Tech Talk for Tuesday March 17th 2020

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Pre-opening Comments for Tuesday March 17th

U.S. equity index futures were higher this morning. S&P 500 futures were up 25 points in pre-opening trade.

Index futures were virtually unchanged following release of February Retail Sales at 8:30 AM EDT. Consensus was a gain of 0.2% versus an increase of 0.3% in January. Actual was a decline of 0.5%. Excluding auto sales, consensus was a gain of 0.2% versus an increase of 0.3% in January. Actual was a decline of 0.4%.

Procter & Gamble added $3.55 to $112.05 after Deutsche Bank raised its rating from Hold to Buy.

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Microsoft added $3.18 to $138.60 despite a drop in target price by Deutsche Bank from $200 to $180.

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Wedbush added Amazon, Facebook and Regions Financial to its Best Ideas List

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EquityClock’s Daily Market Comment

Following is a link:

http://www.equityclock.com/2020/03/16/stock-market-outlook-for-march-17-2020/

Note seasonality chart on iShares U.S. REIT.

 

Observation

The Dow Jones Industrial Average recorded its largest point loss in history yesterday. The decline was notable in late trading following President Trump’s confirmation that control of the coronavirus has yet to be achieved.

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The VIX Index responded by closing at an all-time closing high.

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StockTwits released yesterday

Nil

 

Trader’s Corner

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for March 16th 2020

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Green: Increase from previous day

Red: Decrease from previous day

 

Commodities

Daily Seasonal/Technical Commodities Trends for March 16th 2020

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Green: Increase from previous day

Red: Decrease from previous day

 

Sectors

Daily Seasonal/Technical Sector Trends for March 16th 2020

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Green: Increase from previous day

Red: Decrease from previous day

 

S&P 500 Momentum Barometer

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Percent of S&P 500 stocks trading above their 50 day moving average slipped yesterday to 1.80. Percent remains deeply intermediate oversold and has yet to show signs of bottoming.

 

TSX Momentum Barometer

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Percent of TSX stocks trading above their 50 day moving average dropped to 0, an all-time high. Percent is deeply intermediate oversold, but has yet to show signs of bottoming.

 

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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12 Responses to “Tech Talk for Tuesday March 17th 2020”

  1. Roy Says:

    Is the drop in the price of oil going to be a boost to the economy?

  2. Canuck2004 Says:

    Roy

    Yes, in the USA it is like a tax cut or a pay raise. Plus the zero interest rates and other stimulus will kick start the US economy out of this temporary mess.

    China is recovering now and returning to normal. In a few months so will the US.

    The danger here is the US will be over stimulated later this year and we may get inflationary pressures….

  3. Canuck2004 Says:

    Markets opened a little punchy this morning, as to be expected after such a big drop yesterday. Trying to find its legs. Adding to positions here and there on weakness. We will recover and the markets will repair themselves.

  4. Roy Says:

    Thanks Canuck2004 – you confirmed it for me.
    I dont think it will take too long for the US to get back on their feet either
    When all the doom sayers/brokerage houses come out with dire predictions, I think they are hoping to get the sheeple to sell so they can buy much lower and then start to upgrade stocks. Matter of time.

  5. Bernie Says:

    Canuack2004,

    FYI, I submitted a reply to your comment last night but it got held up for approval by the TMI moderators. I think the holdup was because I included 4 links. Anyway, it finally passed inspection and is there now.

    I wish I had held back some dry powder so I could take advantage of all the bargains out there now. It tough for me to add in new money during my retirement but I was able to add in monthly back in 2008-09. For me these days a new purchase is basically a reshuffling the deck because I stay fully invested.

  6. Bernie Says:

    dave/ab,

    Thanks for your comments last night. I can’t take credit for my comments regarding the negative correlation between SPY and TLT. Its been commented on many times on Seeking Alpha. Some of the non-traders there have even advocated a permanent hold of nothing but a 60% SPY/40% TLT (with a once annual rebalance)in their portfolio. That 60/40 mix would have gotten you an annualized 9.35% CAGR in Aug 2002-Feb 2020 with a worst year TR of -8.51% (2008). My preferred 50/50 mix percentages are 9.22% CAGR with a worst year of -3.08% (2018). It was -1.44% in 2008. For comparison SPY’s numbers are 9.05% CAGR and worst year -36.81% (2008).

    That might be ok pre-retirement but not friendly for a retired DGI who wants to live solely on their income. I prefer my portfolio yield to be between 4% and 4 1/2% with a drawdown below that for safety. Before the sell-off last month my RRIF portfolio yield was 4.36% with a 3.42% withdrawal amount. At yesterdays close my percentages shot up to 5.58% yield with a 4.38% withdrawal. I have further “safe” income generating in my TFSA and N/R account which I haven’t tapped into yet beyond paying off mortgages in 2012 and 2017.

  7. Roy Says:

    anyone have thoughts on the oil stocks like SU and CNQ? Stock price and dividends look appetizing,but will they be cut?

  8. Canuck2004 Says:

    Roy

    Oil has been in a bear since 2015…until you see upward pressure on oil, I would avoid. Don’t buy until you see the turn in the market.

    Pipelines on the other hand are the chicken way to own oil, as they are more like utilities and are being crushed without mercy for no good reason. They don’t produce oil just transport it on long term contracts. I have always liked pipelines and am buying on weakness in here. Great dependable yields as per long term contracts.

  9. Roy Says:

    Thanks Canuck2004

  10. Ron/BC Says:

    The Canadian dollar is selling off sharply. Next support is the early 2016 low of 68.20. Will have to consider switching back to CD$ at that point if touched. I’ve gotten used to having U.S.$ in my RIF so it would be a difficult decision. Will have to deal with that if and when it occurs. At some point when this virus issue resolves there should be a dramatic surge in buying again that could be inflationary. That would help the CD$ being viewed as a commodity currency but it’s not an issue yet. Doesn’t hurt to look down the road with the bright lights on to get an idea of what may be ahead.

    https://stockcharts.com/h-sc/ui?s=%24CDW&p=D&yr=14&mn=0&dy=0&id=p30439402202&a=689160398

  11. dave/ab Says:

    Hi Bernie

    Thank you for your insight. I might have to rethink my international portfolio. I’m a spy, visa, JPM & Dis for US Then I use zwe, hcn and xec for international minus Canada and US

  12. Bernie Says:

    dave/ab

    I shouldn’t have referred to SPY & TLT as polar opposites as they do sometimes track in the same direction for a short period of time, like now. TLT has had more downside than upside since Mar 9th. I have no way of knowing the duration of the down trend but feel confident in holding a TLT/SPY mix long term if I can incorporate it into my portfolio. I won’t give up my core dividend growth stocks but could trim some of my ETFs. End-all I want to maintain a portfolio yield in the 4% to 4.5% range with a set it and forget it mix. I don’t wish to trade, I’m not good with it.

    I tinkered around a bit more today with various mixes of SPY/TLT, VTI/TLT and SPLV/TLT using the Backtest Portfolio tool within “Portfolio Visualizer”. I wanted to determine the optimum mix within each grouping, ie; the best combination of (A) CAGR, (B) Stdev, (C) Best Year, (D) Worst Year, (E) Max Drawdown and (F) US Mkt Correlation. I feel the best mix for each security group were:

    Spy(40%)/TLT(60%) A= 9.01%, B= 8.20%, C= 21.76 (2014)%, (D)=-2.79% (2018), (E)=-15.87%, (F)= 0.33%

    VTI(45%)/TLT(55%) A= 9.36%, B= 8.04%, C= 21.57 (2019)%, (D)=-3.23% (2018), (E)=-15.90%, (F)= 0.48%

    SPLV(70%)/TLT(30%) A= 11.09%, B= 7.73%, C= 23.58 (2019)%, (D)=-0.61% (2018), (E)=-7.62%, (F)= 0.43%

    The SPY/TLT and VTI/TLT test periods were (Aug 2002-Feb 2020). The test period for SPLV/TLT was much shorter at (Jun 2011-Feb 2020) due to SPLV’s inception date of May 05, 2011. I wanted to link the Portfolio Visualizer test data & results but wasn’t able to save them because this is now only available to subscribers. I was able to save the images via “print screen” but couldn’t figure out a way to copy the images into this posting.

    Attached are links to basic long term weekly graphs of SPY/TLT, VTI/TLT and SPLV/TLT. I wanted to display the negative correlation of each grouping. https://stockcharts.com/h-sc/ui?s=TLT&p=W&st=2002-07-22&id=p05095137794
    https://stockcharts.com/h-sc/ui?s=TLT&p=W&st=2002-07-22&id=p89686404128
    https://stockcharts.com/h-sc/ui?s=TLT&p=W&st=2011-05-05&id=p95800876957

    Its quite apparent that there is little volatility in Low Volatility SPLV lol, much less than there is in TLT. Its a shame the back tests couldn’t be done over a longer time frame to see how the SPLV/TLT relationship would fare through a significant recession.

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