Tech Talk for Monday January 13th 2020

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Pre-opening Comments for Monday January 13th

U.S. equity index futures were higher this morning. S&P 500 futures were up 12 points in pre-opening trade.

Lululemon added $5.77 to $240.61 after the company raised its fourth quarter earnings and revenue guidance.

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Goldman Sachs gained $1.29 to $243.40 after JMP Securities upgraded the stock to Outperform from Market Perform.

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General Motors (GM $34.65) is expected to open higher after announcing launch of an electronic version of Hummer.

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EquityClock’s Daily Comment

Following is a link:

http://www.equityclock.com/2020/01/10/stock-market-outlook-for-january-13-2020/

Note seasonality charts on Non-farm Payrolls and Canada Employment.

 

The Bottom Line

With the exception of strength in FANG stocks (Facebook, Apple, Netflix, Google) last week, U.S. equity indices were virtually unchanged. Typical during this time of year when most equity indices and sectors move sideways/slightly lower!

 

Observations

Seasonal influences this year continue to follow their historic pattern. Note seasonal charts below showing that most equity markets have a history of stalling from mid-January to early February. Given the current intermediate overbought levels for equity markets, falling fourth quarter earnings estimates on a year-over-year basis for S&P 500 companies, impeachment proceedings against President Trump and rising tensions in the Middle East, history is likely to repeat in early 2020.

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Medium term technical indicators for U.S. equity markets (e.g. Percent of S&P 500 stocks trading above their 50 day moving average, Bullish Percent Index) were mixed last week and remain intermediate overbought.

Medium term technical indicators for Canadian equity markets also were mixed last week, and remain intermediate overbought.

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

Short term technical indicators for Canadian markets and sectors also moved higher last week and returned to overbought levels.

Consensus for earnings by S&P 500 companies moved lower last week: Seventy three S&P 500 companies have issued negative fourth quarter guidance to date and 34 companies have issued positive guidance. According to FactSet, fourth quarter earnings on a year-over-year basis are expected to decline 2.0% (versus previous estimate of a drop of 1.5%) and fourth quarter revenues are expected to increase 2.6%. For all of 2019, earnings are expected to increase 0.2% and revenues are expected to increase 3.9%. First quarter 2020 earnings are expected to increase 4.5% (versus previous estimate of 5.0%) and revenues are expected to increase 4.3 % (versus previous estimate of 4.4%). Second quarter 2020 earnings are expected to increase 6.4% (versus previous estimate of 6.6%) and revenues are expected to increase 4.9%. Earnings for all of 2020 are expected to increase 9.4% (versus previous estimate of 9.6%) and revenues are expected to increase 5.4%

 

Economic News This Week

December Consumer Price Index to be released at 8:30 AM EST on Tuesday is expected to increase 0.3% versus a gain of 0.3% in November. Excluding food and energy, December Consumer Price Index is expected to increase 0.2% versus a gain of 0.2% in November.

December Producer Price Index to be released at 8:30 AM EST on Wednesday is expected to increase 0.2% versus no change in November. Excluding food and energy, December Producer Price Index is expected to increase 0.2% versus a decline of 0.2% in November.

January Empire State Manufacturing Survey to be released at 8:30 AM EST on Wednesday is expected to remain unchanged from December at 3.50.

Phase #1 Trade Agreement between China and the U.S. is signed on Wednesday.

December Retail Sales to be released at 8:30 AM EST on Thursday are expected to increase 0.3% versus a gain of 0.2% in November. Excluding auto sales, December Retail Sales are expected to increase 0.5% versus a gain of 0.1% in November.

January Philly Fed Index to be released at 8:30 AM EST on Thursday is expected to increase to 3.8 from 2.4 in December.

Weekly Jobless Claims to be released at 8:30 AM EST on Thursday are expected to increase to 216,000 from 214,000 last week.

December Housing Starts to be released at 8:30 AM EST on Friday are expected to remain unchanged from November at 1.365 million units.

December Industrial Production to be released at 9:15 AM EST on Friday is expected to decrease 0.1 versus a gain of 1.1 in November. December Capacity Utilization is expected to slip to 77.1% from 77.3% in November.

January Michigan Consumer Sentiment Index to be released at 10:00 AM EST on Friday is expected to increase to remain unchanged from December at 99.3

 

Earnings News This Week

Fourth quarter reports ramp up this week: 34 S&P 500 companies are scheduled to report including three Dow Jones Industrial companies.

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Trader’s Corner

 

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for January 10th 2019

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Green: Increase from previous day

Red: Decrease from previous day

Commodities

Daily Seasonal/Technical Commodities Trends for January 10th 2019

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Green: Increase from previous day

Red: Decrease from previous day

Sectors

Daily Seasonal/Technical Sector Trends for January 10th 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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Editor’s Note: All of the gains last week by the S&P 500 Index and NASDAQ Composite Index came from the heavily weighted FANG stocks: Facebook up 4.5 %: Apple up 4.3%; Netflix up 1.0 %; Google up 5.1 %. Excluding these stocks, the S&P 500 Index and NASDAQ Composite Index were virtually unchanged.

StockTwits released on Friday @EquityClock

Fiserv $FISV, a NASDAQ 100 stock moved above $118.00 to an all-time high extending an intermediate uptrend.

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Mexico iShares $EWW moved above $46.45 extending an intermediate uptrend.

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AMEX Biotech ETF $FBT moved above $154.03 extending an intermediate uptrend. Anticipating good news from the JP Morgan Healthcare conference next week.

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Gildan Activewear $GIL.CA, a TSX 60 stock moved below $37.58 setting an intermediate downtrend.

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Broadcom $AVGO, a NASDAQ 100 stock moved below $300.09 completing a double top pattern.

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Greg Schnell’s Market Buzz

Released on Friday. Following is a link:

https://www.youtube.com/watch?v=o_55BWotFNQ&feature=youtu.be

Focus is on the retail sector.

 

S&P 500 Momentum Barometers

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Percent of S&P 500 stocks trading above their 50 day moving average slipped last week from 75.35 to 74.35. Percent remains intermediate overbought and rolling over.

Bullish Percent Index for S&P500 stocks increased last week increased last week from 78.00 to 80.00. The Index remains intermediate overbought.

 

TSX Momentum Barometers

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Percent of TSX stocks trading above their 50 day moving average slipped last week from 66.82 to 66.36. Percent remains intermediate overbought and rolling over.

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Bullish Percent Index for TSX stocks inched up last week from 74.68 to 74.79. 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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10 Responses to “Tech Talk for Monday January 13th 2020”

  1. Larry/ON Says:

    TSLA – Doubled in three months. It now has a bigger market cap than GM and Ford combined.

  2. Larry/ON Says:

    Pullback? Bigwig professor Jeremy Siegal last week warned of a possible Jan 2018 scenario. I have been following the market analysis of David Burrows at Barometer who yesterday said “Could easily see a near-term pullback but breadth backdrop remains firm for equity markets around the world. 2-4% pullback likely would be short-lived and serve up opportunity.” For everyone who went to cash fearing a pull-back the question is: What price will you pay when you get back into the market? Place your bets!

  3. dave/ab Says:

    Hi Bernie

    From your post #21 on friday

    I actually own all 3 stocks you wrote about. Not sure if you really want to hear another opinion on them. I bought both KEY and AD on a bottom fishing pattern back in October and PPL have held for a few years.These are 3 companies I will hold possibly forever. From the Long term weekly and monthly charts I see better potential for AD and KEY. Both breaking from ascending long term triangle and from resistance. With PPL if it can break $50 it’s hard to tell how high the ceiling is, but $50 is long term resistance on it. I am often leary of companies coming out of a merger. I never know if a company has paid to much or got a good deal on the takeover. Since the closing of the merger with Kinder Morgan I’m looking at Pembina as trading sideways till the market full digest the takeover over the next few quarters. JMHO.

  4. Roy Says:

    Thanks Larry/On for your response to my query on TECK

  5. Larry/ON Says:

    Roy you will have to be patient on Teck/B – It looks like deep value but you don’t know how long it will take until buying interest really develops. Just a small position and wait. I normally shy away from resource stocks.

  6. Larry/ON Says:

    TSLA – I didn’t know about this but it is from the Strange But True list. Sorry about the juvenile humour.

    CNBC – Musk also suggested the car will be able to emit an external fart noise. The software in some newer Teslas allows the vehicle to, well, make a fart sound inside the car.

    “My daughter loves the flatulence seat. She kept sitting on it and pressing the button,” Cramer said Monday, citing it as evidence as the atmosphere of enjoyment created by Tesla.

  7. Bernie Says:

    dave/ab,

    Thanks much for your take on KEY, PPL and AD. I’m always open to more discussion and other viewpoints! I’ve never owned PPL but know a fair bit about them and their space from various news and media sources. I owned KEY and AD, also IPL, as late as 2018 when my portfolio was close to 100% dividend growth stocks. I agree Pembina (not Pembeana as many on BNN call it) may take a while to absorb the purchase but I feel they have the greatest growth potential of the mid-streams in Canada. KEY has potential too but have been outperformed by PPL since 2016. AD is more speculative or contrarian as some still feel about them. I don’t see much further downside. I see a fairly safe gamble without fear of dividend cuts.

  8. Bernie Says:

    Larry/ON

    Re: #6
    That’s a very expensive whoopee cushion! They’re much cheaper at the Dollar store.

  9. dave/ab Says:

    Hi Bernie

    #7

    Totally agree. Funny you mentioned IPL. I own that one too and have been annoyed at myself. I broke a rule that I super rarely do. It triggered a bottom fishing pattern but was just touching resistance without breaking it last year. Got in last July. Oh well it pays a dividend to wait.

  10. Larry/ON Says:

    Excessive New Daily 52 Week Highs Over Past Three Months Suggests Pullback Within One Week
    -Callum Thomas from Topdown Charts came up with this indicator going all the way back to 1927.
    https://twitter.com/Callum_Thomas/status/1216104977896177669

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