Tech Talk for Friday February 7th 2020

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Pre-opening Comments for Friday February 7th

U.S. equity index futures were lower this morning. S&P 500 futures were down 5 points in pre-opening trade.

Index futures were virtually unchanged following release of the January employment report at 8:30 AM EST. Consensus for January Non-farm Payrolls was 165,000 versus 145,000 in December. Actual was 225,000. Consensus for January Unemployment Rate was unchanged from December at 3.5%. Actual was up 0.1 to 3.6%. Consensus for January Average Hourly Earnings was an increase of 0.3% versus a gain of 0.1% in December. Actual was an increase of 0.2%

The Canadian Dollar added 0.15 to US 75.28 cents following release of Canada’s January employment report at 8:30 AM EST. Consensus for January Employment was an increase of 17,500 versus a gain of 35,200 in December. Actual was an increase of 34,500. Consensus for January Unemployment Rate was unchanged from December at 5.6%. Actual was down 0.1 to 5.5%.

Activision Blizzard gained $1.45 to $61.71 after reporting higher than consensus fourth quarter revenues and earnings. The company also raise its dividend by 11%.

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Take Two Interaction dropped $10.24 to $117.50 after reporting lower than consensus fiscal third quarter revenues and earnings.

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eBay fell $2.35 to $35.65 after Intercontinental Exchange decided to stop exploring strategic opportunities with eBay.

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Canada Goose dropped $2.37 to $30.93 after lowering its fiscal fourth quarter guidance. Sales in China are impacted by the coronavirus.

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EquityClock’s Daily Market Comment

Following is a link:

http://www.equityclock.com/2020/02/06/stock-market-outlook-for-february-7-2020/

Note seasonality charts on Initial Jobless Claims, iShares 7-10 year Treasury Bond ETF and Gold futures.

 

StockTwits released yesterday @EquityClock

Ulta Beauty $ULTA, a NASDAQ 100 stock moved above $284.06 extending an intermediate uptrend.

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Fastenal $FAST, a NASDAQ 100 stock moved above $37.68 to an all-time high extending an intermediate uptrend.

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Financials SPDRs $XLF moved above $31.10 to an all-time high extending an intermediate uptrend.

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Gilead Sciences $GILD, a NASDAQ 100 stock moved above $64.64 completing a base building pattern.

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General Dynamics $GD, an S&P 100 stock moved above $186.86 extending an intermediate uptrend.

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Trader’s Corner

 

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for February 6th 2020

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Green: Increase from previous day

Red: Decrease from previous day

 

Commodities

Daily Seasonal/Technical Commodities Trends for February 6th 2020

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Green: Increase from previous day

Red: Decrease from previous day

Sectors

Daily Seasonal/Technical Sector Trends for February 6th 2020

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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 slipped 1.60 to 66.73 yesterday. It remains intermediate overbought.

 

TSX Momentum Barometer

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The Barometer added 0.40 to 66.36 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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10 Responses to “Tech Talk for Friday February 7th 2020”

  1. Larry/ON Says:

    $CAD At 0.7475-0.75 Support Level – Heavy Short Trade On. At some point there should be a powerful reversal but when? On the link below there is an interesting sentiment chart contrasted with $CAD price that suggests odds are in favour of a reversal.

    USD/CAD IG Client Sentiment: Our data shows traders are now at their least net-long USD/CAD since Oct 04 when USD/CAD traded near 1.33.
    Retail trader data shows 19.46% of traders are net-long with the ratio of traders short to long at 4.14 to 1. Our data shows traders are now at their least net-long USD/CAD since Oct 04 when USD/CAD traded near 1.33. The number of traders net-long is 29.79% lower than yesterday and 46.25% lower from last week, while the number of traders net-short is 25.09% higher than yesterday and 45.01% higher from last week.

    We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USD/CAD prices may continue to rise.

    Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger USD/CAD-bullish contrarian trading bias.
    https://www.dailyfx.com/forex/technical/ssi/2020/02/04/USDCAD-202002040923.html

  2. Larry/ON Says:

    https://www.theglobeandmail.com/business/economy/article-canadas-job-market-blows-past-forecasts-in-january-unemployment-rate/
    I don’t know if this kind of news will turn around $CAD at all but it should put a damper on any thoughts of an interest rate cut by the BOC any time soon.

  3. Ron/BC Says:

    Bernie

    Thanks for the ETF list picks. I do think I’d be more comfortable with ETFs I can chart easily and be able to switch them when the major trend reverses or flattens out now and again. So if there is a reasonable rate of return it shouldn’t be hard to beat most interest rate returns offered today that don’t seem to be rising much. And being I never feel I’m missing out on anything I could buy a combination of them and exit any of them when the charts look like they are rolling over. With a longer term investment plan just holding when prices are above the 50ema would be a sensible rule to use and when price drops below the 50ema just exit and buy it back when above again. No fundamental analyzing or complicated technical work to be concerned about and a good exit/entry strategy. Not much to think about there.

    As far as the Ford Focus you mentioned I’ve know a couple of people who owned them and they are a poor choice. Seems like every car manufacturer makes good vehicles but in order to capture everyone they also make a cheap small model for those who don’t want to spend much. Don’t know why they all do this as the low end model hurts their reputation. I traded in a 1994 Jeep Grande Cherokee for a 2007 Ford Fusion and loved the car. Never had a problem with it including driving in snow and like all my other cars never bought snow tires either. But it had a 4cyl front wheel drive but with a 5 speed automatic not 6 speed like my Ford Escape. But ended up buying a high sitting SUV. My partner has a 2004 Toyota Camry she’s had for 10 years or more and it’s a nice drive. But it is also a higher end Toyota as well. But I’m sold on SUVs that sit high for a view and large windows that are easy to see out of. The newer SUVs are far more contorted for styling and are harder to see out of. The 2008-2012 Ford Escapes are high and boxy with large windows and you know where the front and back are all the time. Might have to stick to them unless I can find something similar. The older Nissan X-Trail is also much the same.

    https://stockcharts.com/h-sc/ui?s=SPLV&p=D&yr=2&mn=0&dy=0&id=p98039434105&a=690775752

    https://stockcharts.com/h-sc/ui?s=XLB&p=D&yr=5&mn=0&dy=0&id=p59737424860&a=673066512

  4. Bernie Says:

    Ron/BC,

    Just curious of your thoughts on using the 50ema as your “line in the sand” so to speak. Many others also find the 50 day significant so I can imagine a lot of activity at that level both in buying and selling. Do you wait for a confirmation, aka; the 3 day rule per Keith Richard? I know you prefer ema in your charting do most others use sma or is there little difference at the 50 day?

  5. Bernie Says:

    Ron/BC,

    Re: #4 questions
    I forgot to ask: would it make more sense if long term investors, who have many holds in their portfolio, use a weekly chart or another moving average?

  6. Ron/BC Says:

    Bernie
    I’m not a fan of 3 days as the price trend is what’s important. If the 50ema is rising steadily and strong I would expect price to test it and even go below it briefly. What I’d want to see when price is below it is a snap back above soon after which shows buyers buying the test of the 50ema. That would be a bullish sign that shorts are covering and buyers are getting in there as it is a closely watched moving average.
    I noticed that the Mawer Funds and other Funds have very large companies in each and when put together they tend to smooth out the price action. So the 50ema tends to support price with a small fudge factor allowing price to dip below briefly without reacting to it. The ETFs on most Sectors seem to be so specific that the 50ema is often crossed so wouldn’t be a solid support level as the group acts as one and selloffs are stronger. One could use a 200ema instead with specific ETFs instead. And most important is if the 50ema is above the 200ema and is rising as well or turning back up and above the 200ema. And yes, a Weekly chart smooths out price action so the daily noise isn’t a factor. Depending on the ETF one could use the 50ema or 50sma with a weekly chart but many would use a 10ema or 10sma along with a 40ema or 40sma to match the Daily chart. The volatility of each ETF would determine which ones work best as the volatility of each are all different. One look at a chart with all of them on the chart would tell you quickly which ones to pay attention to. There isn’t much difference with the EMA and SMA but you’ll find with the EMA which is front weighted that it reacts to a sharp move up or down quickly that affects the 50ema or any other time frame and the SMA is very slow to respond to a sharp price change. You’ll see price turn sharply up for instance but the 50sma will continue its same direction and not respond for some time. Overall they will ‘trend’ together but the SMA will be slower to respond to price changes. Here is a Daily chart of SPLV with EMA averages solid lines and SMA averages dashed. And a Weekly chart with the 10sma and 40sma averages dashed and the 50ema and 200ema solid lines. Much to think about but it does tell you what you feel is important. Moving averages are important as most fund managers use them. But very basic uptrendlines and downtrendlines are also important as they define the trend well also and breakouts and breakdowns are acted upon by other traders & investors. I had to switch from a Firefox browser to Google Chrome and nothing looks the same on my computer or charts. It was either that or end online banking. Not sure what these charts and text look like on other computers. I’m not a fan of change so may switch back to Firefox once they sort out their problems.

    https://stockcharts.com/h-sc/ui?s=SPLV&p=D&yr=2&mn=0&dy=0&id=p96607650306&a=719361402

    https://stockcharts.com/h-sc/ui?s=SPLV&p=W&yr=2&mn=0&dy=0&id=p84700916969&a=719361721

  7. Ron/BC Says:

    Bernie

    Here is a 20 year WEEKLY chart of the $SPX with the gray 50ema and blue 200ema on it. One can see when the 50ema crosses the 200ema up or down. But the signals are not that ‘timely’for buying or selling. What does give very timely signals is using the 50ema and 200ema as a MACD AND then using a 20ema of that MACD for timely signals. I’ve marked the 50/200 MACD crossovers of its 20ema when crossing above in Green dotted vertical lines and the crossing below the 50/200 MACD’s 20ema in Red dotted vertical lines. One can see they don’t have to be concerned with bull or bear markets or major selloffs or question when to buy or sell using this Modified MACD indicator. While it’s not perfect at the buy and sell signals it is very good and eliminates a lot of concern of what action to take. If all one did was buy and hold on the positive 50/200 MACD crossovers of its 20ema and sell and stay out of the $SPX and related markets on the negative 50/200 MACD crossovers of its 20ema one would do quite well according to this 20 year Weekly chart. Exiting on the negative signals stops the clock on losses and restarts the clock on the next positive signal.

    https://stockcharts.com/h-sc/ui?s=%24SPX&p=W&yr=20&mn=0&dy=0&id=p71032597148&a=719390727

  8. Bernie Says:

    Ron/BC,

    Thanks for your replies! Lots to look at there. I just skimmed through for now.

  9. Larry/ON Says:

    MSFT – My favourite stock for over a year. CNBC explains why.

    https://www.cnbc.com/2020/02/08/how-microsoft-became-the-markets-indispensable-stock-once-again.html

  10. Ron/BC Says:

    Bernie

    Here is the Weekly chart of the $SPX again with a Modified MACD “Histogram”. It’s the same as the Modified MACD above but easier to follow at a glance. The MACD lines are not as sensitive to questionable crossovers as the lines merge now and again without an obvious signal. The Histogram shows it above or below the zero line at all times and are more exact on crossovers,but occasionally a whipsaw below and then back above again. But regardless one can take a standard MACD on any chart or Histogram and change the numbers from the standard MACD of 12,26,9 to 50,200,20 to get these longer term signals on any chart you see. Some stocks or ETFs will see more whipsaws above and below than others depending on their volatility. But if you try this with a bunch of stocks or ETFs you are interested in you’ll see how valuable it can be with buy and sells. And using it on Weekly charts will smooth the price data out much better than Daily charts and have more reliable signals. If you have an ETF you wish to see with this let me know.

    https://stockcharts.com/h-sc/ui?s=%24SPX&p=W&yr=20&mn=0&dy=0&id=p55220283789&a=719390727

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