Tech Talk for Friday October 16th 2020

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Pre-opening Comments for Friday October 16th

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

Index futures increased slightly following release of September U.S. Retail Sales at 8:30 AM EDT. Consensus was an increase of 0.7% versus a gain of 0.6% in August. Actual was up 1.9%. Excluding auto sales, consensus was an increase of 0.4% versus a gain of 0.7% in August. Actual was an increase of 1.5%.

Boeing gained $5.87 to $170.11 after European regulators cleared relaunch of Boeing’s 737 Max.

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Pfizer advanced $0.88 to $37.43 after announcing that the company is ready to launch its COVID 19 vaccine upon regulatory approval.

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Schlumberger slipped $0.17 to $16.25 after reporting lower than consensus third quarter revenues.

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VF Corp added $2.00 to $79.74 after reporting higher than consensus third quarter revenues and earnings.

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EquityClock’s Daily Comment

Following is a link:
http://www.equityclock.com/2020/10/15/stock-market-outlook-for-october-16-2020/

Note seasonality charts on Initial Jobless Claims and Crude Oil Days of Supply.

 

Technical Notes for Thursday October 15th

Vertex Pharmaceutical (VRTX), a NASDAQ 100 stock moved below $253.97 extending an intermediate downtrend.

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Verizon (VZ), a Dow Jones Industrial Average stock moved below $58.03 setting an intermediate downtrend.

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AT&T (T), an S&P 100 stock moved below $27.45 extending an intermediate downtrend.

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Zoom (ZOOM), a NASDAQ 100 stock moved above $529.74 to an all-time high extending an intermediate uptrend. The company announced launch of additional services.

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Trader’s Corner

Daily Seasonal/Technical Equity Trends for October 15th 2020

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Green: Increase from previous day

Red: Decrease from previous day

 

Commodities

Daily Seasonal/Technical Commodities Trends for October 15th 2020

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Green: Increase from previous day

Red: Decrease from previous day

 

Sectors

Daily Seasonal/Technical Sector Trends for October 15th 2020

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Green: Increase from previous day

Red: Decrease from previous day

 

Josef Schachter’s “Eye on Energy”

Josef continues to take a cautionary intermediate term outlook on the energy sector. He also predicts that an important buy point in the sector is likely to occur before the end of this year. That also is the time horizon on a real and relative basis for start of a seasonal trade in the sector for a move higher from mid-December into Spring Subscribing to Joaef’s paid service for timely advice makes good sense. Following is a copy of his latest comment:

Conclusion:

As we write this, WTI for November is at US$40.50/b. The price is up on the week by nearly US$1/b as the tug of war of the following has occurred. As production in the Gulf returns in the coming weeks and Norway’s workers strike ends, we expect crude prices will continue to decline.

Positives for crude prices:

· US Gulf Coast production was shut in due to Hurricane Delta. Crude production of 1.67Mb/d or 92% of gulf production. In addition, 62% of the region’s natural gas production was shut in or 1.675Bcf/d. The gulf produces 15% of US crude production and 5% of natural gas production.

· Norway’s strike by energy workers shut in six offshore fields with production of nearly 966Kb/d. Both sides have now agreed to arbitration so this production should be brought back on.

· Colder weather has arrived and demand normally picks up.

Negatives for crude prices:

· Germany, Italy and Austria are reporting record increases in case loads. Tracing is becoming tougher to do in those countries.

· Amsterdam has gone to a four week partial lockdown (restaurants and bars) as it has the highest per capita infection rate in the world.

· Tougher socializing measures (curfews) are being applied to hot spots in London and Paris.

· In 38 US states and Washington DC the number of new cases have increased. In some they are at record levels and some states have hospitals that are at max on their ICU beds.

· Russia plans on increasing its production shortly as it appears to be breaking with OPEC+.

· Libya is reopening its exports and produced 156Kb/d in September. Earlier this week it rose to 355Kb/d as more ports were opened. When the large Sharara field comes on shortly they will raise production by 300Kb/d to 655Kb/d. Of note, before the civil war Libya was producing over 1.1Mb/d.

Downside pressure is expected in the coming weeks as the pandemic caseload rises and production increases around the world. The next breach level to watch is US$36.63/b and we see this occurring later this month. We have been range bound between US$41.47/b at the high end and US$36.63/b at the low end as the weather and shut-ins dominate the price of crude. Once production returns and if the pandemic expands as Wave Two takes hold, we should depressed crude prices and a breach of the US$36.63/b key level.

Most energy and energy service 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 next week and continue through November. Most results will not be investor friendly.

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

The S&P/TSX Energy Index has fallen from the June high at 96.07 to the current level today of 67.75. Overall the index is now down by 30% in under four months. We see much more downside over the coming months as unfavourable Q3/20 results impact 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 60.38 (the low two weeks ago). Further lows are likely in Q4/20 as tax loss selling is likely to be very nasty this year. We see the likelihood that the final low for the index could be 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 our two monthly reports, all archived Webinars (our next webinar 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 reports. If you are interested in the energy industry this should be of interest to you.

Please become subscribers before the November 26th webinar as we will be discussing the best ideas to invest in during the tax loss selling season. In addition during the 90 minute webinar we will discuss the third quarter results of many of the companies we cover versus our expectations.

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

 

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S&P 500 Momentum Barometer

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The Barometer added 0.20 to 70.48 yesterday. It remains intermediate overbought.

 

TSX Momentum Barometer

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The Barometer added 2.82 to 57.28 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




8 Responses to “Tech Talk for Friday October 16th 2020”

  1. Ron/BC Says:

    https://money.cnn.com/data/fear-and-greed/

  2. dave/ab Says:

    Hi Ron/BC

    Thanks for the article.I’m curious if you would be able to plot a graph of Nasdaq 100 equally weighted versus Nasdaq 100. I’m basically wanting to see a chart to see what the US economy is doing without the FANG stocks. Thanks

    Dave

  3. Ron/BC Says:

    Dave/AB

    Not sure if this is what you want to see. IF not let me know what symbols you want to see.

    https://stockcharts.com/h-sc/ui?s=%24NDX&p=D&yr=2&mn=0&dy=0&id=p75180108495&a=827690892

  4. dave/ab Says:

    Hi Ron

    Thank you very much for the graph. I wasn’t expecting the weighted and unweighted to be so close unless I’m reading it incorrectly wrong

  5. Ron/BC Says:

    Dave/AB

    Here is the same chart again with a ratio chart of the two above. And a ratio chart of $NDX:$SPX. Also see the $SPX overlaid the main chart. Odd how all 3 of the ETFS have tracked very close together since the March low.

    https://stockcharts.com/h-sc/ui?s=%24NDX&p=D&yr=2&mn=0&dy=0&id=p15211019060&a=827690892

  6. dave/ab Says:

    Hi Ron

    Thank you so much for you help and charts. I surprised at the closeness. Its easier to see separately. Will be interesting to see if tech and the big 5 will come back and by how much if COVID gets bad this winter.

  7. Ron/BC Says:

    Dave/AB
    Well many traders watch an intraday chart of these markets and are bouncing off the walls all day long as short term charts look like they are going crazy, both ways.

  8. dave/ab Says:

    Hi Ron

    I can’t agree more. It will be awhile before markets stabilise.

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