Tech Talk for Monday May 11th 2020

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Pre-opening Comments for Monday May 11th

U.S. equity index futures were lower this morning. S&P 500 futures were down 31 points in pre-opening trade.

FedEx slipped $1.19 to $119.25 after Deutsche Bank lowered its target price from $142 to $128

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Marriott dropped $1.93 to $85.24 after reporting less than consensus first quarter earnings.

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Under Armour fell $0.33 to $9.65 after reporting a higher than expected adjusted first quarter loss.

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AMC advanced $1.54 to $5.16 on reports that Amazon has expressed a buyout interest.

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EquityClock’s Daily Market Comment

Following is a link:

http://www.equityclock.com/2020/05/09/stock-market-outlook-for-may-11-2020/

Note seasonality charts on U.S. Non-farm Payrolls and Canadian Employment

The Bottom Line

Equity markets moved higher again last week. North American equity markets advanced from intermediate neutral to intermediate overbought. Spread of the coronavirus continues to be a major influence on equity prices. The VIX Index remains elevated.

Buy when it snows, sell when it goes”! The expression originally appeared in my CMT thesis written in 1992. The thesis noted that since 1950 volatility in North American equity indices is higher each year from end-of-April to mid-October, but percent return during the period averages close to zero with some periods slightly higher and some periods slightly lower. Virtually all of North American equity returns are realized each year from mid-October to the end of April. On Friday, it briefly snowed in southern Ontario. An omen??

What about this year? Current equity North American equity indices suggest that history is about to repeat, implying continuation of higher than average volatility and little or no return by equity indices between now and mid-October. However, selected sector opportunities exist between end- of-April and mid-October this year, notably in the Healthcare and Precious Metals sectors. Both sectors were highlighted in Jon Vialoux’s Money Show presentation on Thursday.

Observations

The VIX Index (better known as the Fear Index) peaked in the third week in March, typical of a recovery phase for the U.S. equity market. However, it remains elevated..

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Seasonal influences for U.S., European and Far East equity indices historically have reached a peak in late April or early May. Canadian equity indices are the exception with a seasonal peak in late May.

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Medium term technical indicators for U.S. equity markets (e.g. Percent of S&P 500 stocks trading above their 50 day moving average) moved from intermediate neutral to intermediate overbought last week. See Barometer chart at the end of this report.

Medium term technical indicators for Canadian equity markets also moved from intermediate neutral to intermediate overbought last week. See Barometer chart at the end of this report.

Most short term short term momentum indicators for U.S. markets and sectors (20 day moving averages, short term momentum indicators) turned higher last week. Most sectors and indices remain above their 20 day moving average. In addition, most sectors and indices recorded an improvement in momentum.

Short term momentum indicators for Canadian markets and sectors also turned higher last week.

Year-over-year consensus earnings for S&P 500 companies were reduced significantly again last week in recognition of a greater impact by the coronavirus: 86% of companies have released quarterly results to date. According to FactSet, blended first quarter 2020 earnings have dropped 13.6% (versus a decline of 13.7% last week) and blended revenues increased 0.6% (versus an increase of 0.7% last week). Second quarter 2020 earnings are expected to fall 40.6% (versus a drop of 36.7% last week) and revenues are expected to drop 10.9% (versus a drop of 9.5% last week). Third quarter earnings are expected to fall 23.0% (versus a fall of 20.1% last week) and revenues are expected to decrease 5.2% (versus a decline of 4.3% last week). Fourth quarter earnings are expected to decrease 11.4% (versus a decrease of 9.4% last week) and revenues are expected to decline 1.2% (versus a decline of 0.5% last week). Earnings for all of 2020 are expected to decrease 19.7% (versus a previous decrease of 17.0%) and revenues are expected to decrease 3.4% (versus a previous decrease of 2.9%). Earnings for all of 2021 are expected to increase 26.9% and revenues are expected to increase 8.5%.

 

Economic News This Week

April Consumer Price Index to be released at 8:30 AM EDT on Tuesday is expected to decline by 0.7% versus a drop of 0.4% in March. Excluding food and energy, April Consumer Price Index is expected to slip 0.2% versus a gain of 0.1% in March.

April Producer Price Index to be released at 8:30 AM EDT on Wednesday is expected to slip 0.5% versus a drop of 0.2% in March. Excluding food and energy, April Producer Price Index is expected to be unchanged versus a gain of 0.2% in March

May Empire State Manufacturing Survey to be released at 8:30 AM EDT on Friday is expected to drop 65.00 versus a decline of 78.20 in April.

April Retail Sales to be released at 8:30 AM EDT on Friday are expected to drop 12.0 versus an 8.4% decline in March. Excluding auto sales, April Retail Sales are expected to drop 8.6% versus a drop of 4.2% in March.

April Industrial Production to be released at 9:15 AM EDT on Friday is expected to drop 11.0% versus a decline of 5.4% in March. April Capacity Utilization is expected to drop to 65.0% from 72.7% in March.

March Business Inventories to be released at 10:00 AM EDT on Friday are expected to slip 0.3% versus a decline of 0.4% in February.

May Michigan Consumer Sentiment to be released at 10:00 AM EDT on Friday is expected to decline to 68.0 from 71.8 in April.

 

Selected Earnings Reports This Week

Another 21 S&P 500 companies (including one Dow Jones Industrial company) are expected to report this week.

 

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Trader’s Corner

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for May 8th 2020

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Green: Increase from previous day

Red: Decrease from previous day

 

Commodities

Seasonal/Technical Commodities Trends for May 8th 2020

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Green: Increase from previous day

Red: Decrease from previous day

 

Sectors

Daily Seasonal/Technical Sector Trends for May 8th 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

Idexx Labs $IDXX, a NASDAQ 100 stock moved above $296.25 to an all-time high extending an intermediate uptrend.

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Base Metals ETN $DBB, one third each in copper, zinc and aluminum moved above $12.80 completing a double bottom pattern.

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Monster Beverages $MNST, a NASDAQ 100 stock moved above $64.44 resuming an intermediate uptrend.

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Silver Miners ETF $SIL moved above $33.75 resuming an intermediate uptrend.

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Mexico iShares $EWW moved above $30.81 completing a double bottom pattern.

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S&P 500 Momentum Barometer

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The Barometer advanced last week from 53.91 to 75.95. It moved from intermediate neutral to intermediate overbought on a move above 60.00.

 

TSX Momentum Barometer

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The Barometer advanced last week from 50.66 to 72.32. It moved from intermediate neutral to intermediate overbought on a move above 60.00.

 

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

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15 Responses to “Tech Talk for Monday May 11th 2020”

  1. sp Says:

    TD platform have always problem , not working today. anyone have problem

  2. sp Says:

    Nat gas any thought? UGAZ is trading as a day trader but 2nd thought buy and hold or no?

  3. dave/ab Says:

    Hi Bernie

    I hope these video helps with the copy past. I like videos to show me. I used CC versus listening to his accent.

    https://www.youtube.com/watch?v=q-saw-KiUSA

    https://www.youtube.com/watch?v=Z5-5m51GwS0

  4. Larry/ON Says:

    NVDA – New all-time high. NVDA’s nemesis AMD also up a lot today. Best saying is “All-time highs beget further new all-time highs.”
    AMZN – Looking really interesting almost recovering everything it lost after it posted earnings. This company represents the future of everything and IMO is going to make a major move higher.
    SHOP – Raised money issuing new shares representing around 1.75% of the share float. Excellent timing at a high price. It caused a small drop which was coming anyways after being overextended. Right back up toda.
    TNT.UN and REITS – I should have known better and bailed out of the token amount I had in TNT early last week. REITS are a terrible place to be in this economy.

  5. Paula Says:

    Here is a link to the Money Show that is on right now and next few days. I just listened to Alexander Elder again and he is seeing bearish divergences in the New High New Low index, so expects a retest of some kind:

    https://online.moneyshow.com/may-2020/platform/

  6. Paula Says:

    Here is a link to a recent article by Gary Shilling. He was being interviewed on BNN BLOOMBERG this morning but I can’t seem to find the link. Always seem to have trouble finding stuff on that website. He is quite bearish.

    https://www.bloombergquint.com/gadfly/stock-traders-should-heed-history

  7. Larry/ON Says:

    Covid-19 Pushes Digital Transformation
    “We’ve seen two years’ worth of digital transformation in two months.” Satya Nedella CEO MSFT – April 29, 2020.

  8. Ron/BC Says:

    Paula

    There is an old saying,”It’s hard to steer the boat when you’re up to your ass in alligators.” Right now I think everyone has a lot to think about. Me? I’m just carrying on and ignoring the drama………………

  9. Paula Says:

    Ron/BC
    Re your #8. Thanks! That’s a new one for me. I have not been not very active in the market the last couple of weeks, so you might say that I am finding lots to keep busy with outside of the market. As Elder says (paraphrasing), if the trade does not jump out and grab you by the face, maybe it’s just not a good idea.

    Good luck to all!

  10. Larry/ON Says:

    Tech Melt Up – MSFT $2 and change from its’ all-time high. APPL about 3.5% away from it’s all-time high. QQQ about 4% away from all-time high. QQQ presently doing a gap fill of the Feb 24th drop. I would like to see SPX clear 2955 resistance to keep this rally going. None of the indices are overbought so there is room to move though QQQ up at RSI 65.

  11. Ron/BC Says:

    Paula

    Well you can see the $SPX bumping up against the 200ema and Fibonacci 61.8% retracement level both of which are well known resistance points. BUTTTTTTTTTTTTTT you can also see the RSI 21 above the 50 line and the RSI 8 as well above the 50 line and the rising 20ema crossing back above the now rising 50ema and the Stochastics curled up at the 50 line. Sooooooooooooooo, “IF” you see price clear that 200ema and Fib 61.8% retracment point I think there are a pile of buy stops there that will cause a major rally especially with smart money chasing all the short sellers at that price point. So it’s “show down time” to see just who has the biggest…………bank roll and the strongest will. Might not be such a bad time to cuddle up with the dust bunnies under the bed,lol. I think I’ll go golfing again.

    https://stockcharts.com/h-sc/ui?s=%24SPX&p=D&yr=0&mn=10&dy=0&id=p25155020563&a=725299577

  12. Al Says:

    Paula, here is the link for Gary Shilling: https://www.mediaite.com/news/economist-gary-shilling-warns-quick-recovery-not-realistic-coronavirus-most-traumatic-event-in-the-world-since-world-war-ii/

  13. Bernie Says:

    dave/ab,

    Thanks for the video links. I’ll check them out when I get a chance!

  14. Paula Says:

    Al, thanks for the link.

  15. Ron/BC Says:

    The XIU.to is tracking the same as SPY.

    https://stockcharts.com/h-sc/ui?s=XIU.TO&p=D&yr=1&mn=6&dy=0&id=p89338723017&a=673066273

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