Tech Talk for Friday February 14th 2020

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Pre-opening Comments for Friday February 14th

U.S. equity index futures were higher this morning. S&P 500 futures were up 6 points in pre-opening trade.

Index futures were virtually unchanged following release of January Retail Sales at 8:30 AM EST. Consensus was an increase of 0.3% versus a gain of 0.3% in December. Actual was a gain of 0.3%. Excluding auto sales, consensus for January Retail Sales was an increase of 0.3% versus a gain of 0.6% in December. Actual was an increase of 0.3%.

NVIDIA jumped $17.48 to $288.26 after reporting higher than consensus fourth quarter revenues and earnings. The company also raised guidance. Oppenheimer and Deutsche Bank raised their target price on the stock.

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Expedia advanced $12.12 to $122.71 after reporting higher than consensus fourth quarter earnings.

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Blackrock slipped $0.73 to $567.82 after Deutsche Bank downgraded the stock from Buy to Hold.

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Canopy Growth (CGC $19.52) rose sharply in overnight trade after reporting higher than consensus quarterly revenues. Strength in Canopy Growth prompted a surge in marijuana stocks.

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EquityClock’s Daily Market Comment

Following is a link:

http://www.equityclock.com/2020/02/13/stock-market-outlook-for-february-14-2020/

Note seasonality charts on U.S. Consumer Price Index, Used Car Sales and Initial Jobless Claims

 

Holidays

U.S. and Canadian equity markets are closed for a holiday on Monday.

 

StockTwits released yesterday @EquityClock

Medtronic $MDT, an S&P 100 stock moved below $115.00 completing a double top pattern

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Power Corp. $POW.CA, a TSX 60 stock moved above $34.72 to an all-time high extending an intermediate uptrend

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Josef Schachter’s Presentation at the World Outlook Conference

Josef presented three important themes at the conference:

Historically, energy outperforms as the commodity cycle unfolds.

In 2H/20 we see US$75/b for WTI crude oil and by 2024 over US$100/b.

The S&P/TSX Energy Index should triple in the coming 4-5 years and many growth and exploration ideas could be 10 baggers!

More information on Josef’s services is available at

https://schachterenergy.ca

Editor’s Note: Crude oil has a history of bottoming at this time of year on a real and relative basis for a seasonal trade to the end of June Short term momentum indicators have turned higher.

Crude Oil Futures (CL) Seasonal Chart

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FUTURE_CL1 Relative to the S&P 500
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Trader’s Corner

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for February 13th 2020

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Green: Increase from previous day

Red: Decrease from previous day

 

Commodities

Daily Seasonal/Technical Commodities Trends for February 13th 2020

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Green: Increase from previous day

Red: Decrease from previous day

 

Sectors

Daily Seasonal/Technical Sector Trends for February 13th 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 1.80 to 68.14 yesterday. It remains intermediate overbought.

TSX Momentum Barometer

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The Barometer added 0.46 to 63.89 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 14th 2020”

  1. Ron/BC Says:

    Bernie

    Here is a chart of XLU which is the Utility ETF that some claim trades opposite the $SPX and where to go when the broad market is selling off. As you can see that is b.s. as they tend to trade together but with different volatility at times. This difference is what I meant when I said the Modified MACD or Modified Histogram 50,200,50 works well if a market tracks the $SPX. So with another market that has much different volatility you could get more sell signals to exit if it was much different volatility than the $SPX. But this XLU chart does show a good comparison of a much different market that “basically” still tracks together. My main point is with the 50ema and 200ema widely followed and traded on, the MACD version of it is worth tracking. So if the 50,200,50 Modified MACD Histogram for instance goes below the zero line a long term investor would be wise to not add to holdings and consider exiting and going to cash or another investment that is performing better. I guess long term investors may not want to exit even with a selloff of some magnitude signaled as they would lose dividends and whatever else these companies hand out to those that hold onto their fund or ETF. But even for long term investors it is a good indicator for a heads up on a selloff next or buy signal after a selloff has ended as a new buy signal is then an excellent time to load up on an investment fund or ETF or stock that they wish to buy and hold. (or trade) The buy signals in an uptrend last a lot longer than the shorter sell signals even in a bear market as money needs to go somewhere. And some of those brief sell signals don’t sell off much and the price of the fund or ETF at the next buy signal is actually higher. But one doesn’t know how low price will ever selloff to so best to take all signals mechanically. The 20 to 30 year Weekly charts prove that well.

    https://stockcharts.com/h-sc/ui?s=XLU&p=W&yr=20&mn=0&dy=0&id=p40607526633&a=673066409

  2. Ron/BC Says:

    To all the ladies out there:

    “”””””””””””””””””HAPPY VALENTINES DAY””””””””””””””

  3. KC Says:

    Hello Ron/BC,

    Thanks for your take on BCE the other day.

    Any chance we can have your insightful thoughts on Deere and perhaps if I could be cheeky on VET.TO as well please? Deere and WTI turn seasonally appealing this time of year and I’d like to step in. Seem like Deere has been quite choppy ?

    Hope you enjoy your VDay with your partner 😉

    Cheers,
    KC

  4. Larry/ON Says:

    WTI and Energy Stocks – Anyone who wants to buy an energy stock should look at the chart XOP S&P Oil and Gas Exploration and Production and ask themselves if there is anything there that suggests now is a time to buy. It’s not a falling knife. It’s a falling, head chopping, guillotine blade. Might also want to consider the impact of Coronavirus on Chinese oil consumption. Why do investors have an obsession with bottom fishing instead of buying what is actually going up in a bull market?
    https://www.cnbc.com/video/2020/02/03/jim-cramer-claims-there-is-no-more-money-to-made-in-oil-and-gas-stocks.html

  5. still_learning Says:

    re #4:

    Larry, it could be something to do with the fact that we (boomers) are all children of children of the depression? We’ve been imprinted to always look for a bargain first, even at the expense of value …sigh. There’s a whole marketing and advertising industry built around this imprint.

    Bernie/AB

  6. Ron/BC Says:

    KC

    DE is a bucking bronco stock with extreme volatility. Oddly enough it continues to see the 50ema bounce off the 200ema without breaking below it and price does seem to be trending higher regardless. Price seems to have a ‘thing’ with $168. Very dangerous stock to trade.

    VET.to is still a sick puppy that just can’t reverse it’s trend to up. Price needs to clear 23.50 resistance and its year and a half downtrendline to breakout and be bullish.

    https://stockcharts.com/h-sc/ui?s=DE&p=D&yr=5&mn=0&dy=0&id=p34530469787&a=721227540

    https://stockcharts.com/h-sc/ui?s=VET.TO&p=D&yr=3&mn=0&dy=0&id=p13773613414&a=678400254

  7. Larry/ON Says:

    This is what is working in the market

    https://www.cnbc.com/2020/02/15/investors-are-flocking-to-the-largest-us-growth-stocks-as-concerns-rise-over-the-global-economy.html
    Vanguard Mega Cap Growth ETF – Strip out the bottom two and there is your list. You could create a portfolio with those 8 names and maybe add a little NVDA and SHOP

    1 Microsoft Corp.
    2 Apple Inc.
    3 Alphabet Inc.
    4 Amazon.com Inc.
    5 Facebook Inc.
    6 Visa Inc.
    7 Mastercard Inc.
    8 Home Depot Inc.
    9 Comcast Corp.
    10 Boeing Co.

  8. Bernie Says:

    Ron/BC,
    I graphed and tested your 50,200,50 Modified MACD Histogram method for buying/selling on a number of my holdings. It works quite well in most instances but not all the time as you stated. For example in the weekly chart for Telus (T.TO), linked below, it works beautifully until ~Sep 2015 then seems rather sensitive, ie; IMO the signals should have indicated a buy at ~ June 2016 and hold until current. Actually, if I were to have bought T.TO at anytime from the low of 2009 onward I see no reason to sell. Can the histogram parameters be set to reflect that kind of sensitivity? Perhaps, MacDs aside, I should just hold until the 200ema is breached. This would take a lot less time to for me to monitor my 35 RRIF holdings.
    https://stockcharts.com/h-sc/ui?s=T.TO&p=W&st=2000-01-03&en=2020-01-24&id=p22417612511

    You’ve suggested on a number of occasions that I should downsize into an ETF or two so its easier to monitor the portfolio…and because you feel ETFs are safer. Believe me I’ve thought about this a lot over the years but I’ve yet to find an ETF that has reliable, consistent and predictable distributions which would provide my target 4 to 4.5% yield which I can get with a diverse portfolio of dividend growth stocks. Dividend ETF distributions tend to be lumpy and irregular plus you can never tell whether they will go up or down. You would think they mimic their holdings but they don’t. Most of them vary their distributions from pay period to pay period. iShares is a little better, they adjust the payments every three months, BMO is fairly good at smoothing out payments over longer periods. The trouble is you still don’t know whether the payments will go up or down after they adjust them when you know damn well their ETF holdings dividends haven’t had any cuts or changes in their dividend streams. I’ve lessened my portfolio volatility by holding several different equity and fixed income ETFs to go along with my core diversity of 11 Canadian stocks plus one U.S. and one Int’l stock. Its mostly the stocks that increase their dividends for my inflation protection. I feel I have a good mix of fairly safe non-correlated securities. End-all, I’m basically running my own hedge fund. My overall yield is near 4.5%. That gives me a buffer of near 1% because my withdrawal rate is ~3.5% currently. I’ve yet to draw on my TFSA or my non-registered account income on a regular basis. Thats to come yet. I’m leaning towards drawing the same amount from my RRIF when I start to withdraw from my other accounts.

    Anyway, I’ve gone off topic and wordy again as I frequently do so I’ll stop here. Thanks again for sharing your TA expertise. I’ve learned a lot from you…just haven’t put it to regular use.

  9. Ron/BC Says:

    Bernie

    Nice chart! Keep in mind a 20 year chart makes the MACD breakdowns look like false signals but looked at over just a few years they would be very tradable signals.
    I have wondered about fine tuning the Modified MACD to the character of a stock or ETF and one would have to pick one they have confidence in and wish to hold and then start adjusting the MACD. Waiting for price to break below the 200ema would see a lot of profit lost as it takes time especially with a Weekly chart. I couldn’t stand the torture. $GOLD can be specially bad for choppiness and sideways trading.
    I’ve always looked for the flaw in indicators and found that anything based on moving averages needs to have a trend to work consistently. Doesn’t need a strong trend but does need a trend. When price gets choppy and goes sideways so will the Modified MACD and most anything based on them. The one factor that would suggest a long term investor hold his position in a choppy market with conflicting signals from various indicators is to hold the position as long as the 50ema is above the 200ema as that is the basis of a rising trend that is used by investors and fund managers to determine uptrends. And if both are still rising that is a big positive. Only thing is holding until the 50ema crosses below the 200ema means staying in long after price has deteriorated. With the ups and downs of price in most everything “when” price pulls back to the 50ema and even breaks below briefly, as long as price bounces back above the 50ema one could buy a position on the cross above again most of the time and play the bounce back. To be cautious in a sideways choppy market one could use a trailing stop after buying just in case the selloff isn’t finished yet and the bounce was just short covering. While one could continue holding the original position they could buy the bounce back above the 50ema with a trailing stop and just end up swing trading the bounce regardless if it’s just short covering. Over time a lot of income could be made with this bounce back above the 50ema. But the 50ema would need to be above the 200ema to suggest strength overall. And if price is below the 50ema this is very negative when it remains below and bounce backs to the 50ema tends to see price roll over as the 50ema is then resistance with smart traders selling and shorting price at the underside of the 50ema. Look at a bunch of charts and you’ll see this happen all the time.
    The dividend thing is complicated to me as I feel like an employee waiting for a raise.

  10. Wayne Says:

    Bernie,
    One of my fav commentators on BNN referred to ETF’s as a combination of “The good, bad and ugly.” He doesn’t touch them.

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