Tech Talk for Monday December 30th 2019

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The Bottom Line

World equity markets continued their intermediate uptrend last week. Strength was recorded despite recent concerns including an earnings recession by major U.S. companies until the first quarter next year, growing efforts by the Democrats to impeach Donald Trump and growing Middle East and Hong Kong tensions. Seasonal influences remain positive for most equity markets until the end of 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. Note that most equity markets also have a history of weakening from early January to early February. Given the current intermediate overbought levels for equity markets, history is likely to repeat in early 2020. Many individual investors have large unrealized profits in 2019 that have been deferred for tax purposes until the New Year. Their profit taking is likely to cause short term weakness in equity markets into January.

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U.S and Canadian equity markets are closed on Wednesday.

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 and are overbought, but have yet to show signs of peaking.

Medium term technical indicators for Canadian equity markets also moved higher last week and are overbought, but have yet to show signs of peaking.

Most short term technical indicators for U.S. markets and sectors (20 day moving averages, short term momentum indicators) also moved higher last week and are overbought, but have yet to show signs of peaking.

Short term technical indicators for Canadian markets and sectors also moved higher last week and are overbought, but have yet to show signs of a peak.

A series of annual events occur during the next weeks that traditionally are positive for equity markets

The end of tax loss selling pressures.

Release of more bullish investment dealer predictions for next year.

Start of investing of yearend bonuses by individual investors

A decline of institutional investor influences as major investors go on holidays

A drop in volume that prompts more volatility on the upside

Continuation of the Christmas (Santa Claus) rally that historically includes the last five trading days of the past year and the first two trading days of the next year.

 

Economic News This Week

Consensus for December Manufacturing ISM to be released at 10:00 AM EST on Friday is an increase to 49.0 from 48.1 in November.

Consensus for November Construction Spending to be released at 10:00 AM EST on Friday is an increase of 0.4% versus a decline of 0.8% in October.

 

Earnings News This Week

Nil

 

Trader’s Corner

 

Equity Indices and related ETFs

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Green: Increase from previous day

Red: Decrease from previous day

 

Commodities

Daily Seasonal/Technical Commodities Trends for December 27th 2019

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Green: Increase from previous day

Red: Decrease from previous day

 

Sectors

Daily Seasonal/Technical Sector Trends for December 27th 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

TSX 60 Index $SPTSE moved briefly above 1,024.47 to an all-time high extending an intermediate uptrend.

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Canadian Tire $CTC.A.CA, a TSX 60 stock moved below support at $140.17. The stock has been subject of a raid by short sellers.

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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 was unchanged last week at 80.76. Percent remains intermediate overbought, but has yet to show signs of peaking.

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Bullish Percent Index for S&P 500 stocks increased last week to 77.80 from 77.20. The Index remains intermediate overbought, 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 increased last week to 72.56 from 67.59. Percent remains intermediate overbought, but has yet to show signs of peaking.

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Bullish Percent Index for TSX stocks increased last week to 72.29 from 71.43. The Index remains intermediate overbought, but has yet to show signs of peaking.

 

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 December 30th 2019”

  1. Larry/ON Says:

    They were supposed to wait until after the first week of January but as soon as they got to the first day of the New Year for settlement they sold first and asked questions later as far as their big gainers were concerned.

  2. Rol Lew Says:

    “They” are not selling “everything”

    https://stockcharts.com/freecharts/candleglance.html?COST,BRZU,SGDJ,GDX,SGDM,GLD,EWZ,GOLD,PSLV,PSLV.TO,FXI|D|0

    Why are ewz, fxi, here? a bit puzzling.

    https://stockcharts.com/freecharts/candleglance.html?JNUG,FIVE,NUGT,BURL,CXO,NIO,NOC,NEM,GDXJ,OXY,HES,CVX|D|0

    Golds & Oils?

  3. Larry/ON Says:

    The SP500 dipped to the 9 day MA and bounced. We need a pull-back at least to the 20. A revisit of the 50day MA would take excess froth out of the market. The market never touched the 50 day since 2nd week of Oct. We have had the longest stretch over RSI 70 since Jan18. AAPL now positive by quite a bit so there is no shortage of buyers.

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