Tech Talk for Monday June 1st 2020

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Pre-opening Comments for Monday June 1st

U.S. equity index futures were lower this morning. S&P 500 futures slipped 4 points in pre-opening trade.

U.S. equity index futures were weaker despite strength in European and Far East equity markets. Notably stronger was the Shanghai Composite Index, up 63.08 to a 10 week high of 2915.43 following news that the China Caixin Purchasing Managers Index advanced from 49.4 in April to 50.7 in May.

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Eli Lilly advanced $4.55 to $157.50 after announcing start of human studies on a coronavirus treatment.

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Canopy Growth (WEED $24.21 Cdn) is expected to open lower after Stifel Nicolaus downgraded the stock from Buy to Sell.

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Pfizer dropped $2.54 to $35.65 after the company halted its breast cancer study.

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EquityClock’s Daily Market Comment

Following is a link:

http://www.equityclock.com/2020/05/31/stock-market-outlook-for-june-1-2020/

Note seasonality charts on the S&P 500 Index, U.S. Trade and Canadian GDP

The Bottom Line

Most equity markets moved higher again last week. North American equity markets are now extremely intermediate overbought. Spread of the coronavirus continues to be a major influence on equity prices. The VIX Index remains elevated, typical for North American equity markets between May and October.

 

Observations

The VIX Index (better known as the Fear Index) remained elevated last week.

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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 back from intermediate neutral to intermediate overbought. See Barometer chart at the end of this report.

Medium term technical indicators for Canadian equity markets remained 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) remained high last week, but have yet to show signs of peaking

Short term momentum indicators for Canadian markets and sectors also remained high last week, but has yet to show signs of peaking.

Year-over-year consensus earnings for S&P 500 companies were reduced slightly again last week in recognition of a greater impact by the coronavirus: 97% of companies have released quarterly results to date. According to FactSet, blended first quarter 2020 earnings have dropped 14.6% and blended revenues increased 0.8%. Second quarter 2020 earnings are expected to fall 43.1% (versus a drop of 42.9% last week) and revenues are expected to drop 11.5%. Third quarter earnings are expected to fall 24.9% (versus a fall of 24.8% last week) and revenues are expected to decrease 5.7%. Fourth quarter earnings are expected to decrease 12.5% (versus a decrease of 12.4% last week) and revenues are expected to decline 1.4%. Earnings for all of 2020 are expected to decrease 21.1% (versus 20.8% last week) and revenues are expected to decrease 4.0% (versus 3.9% last week). Earnings for all of 2021 are expected to increase 28.8% (versus 27.8 last week) and revenues are expected to increase 8.6%.

 

Economic News This Week

April Construction Spending to be released at 10:00 AM EDT on Monday is expected to drop 6.0% versus a gain of 0.9% in March.

May ISM Manufacturing Index to be released at 10:00 AM EDT on Monday is expected to improve from 41.5 in April to 43.5.

May ADP Employment Report to be released at 8:15 AM EDT is expected to report a job loss of 9.500 million versus a loss of 20.236 million in April.

April Factory Orders to be released at 10:00 AM EDT on Wednesday are expected to drop 14.6% versus a decline of 10.4% in March.

May ISM Services Index to be released at 10:00 AM EDT on Wednesday is expected to improve from April from 41.8 to 43.0.

Bank of Canada releases its interest rate decision at 10:00 AM EDT on Wednesday.

European Central Bank releases its Monetary Policy statement at 7:45 AM EDT on Thursday. Rates are expected to remain the same at 0.0%.

First quarter Non-farm Productivity to be released at 8:30 AM EDT on Thursday is expected to drop 2.5 versus a gain of 1.2 in the fourth quarter.

April U.S. Trade Deficit to be released at 8:30 AM EDT on Thursday is to be $41.00 billion versus a deficit of $44.40 billion in March.

April Canadian Trade Balance to be released at 8:30 AM EDT on Thursday is expected to be a deficit of $2.00 billion versus a deficit of $1.41 billion in March.

May U.S. Non-farm Payrolls to be released at 8:30 AM EDT on Friday is expected to drop 10.00 million versus a deficit of 20.50 million in April. May Unemployment Rate is expected to increase to 19.6% from 14.7% in April. May Average Hourly Earnings are expected to increase 0.7% versus an increase of 4.7% in April.

May Canadian Employment to be released at 8:30 AM EDT on Friday is expected to drop 4.000 million versus a drop of 1.993 million in April. May Unemployment Rate is expected to increase to 19.6% from 14.7% in April.

 

Selected Earnings Reports This Week

Six more S&P 500 companies are scheduled to report quarterly results this week.

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Trader’s Corner

Note changes in seasonal ratings.

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for May 29th 2020

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Green: Increase from previous day

Red: Decrease from previous day

 

Commodities

Seasonal/Technical Commodities Trends for May 29th 2020

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Green: Increase from previous day

Red: Decrease from previous day

 

Sectors

Daily Seasonal/Technical Sector Trends for May 29th 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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Technical Notes

The U.S. Dollar Index moved below 98.35 setting an intermediate downtrend.

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Coffee ETN moved below $8.30 to an all-time low extending an intermediate downtrend.

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Uranium ETF moved above $11.19 extending an intermediate uptrend.

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CCL Industries, a TSX 60 stock moved above $48.28 extending an intermediate uptrend.

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Telus, a TSX 60 stock moved above $23.79 setting an intermediate uptrend.

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Xilinx, a NASDAQ 100 stock moved above $91.60 extending an intermediate uptrend.

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Verisk Analytics, a NASDAQ 100 stock moved above $171.42 to an all-time high extending an intermediate uptrend.

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S&P 500 Momentum Barometer

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The Barometer advanced last week from 82.77 to 94.99 after reaching an all-time high on Thursday at 95.99. It is extremely intermediate overbought, but has yet to show signs of peaking.

 

TSX Momentum Barometer

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The Barometer advanced last week from 78.12 to 87.89. It is extremely overbought, but has yet to show signs of peaking.

 

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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7 Responses to “Tech Talk for Monday June 1st 2020”

  1. Pat/Vic Says:

    Mary,
    Interesting conversation with Ron regarding TLRY…I have started watching it and even made a few bucks! Thank you both.
    And thanks to the person that suggested Yahoo Finance for free charts..looks good so far.
    Cheers,Pat

  2. Mary Says:

    Pat/Vic

    You are welcome. Hope Ron/BC took the trade under $10 last week. All thanks to Ron/BC. Watch gold, I read time to take profits. I did trade JDST, made some profit and exit.
    Good luck with your trades.

  3. Ana Says:

    $SPX Futures

    https://invst.ly/q-ano

  4. Ana Says:

    $SPX

    https://invst.ly/q-asd

  5. Paula Says:

    Mary, re your #2: Well done on your bearish gold trade. Where did you read “time to take profits”?

    Ana, thanks for #3 and #4 S&P futures charts. The rising wedge look bearish but still going up. Is that how you see it? Do you wait for a break of the lower line or try to anticipate it?

  6. Mary Says:

    Paula

    RE #5… I listened to Stephen Whiteside report and also read a report from someone from Forex signals, that I believe is with VentorVest. I just heard Jim Cramer said to lighten up on gold as it may have one more leg up. Do your own Due Diligence please.

  7. Ana Says:

    #5. Paula,

    The rising wedges never reach the top. I went short with the double top on the futures chart at 3058.56.

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