Tech Talk for Wednesday January 8th 2020

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Pre-opening Comments for Wednesday January 8th

U.S. equity index futures were higher this morning despite missile attacks by Iran against U.S. troop locations in Iraq. S&P 500 futures were up 7 points in pre-opening trade. President Trump is scheduled to comment later this morning.

Index futures moved slightly higher following release of the December ADP Employment Report at 8:15 AM EST. Consensus was 150,000 versus a gain of 67,000 in November. Actual was 202,000.

Boeing (BA $337.28) and General Electric (GE $12.05) are expected to open lower after a Boeing 737 aircraft powered by General Electric engines suffered a fatal crash outside of Tehran.

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Walgreen Boots dropped $1.99 to $57.30 after reporting lower than consensus fiscal first quarter sales and earnings.

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Constellation Brands gained $6.11 to $189.71 after reporting higher than consensus fiscal third quarter results.

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Maxar Technologies added $0.42 to $18.31 after JP Morgan raised its target price to $25 from $15.

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Lennar gained $2.11 to $59.25 after reporting higher than consensus quarterly sales and earnings.

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EquityClock’s Daily Market Comment

Following is a link:

http://www.equityclock.com/2020/01/07/stock-market-outlook-for-january-8-2020/

Note seasonality charts on the U.S. Trade Deficit and Manufacturers’ New Orders.

 

Observation

Gold continues moving higher during its period of seasonal strength.

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Trader’s Corner

 

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for January 7th 2019

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Green: Increase from previous day

Red: Decrease from previous day

Commodities

Daily Seasonal/Technical Commodities Trends for January 7th 2019

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Green: Increase from previous day

Red: Decrease from previous day

 

Sectors

Daily Seasonal/Technical Sector Trends for January 7th 2019

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Green: Increase from previous day

Red: Decrease from previous day

 

S&P 500 Momentum Barometer

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The Barometer dropped another 3.41 to 70.34 yesterday. It remains intermediate overbought and has started to trend down.

TSX Momentum Barometer

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The Barometer added 3.72 to 69.77 yesterday. It 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 Wednesday January 8th 2020”

  1. Jimmy(ONT) Says:

    Market goes up every day, every week, year, decade etc. Now, I’m fearful ’cause everyone else is greedy. It’s been years since we’ve had any true shakeout. I diligently follow the charts and left with a respectable 6.75% annualized (NET of fees but not taxes) over the past five years vs a market of about 12%. My risk metrics, beta, alpha is much lower but I can’t eat relative returns. Anyone else feeling my pain? Thank you Ron, Bernie, Anna ROL, Larry and many others for your education.

  2. Larry/ON Says:

    Jimmy it’s not just technicals but fundamentals that have to be looked at. On the fundamental side there is a lot of liquidity in financial markets right now with low interest rates and piles of cash looking for a place to generate some profits. That drives asset prices higher than would be expected so you will see stocks trading at PE multiples that seem a little too high. Whenever there is a drop cash comes flying in (TINA) so you don’t see extended declines. The Dec 2018 drop was on fears of a recession following Fed rate hikes but that turned out to be false and those hikes were later reversed. What will take the juice out of the system is a series of interest rate hikes as happened in 2018 but the Fed has indicated that we probably won’t see any in 2020 and in any case the Fed usually avoids rate hikes in presidential election years. All that being said we need some kind of market correction albeit likely small. I just took off the last of my leverage this week. If we get a drop I put leverage back on. Timing is a difficult thing to do. You might consider Rick’s posts about just owing the Nasdaq 100 (QQQ). Right now this market could eve keep going higher for even a few more weeks and everyone who cashed out too early will have to pay higher prices to get back in. I will finish by saying that all the market doubters from six or seven months ago have now been proven totally wrong. Put that in your pipe Rosenberg!

  3. Ron/BC Says:

    Jimmy/ON

    Never compare yourself or your accomplishments to anything or anyone else. You made money and are doing well from the sounds of it. Doesn’t matter a damn if the market went up 100% as this isn’t a contest. And most investors and even fund managers don’t match or outperform the $SPX. No one knew what would happen during the rising market just like they don’t know what will happen on the way down again. And many individual stocks did poorly as well. When the market plunges and stays down for months on end in a major downtrend that will happen as it always has you’ll be happy you made money then. Nothing wrong with playing it caustically and enjoying life without betting the farm on a so called ‘sure thing’. I never compare myself to other’s accomplishments as I need to live in my own comfort zone my own way. Glad that’s the only thing about the market you are complaining about as there are far worse stock stories than yours.

  4. Bernie Says:

    Ron/BC,

    Good to hear you’ve resolved your TFSA issue and its in your favour. I’ve always been impressed with your technical view and those very graphic charts you share freely! Just wanted to point out your 2nd chart in #17 Tuesday is an XRE chart instead of the ZRE you intended.

    Also, when you have a moment, could you please give me your technical take on PPL.TO and FC.TO. I feel PPL would fit well in my TFSA for its growth, income and dividend growth characteristics and FC for its very stable good income, low volatility and decent behaviour in down markets. I own the FC in my RRSP/RRIF currently and have owned PPL in the past.

  5. Ron/BC Says:

    Bernie

    Here is a 2 year chart of PPL.to. This is the type of chart pattern I prefer. Easy to trade as it is in a nice sideways channel between $45 and $49 after a run up which is overall bullish. Simply buy the bottom of the channel and sell the top of the channel. And if you want to hold it buy it back “IF” it clears the top of the channel. And if it breaks the bottom of the channel exit. Don’t know what an investor would do. The 2nd chart is a 20 year chart that shows much the same thing shorter term but also shows how it got cut in half from late 2014 through 2015 and had downside spikes along the way as well so it can be volatile.

    https://stockcharts.com/h-sc/ui?s=PPL.TO&p=D&yr=2&mn=0&dy=0&id=p88898009645&a=712023444

    https://stockcharts.com/h-sc/ui?s=PPL.TO&p=D&yr=12&mn=0&dy=0&id=p00436721627&a=712025461

  6. Ron/BC Says:

    Bernie

    Here is a two year chart of FC.to. Looks good with the 20ema tracking along the 50ema in what ‘appears’ to be a nice trending stock. Can’t find much wrong with the chart at a glance. BUTTTTTTTTTTTTTT look at the 20 year chart below and see what’s called a very bearish Parabolic Curve in price. That is a classic blow off top much like you saw in the past with the big brand names that did the same. Recall the Japanese stocks that looked like this in the early 90’s. This is not a good pattern get get onboard with. Doesn’t mean it can’t go higher as patterns like this want everyone onboard before it reverses. See how price is the furthest it has ever been above the 200ema. Looks much like a skier reaching the top of a hill just before he does a flip and comes down. This stock needs to come back to earth just like the $SPX does. A sharp pullback to the uptrendline and price support around $11 would be a consideration. So that’s what the chart tells me,fwiw……………..

    https://stockcharts.com/h-sc/ui?s=FC.TO&p=D&yr=2&mn=0&dy=0&id=p33531484935&a=691104566

    https://stockcharts.com/h-sc/ui?s=FC.TO&p=D&yr=20&mn=0&dy=0&id=p65710865962&a=712022759

  7. Bernie Says:

    Ron/BC,

    Thank you kindly for the charts. Buying PPL at the bottom of the channel sounds like a good plan. However I’m not looking at locking in a capital gain so I likely wouldn’t sell unless they either cut the dividend or fall 10% in price from where I bought. The dividend investor in me is looking at buying the dividend at a reasonable price and then holding on for growing dividends. PPL is a quality midstreamer, probably tops in Canada with a lot of contracts in the U.S. so they’re not about to cut the dividend anytime soon.

    Yeah it wouldn’t be prudent to buy into FC after their price has gone parabolic like it has. I think I’ll wait until the price drops to near $13.50 where the rate of ascent increased. There appears to be a bit of support there. When I buy its likely for the very long term. FC has paid the same high dividend since inception in 1999 and they’ve been a very good defensive player.

    Think I’ll sit on the sidelines for now and do some more searching. Its tough to find a good dividend stock at a reasonable price in this elevated market! I hate waiting on stocks. It means I have to spend even more time monitoring than I’m accustomed to.

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