Tech Talk for Tuesday March 10th 2020

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Pre-opening Comments for Tuesday March 10th

U.S. equity index futures were sharply higher this morning. S&P 500 futures were up 80 points in pre-opening trade. Index futures responded to news that the Trump Administration will announce fiscal measures later today to offset coronavirus fears.

Crude oil recovered $3.11 to $34.24 per barrel on rumors that Russia and key OPEC members will resume negotiations on production quotas.

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UPS gained $3.50 to $90.68 after Stifel Nicolaus upgraded the stock from Hold to Buy.

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Dick’s Sporting Goods advanced $4.67 to $39.15 after reporting higher than consensus fourth quarter sales and earnings. The company also increased its dividend.

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JP Morgan and Stifel Nicolaus substantially lowered target prices on oil service companies. For example, JP Morgan slashed its target price on Halliburton (HAL $9.15) from $25 to $14 and Stifel Nicolaus dropped its target price on Halliburton from $30 to $13.

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EquityClock’s Daily Market Comment

Following is a link:

http://www.equityclock.com/2020/03/09/stock-market-outlook-for-march-10-2020/

 

Jon Vialoux on BNNBloomberg’s Market Call Tonight

 

Recorded last night. Following are links:

 

Market Comment

https://www.bnnbloomberg.ca/video/jon-vialoux-s-market-outlook~1918256

Past Picks

https://www.bnnbloomberg.ca/video/jon-vialoux-s-past-picks~1918275

Top Picks

https://www.bnnbloomberg.ca/video/jon-vialoux-s-top-picks~1918290

 

Observations

The drop in equity markets was prompted by lower crude oil prices

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Lower oil equities and related ETF prices were the focus on both sides of the border.

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StockTwits released yesterday @EquityClock

Another 58 S&P 100/NASDAQ 100 stocks broke short and intermediate support levels just after the opening.

TSX 60 stocks breaking short/intermediate support this morning: $TRP.CA $BIP/UN.CA $ARX.CA $ENB.CA $CCO.CA $CNR.CA $BCE.CA $CP.CA $MG.CA $RCI.B.CA $OTEX.CA $SJR.B.CA $FTS.CA $TECK.B.CA

 

Trader’s Corner

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for March 9th 2020

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Green: Increase from previous day

Red: Decrease from previous day

 

Commodities

Daily Seasonal/Technical Commodities Trends for March 9th 2020

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Green: Increase from previous day

Red: Decrease from previous day

 

Sectors

Daily Seasonal/Technical Sector Trends for March 9th 2020

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Green: Increase from previous day

Red: Decrease from previous day

 

Technical Scoop

Compliments of David Chapman and www.EnrichedInvesting.com

Headline reads, March lion, COVID volatility, golden performer, slashed rates, ongoing repo, bear territory, oil war” Following is a link:

http://enrichedinvesting.com/wp-content/uploads/2020/03/March-lion-COVID-volatility-golden-performer-slashed-rates-ongoing-repo-bear-territory-oil-war.pdf

 

S&P 500 Momentum Barometer

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The Barometer plunged 9.22 to 5.01 yesterday. It remains deeply oversold, but has yet to show significant signs of an intermediate bottom.

 

TSX Momentum Barometer

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The Barometer plunged 16.18 to a new 15 month low. It remains intermediate oversold, but has yet to show significant signs of an intermediate bottom.

 

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




9 Responses to “Tech Talk for Tuesday March 10th 2020”

  1. wsto Says:

    I came across the following snippets from TDW. Essentially it is saying the market has likely bottomed when corporate bond fund outperforms treasury fund. I don’t have a way to back test this theory so have to take it at face value. Does any one have thought on this?

    “We believe that an important bond market indicator to follow for the potential direction and confirming a bottom in equities will likely be the relative performance of corporate bonds. When we look at the past three major equity corrections in Q3/2011, Q1/2016,and Q4/2018, the relative strength of corporate bonds was an important leading confirmation both to the downside (a leading indicator) and for the recovery (acoincidental confirming indicator) in equities. For our analysis, we view the relative performances of the iShares iBoxx High Yield Corporate Bond ETF (HYG-US)and the iShares Investment Grade Corporate Bond ETF (LQD-US) against the iShares 7-10 Year Treasury Bond ETF (IEF-US). In Exhibits 1 and 2, we chart therelative performance ratio of HYG/IEF and LQD/IEF versus the S&P 500 ETF (SPY-US).

    We believe that if corporate bonds continue to underperform, we are likely to see further downside in equities. This would likely be the result of rising recession fears, as we saw in those prior periods. The steep recent relative weakness in the HYG/IEF ratio is a major risk for lower-quality, higher-debt companies (e.g. energy). However,the S&P 500 is a higher-quality, technology-heavy index and now correlates more to the direction of LQD/IEF, in our view. We believe that this ratio will be important to follow. As seen in Exhibits 1 and 2, the relative performance of corporate bond ETFs has been a consistent leading indicator on the downside.”

  2. Paula Says:

    Wsto re #1,
    Thanks for this. Yes the bond market gives us a lot of important information. Do you have a link?

  3. Paula Says:

    Rick, Ron/BC
    RE: discussion about VIX/VXN spikes possibly being indicators of good time to go long. Ciovacco’s weekly video was on this topic:

    https://www.youtube.com/watch?v=ddTRrc0A7Vo

    Here is a link to his “Short Takes” where earlier and later comments can be seen:
    https://www.ccmmarketmodel.com/short-takes

    I bought a small position in XLK today – “toe dipping”. This was before I read your comments yesterday, just catching up with yesterday’s comments today.
    XLK does tend to outperform SPY if it is a bull market. MACD is not encouraging but the bullish divergences on RSI(8) and ADX –DI are:

    http://schrts.co/bvCVRYVi

  4. wsto Says:

    Paula re #2

    The snippet came from the March TD report, you might need to be a client in order to have access but can try to poke around here and see if you can get to it

    https://www.td.com/ca/markets-research/markets/

  5. Ron/BC Says:

    Paula

    Don’t know if you recall my charts of $VIX using the Modified MACD 50,200,1 with a 50ema signal line and several other combinations some time ago or not but it is easy to use this one for long term investors investing in $SPX type ETFs or stocks that track it reasonably well. You can see with the Green and Red dotted vertical lines they give a lot of important information. How this combination works with the $VIX is you buy and hold when the Modified MACD 50,200,1 orange line crosses below the blue zero line. And you exit the $SPX when it crosses above the blue zero line. If that’s all you did you’d do ok. But to make the buy signals more timely instead of waiting for the orange Modified MACD line to cross the blue zero line you buy the $SPX when it crosses its 50ema line even with it above the zero line. And you continue to hold the $SPX trade as you see it drop below the blue zero line and only sell the $SPX trade when the orange M.MACD line crosses back above the blue zero line. You don’t react to crossovers of the orange and blue lines when below the thick blue horizontal zero line. Much easier to see than explain. There are occasional brief cross overs as the $VIX is a basket case of an indicator and is prone to whipsaws. So this is one way to “smooth out” the erratic nature of the $VIX and make it work for you and capture the bulk of the $SPX gains and keep out of trouble to boot. I’ve used green dotted arrows to show how you would have done using this. So what we’d be waiting for next is the orange M.MACD line to cross below the blue signal line for a buy signal. And no it wont catch the highs and lows but both are well underway when crossovers occur without whipsaws like most indicators cause.

    https://stockcharts.com/h-sc/ui?s=%24VIX&p=D&yr=4&mn=0&dy=0&id=p05581754596&listNum=1&a=673536387

  6. Paula Says:

    Wsto re #4
    Thanks for the link. I am a client but I could not find that particular item. I have been thinking that the bond market holds a lot of clues and will look more closely at these ratio charts: HYG/IEF and LQD/IEF versus the S&P 500 ETF (SPY-US).

  7. Paula Says:

    Ron/BC

    Thanks for the VIX chart and excellent explanation of your indicators. I did not recall it and for some reason I had an old VIX chart which I had labelled as yours but there were no indicators on it. I like the way you have smoothed out its erratic nature to avoid whipsaws and still be timely. I have now saved this VIX chart and marked it as one of the very important ones to watch.

  8. Ron/BC Says:

    Paula

    One doesn’t have to use a 50ema with the Modified MACD 50,200,1. And to keep it simple one could simply buy and hold the $SPX when the Modified MACD (orange line) is below the zero line. And exit on a cross above the zero line. But buying on a cross down of the Modified MACD orange line below the blue 50ema signal line even when well above the zero line in the bear mode area would get you in the $SPX trade much earlier than waiting for it to cross below the zero line buy signal and with a new uptrend in place. Then just hang on and at some point that Modified MACD line will cross below the zero line in bull mode and then back up over the zero line for a sell signal. The buy and sell signals are not at exact price highs or price lows which is good as they must prove themselves for a short while to be sure an uptrend or downtrend is in place. So now we wait for the Modified MACD orange line to cross below its 50ema blue line for a buy signal. Will be interesting to see how this plays out. I’ve spent a lot of time on various combinations of this and not taking buy and sell signals when in the bullish area below the zero line and just enjoying the price ride up despite the $SPX’s minor zig zags below the zero line works well, along with buying the $SPX when the M.MACD (orange line)is crossing down below the 50ema blue even when in the bear area which is above the zero line.

  9. wsto Says:

    Paula Re 6

    Log onto webbroker at TD, go to research->market->reports, look or search for ‘TDSI Action List’

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