Tech Talk for Friday October 2nd 2020

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Morning Technical Notes for October 2nd

Crude Oil ETN (USO) moved below $26.27 extending an intermediate downtrend.

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Pre-opening Comments for Friday October 2nd

U.S. equity index futures were lower this morning. S&P 500 futures were down 47 points in pre-opening trade. Index futures responded to news that President Trump tested positive to a COVID 19 test.

WTI Crude oil dropped another $1.30 to US $37.42 per barrel. Crude oil prices are responding to start of a second wave of COVID 19.

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Index futures were virtually unchanged following release of the U.S. September Employment Report at 8:30 AM EDT. Consensus for September Non-farm Payrolls was 850,000 versus an upwardly revised 1,489,000 in August. Actual was 661,000. Consensus for the September Unemployment Rate was 8.2%, down from 8.5% in August. Actual was 7.9%. Consensus for September Average Hourly Earnings was an increase of 0.2% versus a gain of 0.4% in August. Actual was an increase of 0.1%

EquityClock’s Daily Comment

Following is a link:

http://www.equityclock.com/2020/10/01/stock-market-outlook-for-october-2-2020/

Note seasonality charts on Non-farm Payrolls, Construction Spending, Copper Futures and Crude Oil futures.

The Canadian Technician

Greg Schnell says “Renewable energy shines” Following is a link:

https://stockcharts.com/articles/canada/2020/10/renewable-energy-shines-278.html

 

Technical Notes for Thursday

Occidental Petroleum (OXY), an S&P 100 stock moved below $9.82 extending an intermediate downtrend. The stock responded to a 2.9% in the price of WTI Crude Oil.

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Base metal equities and related ETFs responded to a 5.51% drop in the price of copper.

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Energy equities and related ETFs moved lower following a 3.73% drop in the price of WTI crude oil on both sides of the border. Crude oil prices are responding partially to declining demand related to global expansion of COVID 19.

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‘Tis the season for WTI crude oil prices to move lower!

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‘Tis the season for relative weakness in the energy equity sector!

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Trader’s Corner

Daily Seasonal/Technical Equity Trends for October 1st 2020

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Green: Increase from previous day

Red: Decrease from previous day

 

Commodities

Seasonal/Technical Commodities Trends for October 1st 2020

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Green: Increase from previous day

Red: Decrease from previous day

 

Sectors

Daily Seasonal/Technical Sector Trends for October 1st 2020

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Green: Increase from previous day

Red: Decrease from previous day

 

Latest comments on the energy from Josef Schachter

Conclusion:

As we write this, WTI for November (the next contract) is at US$39.44/b with the day’s low at US$38.68/b. Further downside pressure is expected in the coming weeks as the pandemic caseload rises and the President’s indifference weights on the economy and individual behavior. The next breach level is US$36.13/b and we see this occurring during October. The next key level for WTI thereafter is US$34.36/b. If this is breached then the  sector will face enormous selling pressure. We continue to see a risk of WTI falling below US$30/b if OPEC excess production is not reigned in.

Most energy stocks have significant downside risk. The most vulnerable companies are energy and energy service companies with high debt loads, high operating costs, declining production, current balance sheet debt maturities of some materiality within the next 12 months and those that produce heavier crude barrels. Results for Q3/20 should start shortly and continue through November and many reports will not be investor friendly. Another US producer fell by the wayside today – Bakken producer Oasis Petroleum filed for Chapter 11 with debts of US1.8B.

Hold cash and remain patient for the next low risk BUY window expected during Q4/20.

The S&P/TSX Energy Index has fallen from the June high at 96 (when we recommended profit taking) to the current level today of 65.76. Overall the index is now down by 32% in under four months. We see much more downside over the coming months as lousy Q3/20 results shaft the stocks even more. We will be watching to see how companies discuss their debt loads and lender support. Companies with pessimistic views about their reserve base lending, cutbacks in lines of credit and potential additional impairment write-downs will face significant stock price pressure. The next support for the S&P/TSX Energy Index is at 65.07 and then 58.05. Further lows are likely in Q4/20 as tax loss selling could be very nasty this year. We see the likelihood that the final low for the index will occur in the 32-36 area during tax loss selling season. We expect to see a very attractive BUY signal generated during Q4/20 and will recommend new ideas as well as highlight our favourite Table Pounding BUYS which should trade at much lower levels than now. 

Subscribe to the Schachter Energy Report and receive access to all archived Webinars (our next one will be held at 7PM on Thursday November 26th), Action Alerts, TOP PICK recommendations when the next BUY signal occurs, as well as our Quality Scoring System review of the 27 companies that we cover. We go over the markets in much more detail and highlight individual companies in our two monthly reports. If you are interested in the energy industry this should be of interest to you.

To get access to our research go to  http://bit.ly/2OvRCbP to subscribe.

 

S&P 500 Momentum Barometer

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The Barometer added 5.21 to 51.10 yesterday. It remains intermediate neutral.

 

TSX Momentum Barometer

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The Barometer added 5.58 to 47.44 yesterday. It remains intermediate neutral.

 

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

MoneyShowNovember62020




6 Responses to “Tech Talk for Friday October 2nd 2020”

  1. Bman/Van Says:

    Not a surprise the market is down given the US has still not been able to agree on a stimulus package (which was a major contributor to why we were riding up this week). Wondering if we will break any major supports today, time will tell.

  2. tony Says:

    So POTUS tested positive to covid-19

    does this mean he will postpone the election because he couldn’t go on his rallies?

  3. Ron/BC Says:

    Anyone notice how all these hot shot politicians claim they have Covid-19 and a few days later are walking around just fine again. It’s a great way to get some attention and sympathy. B.S. baffles brains it seems……………..

  4. Larry/ON Says:

    The Chickens Have Come Home To Roost at the White House. Let’s assume Trump pulls through and has a mild case. IMO he suffers damage to his credibility due to his recklessness and constant mocking of the one thing that could have prevented this – mask usage. His family and his entourage also put a lot of other people at risk at the debate hall and other locations by refusing to wear masks. If there are serious illnesses or deaths that can be contact traced to the Trump family it will be politically damaging. Oddsshark posts an increase in odds for Biden to win following the news now at 65.52% Biden vs 38.46% Trump (It doesn’t add to 100 but is based on the way bets work which I’m not familiar with).

  5. Ron/BC Says:

    I expect to see Trump walking around “cured” of Covid-19 in about a week talking about how great he is and how there is little to worry about as he’s living proof of it. I wish I could buy that scenario like an etf.

  6. dave/ab Says:

    Ron/BC

    All just a Potemkin display. If I was secret service I would wearing all the PPE I would still decline to drive him. Look at all the Healthcare workers that got infected even taking all the precautions. If he really is infected. Everything about this situation smells foul. Total reality showman.

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