Tech Talk for Monday March 2nd 2020

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Pre-opening comments for Monday March 2nd

U.S. equity index futures were lower this morning. S&P 500 futures were down 10 points in pre-opening trade.

Index futures moved in a wide range overnight. Dow Jones Industrial Average futures initially moved sharply lower, then sharply higher, then sharply lower again for a 1,000 point swing. They currently are down 200 points.

Asian equity markets were mostly higher. The Shanghai Composite Index jumped 90.63 to 2970.93.

Precious metals prices were mostly higher. Gold jumped $36.30 to $1,603.00 per ounce.

Apple gained $3.84 to $273.36 after Oppenheimer upgraded the stock from Perform to Outperform. Target price is $320.

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Pan American Silver gained $0.31 to $20.11 after Deutsche Bank raised its rating from Hold to Buy.

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Verizon added $054 to $54.70 after Cowen upgraded the stock from Market Perform to Outperform.

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EquityClock’s Daily Market Comment

Following is a link:

http://www.equityclock.com/2020/02/29/stock-market-outlook-for-march-2-2020/

Note seasonality charts on U.S. Retail Trade, Durable Goods Orders and Canadian GDP.

Greg Schnell’s “Market Buzz”

Greg released a video over the weekend entitled “Analyzing the Carnage”. Following is a link:

https://www.youtube.com/watch?v=u4OHgVLC5tU&feature=emb_rel_end

 

The Bottom Line

A “Black Swan event” occurred last week. Equity markets around the world plunged on news that the coronavirus expanded beyond China and into the communities of several nations. That’s a classic definition of a Pandemic. Note the “glimmer of hope” in the first observation offered below and a comment released on Saturday by Martin Pring entitled,” Three charts that suggest an interim bottom is at hand”.

https://stockcharts.com/articles/chartwatchers/2020/02/three-charts-that-suggest-an-i-339.html

 

Observations

Equity markets recovered sharply during the last 20 minutes of trading on Friday. The Dow Jones Industrial Average gained 600 points on rumours that the Federal Reserve will reduce its Fed Fund rate by 50 basis points over the weekend.

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) moved sharply lower last week and have reached deep intermediate oversold levels. Signs of a bottom have yet to appear. See end of this report for charts.

Medium term technical indicators for Canadian equity markets also moved sharply lower last week and also have reached intermediate oversold levels. See end of this report for charts.

Most short term technical indicators for U.S. markets and sectors (20 day moving averages, short term momentum indicators) moved lower again last week

Short term technical indicators for Canadian markets and sectors also moved lower last week.

Consensus for fourth quarter earnings by S&P 500 companies was virtually unchanged last week: 95% of companies have released quarterly results to date. According to FactSet, blended fourth quarter earnings on a year-over-year basis are expected to increase 0.9% and fourth quarter revenues are expected to increase 4.0% (versus 3.6% last week).

Beyond fourth quarter reports, year-over-year consensus earnings for S&P 500 companies turn positive and earnings gains accelerate as the year progresses, albeit at a slower rate than indicated last week. Estimates have been reduced to reflect coronavirus concerns. According to FactSet, first quarter 2020 earnings are expected to increase 0.7% on a year-over-year basis (versus 1.5% last week) and revenues are expected to increase 4.2%. (versus 4.4% last week). Second quarter 2020 earnings are expected to increase 4.6% (versus estimate of 4.7% last week) and revenues are expected to increase 4.6% (versus 4.8% last week). Third quarter earnings are expected to increase 9.1% (versus previous estimate of 9.5%) and revenues are expected to increase 6.0% (versus 6.1% last week). Fourth quarter earnings are expected to increase 11.4% (versus previous estimate of 11.5%) and revenues are expected to increase 5.5% (versus 6.0% last week). Earnings for all of 2020 are expected to increase 7.4% (versus a previous estimate of 7.7%) and revenues are expected to increase 5.0%.(versus previous estimate of 5.1%).

 

Economic News This Week

January Construction Spending to be released at 10:00 AM EST on Monday is expected to increase 0.7% versus a decline of 0.2% in December.

February ISM Manufacturing Index to be released at 10:00 AM EST on Monday is expected to slip to 50.2 from 50.9 in January.

February ISM Services Index to be released at 10:00 AM EST on Wednesday is expected to slip to 54.5 from 55.5 in January

Bank of Canada releases its interest rate decision at 10:00 AM EST on Wednesday. Overnight lending rate to major banks is expected to remain unchanged at 1.75%.

Beige Book is released at 2:00 PM EST on Wednesday.

OPEC meeting to determine crude oil production by members is held on Thursday and Friday.

Fourth quarter Non-farm Productivity to be released at 8:30 AM EST on Thursday is expected to increase at an annualized rate of 1.4% versus a decline of 0.2% in the third quarter.

January Factory Orders to be released at 10:00 AM EST on Thursday are expected to drop 0.3% versus a gain of 1.8% in December.

Weekly Jobless Claims to be released at 8:30 AM EST on Thursday are expected to slip to 212,000 from 219,000 last week

February Non-farm Payrolls to be released at 8:30 AM EST on Friday are expected to drop to 175,000 from 225,000 in January. February Unemployment Rate is slip to 3.5% from 3.6% in January. February Average Hourly Earnings are expected to increase 0.3% versus a gain of 0.2% in January.

January U.S. Trade Deficit to be released at 8:30 AM EST on Friday is expected to slip to $48.20 billion from $48.90 billion in December

January Canadian Trade Deficit to be released at 8:30 AM EST on Friday is expected to increase to 610 million from $400 million in December.

Canadian February Employment to be released at 8:30 AM EST on Friday is expected slip to 10,000 from 34,500 in January. February Unemployment Rate is expected to increase to 5.6% from 5.5% in January.

 

Selected Earnings News This Week

Another 13 S&P 500 companies are scheduled to release fourth quarter results this week. Focus in Canada is on reports to be released by Canadian energy companies.

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Trader’s Corner

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for February 28th 2020

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Green: Increase from previous day

Red: Decrease from previous day

 

Commodities

Daily Seasonal/Technical Commodities Trends for February 28th 2020

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Green: Increase from previous day

Red: Decrease from previous day

Sectors

Daily Seasonal/Technical Sector Trends for February 28th 2020

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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

S&P 100 and NASDAQ 100 stocks breaking intermediate support after opening:$AMZN $CPRT $LBTYA $ROST $LULU $KMI $ALL $BLK $MET $ISRG $MRK $AGN $FAST $ACN $ADI $AMAT $CDNS $GOOG $GOOGL $ATVI $MXIM $SO

Notable U.S. listed ETFs breaking intermediate support this morning: $SLV $XLK $XLY $XLU $DIA $RSP $BBH $IBB $SMH $SOXX $IYR $GDX $GDXJ

TSX 60 stocks breaking intermediate support levels this morning include $FTS.CA $MRU.CA $WN.CA $ATD.B.CA $T.CA $BCE.CA

 

S&P 500 Momentum Barometers

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Percent of S&P 500 stocks trading above their 50 day moving average virtually collapsed last week from 57.51 to 3.41. Percent is deeply oversold, but has yet to show signs of bottoming.

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Bullish Percent Index for S&P 500 stocks plunged last week from 76.80 to 22.20. The Index is oversold, but has yet to show signs of bottoming.

 

TSX Momentum Barometers

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Percent of TSX stocks trading above their 50 day moving average virtually collapsed last week from 59.46 to 15.00. Percent is deeply oversold, but has yet to show signs of bottoming.

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Bullish Percent Index plunged last week from 72.73 to 52.81. The Index changed from intermediate overbought to intermediate neutral on a drop below 40.00.

 

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




3 Responses to “Tech Talk for Monday March 2nd 2020”

  1. Ron/BC Says:

    The $SPX is trapped in a 170 point range between 3025 and 2855. Watch for a break of either level to determine direction. As always, the break must hold not just have a nose poke threw to trigger buys and sells.

    Long term charts show price has only had a minor pullback so far and there is far more to go on the downside within a typical correction. The uptrendline from the 2009 low is presently at 2500 and the Fibonacci 38.2% retracement level which is considered a mild retracement within a bull market is presently at 2130 level.

    https://stockcharts.com/h-sc/ui?s=%24SPX&p=D&yr=1&mn=6&dy=0&id=p01568871853&a=693577605

    https://stockcharts.com/h-sc/ui?s=%24SPX&p=M&st=1990-03-10&id=p64075137427&a=673066407

  2. Bernie Says:

    The Problem With Buy and Hold (if your objective is total return)
    http://www.alphaim.net/power_newsletter.html

  3. Ron/BC Says:

    Bernie

    Excellent article,thanks.

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