Tech Talk for Monday June 29th 2020

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Pre-opening Comments for Monday June 29th

U.S. equity index futures were higher this morning. S&P 500 futures were up 12 points in pre-opening trade.

Boeing added $12.30 to $182.31 after the FAA indicated that test flights on the 737 Max aircraft are set to start today.

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Gap Stores gained $0.63 to $12.70 after Deutsche Bank raised its target price from $13 to $15.

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Square added $1.45 to $105.75 after KeyBanc Capital increased its target price from $70 to $125.

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Facebook dropped $8.25 to $207.90 after more companies announced a boycott of advertising on social media platforms.

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EquityClock’s Daily Market Comment

Following is a link:

http://www.equityclock.com/2020/06/27/stock-market-outlook-for-june-29-2020/

The Bottom Line

Equity indices around the world mostly moved lower last week. Far East equity markets were the exception. Most indices reached a short term peak on or about June 9th and have trended flat to lower since then. Concern about a second wave of the coronavirus (negative) and possibility of FDA approval of a vaccine by early November (positive) continue to influence equity prices on the upside and downside. Intermediate technical indicators for North American equity markets have moved from extremely intermediate overbought to neutral. The VIX Index remains elevated and moving higher, typical for North American equity markets between late May and mid-October.

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Observations

The VIX Index (better known as the Fear Index) remained elevated last week and moved higher

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The S&P 500 Index slipped below its 200 day moving average on Friday, a technical indicator frequently used by institutional investors to determine longer term U.S. equity market direction.

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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) changed from extremely intermediate overbought to neutral last week. See Barometer chart at the end of this report.

Medium term technical indicators for Canadian equity markets also changed from extremely intermediate to neutral. 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) moved lower last week.

Short term momentum indicators for Canadian markets and sectors also moved lower 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 43.9% (versus a drop of 43.8% last week) and revenues are expected to drop 11.2%. Third quarter earnings are expected to fall 25.4% (versus 25.1% last week) and revenues are expected to decrease 5.6% (versus 5.5% last week). Fourth quarter earnings are expected to drop 12.8% (versus 12.7% last week) and revenues are expected to decline 1.4%. Earnings for all of 2020 are expected to decrease 21.6% and revenues are expected to decline 3.9%.

No so much this year! North American equity markets have a history of moving higher from the first week in July to the third week in July in anticipation of strong and improving second quarter corporate results. As indicated above, anticipation of second quarter corporate results this year will be negative.

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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 12.6% (versus 12.7% last week) and revenues are expected to increase 2.7% (versus 2.9% last week). Earnings for all of 2021 are expected to increase 28.8% (versus an increase of 28.7% last week) and revenues are expected to increase 8.5%.

 

Economic News This Week

Canadian April GDP to be released at 8:30 AM EDT on Tuesday is expected to drop 12.3% versus a decline of 7.2% in March

June Chicago PMI to be released at 9:45 AM EDT on Tuesday is expected to improve to 44.5 from 32.3 in May.

Canada Day on Wednesday. Canadian equity markets are closed

June ADP Private Employment to be released at 8:15 AM EDT on Wednesday is expected to increase 3.000 million versus a drop of 2.760 million in May.

May Construction Spending to be released at 10:00 AM EDT on Wednesday is expected to increase 1.0% versus a decline of 2.9% in April.

June ISM Manufacturing PMI to be released at 10:00 AM EDT on Wednesday is expected to improve to 47.6 from 43.1 in May.

FOMC Meeting Minutes are released at 2:00 PM EDT on Wednesday

June Non-farm Payrolls to be released at 8:30 AM EDT on Thursday are expected to increase to 3.074 million from 2.509 million in May. June Unemployment Rate is expected to slip to 12.3% from 13.3% in May. June Average Hourly Earnings are expected to drop 0.6% versus a decline of 1.0% in May.

May U.S. Trade Deficit to be released at 8:30 AM EDT on Thursday is expected to increase to $52.00 billion from $49.40 billion in April.

May Canadian Trade Deficit to be released at 8:30 AM EDT on Thursday is expected to ease to $2.10 billion from $3.25 billion in April.

May Factory Orders to be released at 10:00 AM EDT on Thursday are expected to increase 68.5% versus a drop of 13.0% in April.

Independence Day on Friday. U.S. equity markets are closed.

 

Selected Earnings News This Week

Seven S&P 500 companies are scheduled 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 26th 2020

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Green: Increase from previous day

Red: Decrease from previous day

Commodities

Seasonal/Technical Commodities Trends for June 26th 2020

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Green: Increase from previous day

Red: Decrease from previous day

 

Sectors

Daily Seasonal/Technical Sector Trends for June 26th 2020

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Green: Increase from previous day

Red: Decrease from previous day

 

Seven Critical Skills for Success in Trading

Repeat presentation by Jake Bernstein. Following is a link:

https://www.youtube.com/watch?v=yZeKUVrtnFQ&feature=youtu.be

 

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

Brazil iShares (EWZ) moved below $28.35 setting an intermediate downtrend.

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Wheat ETN $WEAT) moved below $4.91 and $4.87 extending an intermediate downtrend.

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TC Energy (TRP), a TSX 60 stock moved below $57.39 extending an intermediate downtrend

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S&P 500 Momentum Barometer

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The Barometer plunged last week from 77.96 to 47.49. It changed from extremely intermediate overbought to neutral on a move below 60.00. Trend is down.

 

TSX Momentum Barometer

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The Barometer plunged last week from 75.45 to 56.34 last week. It changed from extremely intermediate overbought to neutral on a move below 60.00. Trend is down.

 

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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One Response to “Tech Talk for Monday June 29th 2020”

  1. Larry/ON Says:

    GOOGL – Up after Friday’s drop and looks like it may have bottomed. FB is an interesting case. Dozens of companies are now refusing to advertise on it until they remove hate-speech. It’s a fantastic example of the power of business on a social issue. FB is paying for it on their stock price and I am sure their share holders want action. The US is winding up its’ anti-trust probe of FB, GOOGL, AAPL and AMZN which may be putting some temporary pressure on all of them.

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