Tech Talk for Monday June 22nd 2020

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Pre-opening Comments for Monday June 22nd

U. S. equity index futures were higher this morning. S&P 500 futures were up 26 points in pre-opening trade.

Sherwin Williams added $0.33 to $585.00 after the company raised its second quarter sales outlook.

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Gap Stores gained $0.57 to $11.23 after Wells Fargo upgraded its recommendation on the stock from Underweight to Overweight. Target was increased from $8.00 to $19.

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KLA Tencor slipped $1.10 to $192.00 after Stifel Nicolaus raise its rating from Hold to Buy.

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Foot Locker slipped $0.29 to $27.80 after B.Riley downgraded the stock from Buy to Neutral.

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EquityClock’s Daily Market Comment

Following is a link:

http://www.equityclock.com/2020/06/20/stock-market-outlook-for-june-22-2020/

Note seasonality chart on Canadian Retail Trade.

The Bottom Line

Equity indices around the world mostly moved slightly higher last week. Most indice reached a short term peak on or about June 9th and continue to show extreme intermediate overbought technical signs. Concern about a second wave of the coronavirus and possibility of FDA approval of a vaccine by early November continue to influence equity prices on the upside and downside. 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) remained extremely intermediate overbought and extended a downtrend on Friday. See Barometer chart at the end of this report.

Medium term technical indicators for Canadian equity markets also remained extremely intermediate overbought and have started to trend down. 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) recovered slightly last week. Notably stronger were commodity and commodity sensitive equities despite strength in the U.S. Dollar Index

Short term momentum indicators for Canadian markets and sectors also recovered slightly last week.

Year-over-year consensus earnings for S&P 500 companies moved slightly lower again last week. According to FactSet, second quarter 2020 earnings are expected to fall 43.8% (versus a drop of 43.5% last week) and revenues are expected to drop 11.2%. Third quarter earnings are expected to fall 25.1% (versus 25.1% last week) and revenues are expected to decrease 5.5%. Fourth quarter earnings are expected to decrease 12.7% (versus 12.6% last week) and revenues are expected to decline 1.4% (versus a drop of 1.3% last week). Earnings for all of 2020 are expected to decrease 21.6% (versus a decline of 21.4% last week) and revenues are expected to decrease 3.9% (versus a drop of 4.0% last week).

Consensus estimates for earnings and revenues by S&P 500 companies turn positive on a year-over-year basis in the first quarter of 2021. According to FactSet, earnings in the first quarter are expected to increase 12.7% and revenues are expected to increase 2.9%. Earnings for all of 2021 are expected to increase 28.7% (versus an increase of 28.6% last week) and revenues are expected to increase 8.5%.

 

Economic News This Week

May U.S. Existing Home Sales to be released at 10:00 AM EDT on Monday are expected to slip to 4.10 million from 4.33 million units in April.

May U.S. New Home Sales to be released at 10:00 AM EDT on Tuesday are expected to increase to 639,000 from 623,000 in April.

May Durable Goods Orders to be released at 8:30 AM EDT on Thursday are expected to increase 10.5% versus a drop of 17.1% in April. Excluding Transportation Orders, May Durable Goods Orders are expected to increase 2.1% versus a drop of 7.7% in April.

Next estimate of first quarter annualized U.S. GDP to be released at 8:30 AM EDT on Thursday are expected to drop 5.0% versus a gain of 2.1% in the fourth quarter of 2019.

May Personal Income to be released at 8:30 AM EDT on Friday is expected to drop 6.0 versus a gain of 10.5% in April. May Personal Spending is expected to increase 9.0% versus a drop of 13.6% in April.

June Michigan Consumer Sentiment Index to be released at 10:00 AM EDT on Friday is expected to increase to 79.0 from 78.9 in May.

 

Selected Earnings News This Week

Five S&P 500 companies (including one Dow Jones Industrial company: Nike) are expected to report quarterly results this week.

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Trader’s Corner

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for June 19th 2020

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Green: Increase from previous day

Red: Decrease from previous day

 

Commodities

Seasonal/Technical Commodities Trends for June 19th 2020

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Green: Increase from previous day

Red: Decrease from previous day

 

Sectors

Daily Seasonal/Technical Sector Trends for June 19th 2020

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Green: Increase from previous day

Red: Decrease from previous day

 

The Canadian Technician

Greg Schnell noted in a comment on Friday that “Last week’s ripcord yank stalled momentum”. Following is a link:

https://stockcharts.com/articles/canada/2020/06/last-weeks-ripcord-yank-stalle-87.html

 

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

Activision (ATVI), a NASDAQ 100 stock moved above $75.97 extending an intermediate uptrend.

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Incyte, a NASDAQ 100 stock moved above $104.81 extending an intermediate uptrend.

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First Trust Biotech ETF (FBT) moved above $167.61 to an all-time high extending an intermediate uptrend. VanEck Biotech ETF moved above $164.69 to an all-time high extending an intermediate uptrend. NASDAQ Biotech iShares moved above $136.07 to an all-time high extending an intermediate uptrend. ETFs responded to a Piper Jaffray report predicting that the FDA could approve a vaccine for COVID 19 before the U.S. Presidential election in November. Following is a link to a report released by Market Watch on Friday:

https://www.marketwatch.com/story/heres-why-the-fda-may-approve-a-covid-19-vaccine-before-the-november-elections-according-to-jefferies-biotech-research-team-2020-06-19?mod=home-page

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‘Tis the season for strength in the Biotech sector to mid-September!

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Seattle Genetics (SGEN), a NASDAQ 100 stock moved above $168.10 to an all-time high extending an intermediate uptrend.

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S&P 500 Momentum Barometer

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The Barometer dropped 7.41 to 77.96 on Friday and 3.00 last week. It remains extremely intermediate overbought and is trending lower.

 

TSX Momentum Barometer

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The Barometer slipped 0.57 to 75.45 on Friday and 0.09 last week. It remains extremely intermediate overbought and shows early signs of trending lower.

 

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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9 Responses to “Tech Talk for Monday June 22nd 2020”

  1. tony Says:

    Good huh 2h40 am here in montreal Larry,

    NVDA
    The value of MACD is negative for the 1-2-5 minute charts, as for the 15min chart the value is right on its 50MA and MACD = 0 so need to see if it fails this morning or bounces off the 50MA. if it fails we could see the price drop to the next line in the sand would be around 367(30 min 50MA) or 364 (1hr 50MA) currently the value MACD for every time frames from 30min and higher are positive.

    By 10am we’ll get a sense of what to expect

    Friday was option expiration day and the 4th of july is just around the corner so will the big guys go on vacation happy with their 30+% or will they be trading the summer away out of their beach house?

    In my case my summer vacation was set in europe but flight has been cancelled. Camping is usually my way to go but with all the measures being taken we opted to stay home. Purchased an intex swimming pool to keep kids busy, might go hicking or sight seeing or something but no big vacation planned.

  2. tony Says:

    Larry,

    After posting my previous comment, was wondering what will the big boys do with this market. June30th is the end of second quarter so I would think the big boys are going to stick around their computers and put up trades and the reason is we will see which CEO is slightly optimistic and whos extremely optimistic and who was able to better weather the storm. I would think their will be extreme shorts on the way.

    I know that management of big companies are playing on a daily basis with their numbers of what to expect for the next few quarters and that by 2022 they expect to be back on track.

    About the virus with family still in the old country they don’t see the end to this virus one of my cousin who’s in the medical field over there and is girlfriend caught the disease twice since the start so social immunity doesn’t work out.

  3. Larry/ON Says:

    NVDA – Tony about an hour after I posted I got this email in my inbox. You will need to copy and paste to your browser.

    https://www.thestreet.com/investing/nvidia-nvda-stock-trading-breakout-new-highs?puc=_htmlmdb_pla&cm_ven=EMAIL_htmlmdb&tstmem=175456743&utm_source=newsletter&utm_medium=email&utm_campaign=MDB&utm_term=Can+Nvidia+Break+Out+to+New+Highs%3F

  4. Larry/ON Says:

    Momentum building after a weak start. Buyers are waiting to buy on weakness. It’s a good sign

  5. Mary Says:

    Dave/ab

    RE #9 yesterday

    I usually use CNBC for quotes. But would try your suggested site.
    Thanks and happy trading.

  6. Larry/ON Says:

    SOXX – Nice hammer forming off a low today. Still early but tech is doing very well. The payment companies like MA and V and PYPL doing well. Unfortunately the banks, reits, telecom are not good. Stick with what works. Bottom fishing often results in pain.
    New high on GLD.

  7. Pat Says:

    Mary,
    Tilray seems to be changing it’s MO…used to trade in a narrow time frame but now,not so much.
    Cheers,Pat/Vic

  8. Mary Says:

    Pat
    I noticed that as well. Took my $ and moved on. OXY lost it MO as well. Sold my UVXY this morning. Looking to enter again.
    Best of luck.

  9. Larry/ON Says:

    Milestones – MSFT cleared $200, NVDA cleared $380, record close on QQQ. The thinking is that NVDA runs up quick to $400. On MSFT we are less than 4 weeks away from earnings and it’s a stock that has a history of outperforming estimates. Moreover, the pandemic has brought more business to MSFT. It should stay strong. AAPL – another winner.

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