at 10:00 AM EST on Thursday are expected to increase to 5.50 million units from 5.38 million units in September.

November Michigan Consumer Sentiment Index to be released at 10:00 AM EST on Friday is expected to increase to 95.9 from 95.7 in October.

 

Selected Earnings News This Week

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Trader’s Corner

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for November 15th 2019

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Green: Increase from previous day

Red: Decrease from previous day


Commodities

Daily Seasonal/Technical Commodities Trends for November 15th 2019

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Green: Increase from previous day

Red: Decrease from previous day

Sectors

Daily Seasonal/Technical Sector Trends for November 15th 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

Health care Providers iShares $IHF moved above $184.80 extending an intermediate uptrend.

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U.S. Medical Devices iShares $IHI moved above $252.44 to an all-time high extending an intermediate uptrend.

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Aerospace & Defense iShares $ITA moved above $231.38 to an all-time high extending an intermediate uptrend.

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U.S. Brokers iShares $IAI moved above $66.56 to an all-time high extending an intermediate uptrend.

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Biotech ETF $BBH moved above $132.80 extending an intermediate uptrend.

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Lam Research $LRCX, a NASDAQ 100 stock moved above $282.88 to an all-time high extending an intermediate uptrend.

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Medtronic $MDT, an S&P 100 stock moved above $111.49 to an all-time high extending an intermediate uptrend.

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Autodesk $ADSK, a NASDAQ 100 stock moved above $159.88 resuming an intermediate uptrend.

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Cerner $CERN, a NASDAQ 100 stock moved above $68.49 setting an intermediate uptrend.

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UnitedHealth Group $UNH, a Dow Jones Industrial stock moved above $267.43 and $268.99 resuming 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 increased last week from 66.53 to 72.75. Percent remains intermediate overbought, but continues to trend higher.

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Bullish Percent Index for S&P 500 stocks increased last week from 69.20 to 71.40. The Index remains intermediate overbought, but continues to trend higher.

 

TSX Momentum Barometers

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Percent of TSX stocks trading above their 50 day moving average increased last week from 59.28 to 65.61. Percent changed from intermediate neutral to intermediate overbought on a move above 60.00, but continues to trend higher.

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Bullish Percent Index for TSX stocks increased last week from 63.95 to 66.52. The Index remains intermediate overbought, but continues to trend higher.

 

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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3 Responses to “Tech Talk for Monday November 18th 2019”

  1. Larry/ON Says:

    SP500 Multi-Year Inverse Head and Shoulders Break-Out – I must have missed discussion on this website but I am charting a breakout from a two and a half year inverse head and shoulders that took place about two weeks ago. One of my info sources Seeking Alpha had an article about it on Nov 11th.

    Bear Case – Forward P/E on the SPX is at quite elevated levels going back to 2008. It was higher in 2017 I believe.

    We are set up for a major bull market continuation on this inverse head and shoulders breakout with seasonality in place and particularly if a trade agreement is reached. Research by Morgan Stanley is suggesting a global growth recovery for 2020 which helps to connect the dots.

  2. Larry/ON Says:

    To add – The neckline around 3025 should be good support and the point to add on any pullback that seeks to test the breakout.

  3. FishFat Says:

    Larry/ON
    Interesting. Below is a weekly chart of the S&P500 with (I think) the inverse H&S and neckline you have described.
    https://stockcharts.com/h-sc/ui?s=%24SPX&p=W&st=2016-01-04&en=2019-11-15&id=p82095491589&listNum=85&a=701024969

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