Tech Talk for Monday November 9th 2020

Daily Reports Add comments

Morning Technical Notes for Monday November 9th

S&P 500 Index moved above 3,588.11 to an all-time high extending its intermediate uptrend.

clip_image001[5]

Dow Jones Industrial Average also moved to an all-time high extending an intermediate uptrend.

clip_image002[5]

Breakouts above intermediate resistance levels by S&P 500 stocks were too numerous to include in this report. Breakouts by Sector SPDRs included XLP, XLI, XLF, XLE and XLP.

 

Pre-opening Comments for Monday November 9th

U.S. equity index futures were higher this morning. S&P 500 futures were up 150 points in pre-opening trade. Index futures responded to news that results from Pfizer’s stage 3 COVID 19 vaccine have been encouraging. According to Pfizer, the vaccine is more than 90% effective and has little or no side effects. Pfizer advanced $5.25 to $41.65. The S&P 500 Index is expected to open at an all-time high above its previous high at 3,588.11.

clip_image001

clip_image002

McDonald’s gained $10.22 to $226.78 after reporting higher than consensus third quarter earnings. The company also raised its dividend.

clip_image003

UnitedHealth Group advanced $22.27 to $369.73 after Mizuho increased its target price from $361 to $380.

clip_image004

 

EquityClock’s Daily Comment

Following is a link:

http://www.equityclock.com/2020/11/08/stock-market-outlook-for-november-9-2020/

Note seasonality charts on U.S. Non-farm Payrolls and Canadian Employment.

The Bottom Line

Most major equity indices around the world moved sharply higher last week. Greatest influences remain growing evidence of a second wave of the coronavirus (negative), possible approval of a vaccine (positive) and final returns from the U.S. President and Congress elections (uncertain).

 

Observations

The Dow Jones Industrial Average and S&P 500 Index are following their historic trend after a U.S. Presidential Election. Indeed, the strongest 12 week period during the four year U.S. Presidential Cycle has occurred from U.S. Presidential Election Day to Inauguration Day in the third week in January. Since 1952, the S&P 500 Index advanced in 11 of 17 periods. Average gain per period was 2.6% excluding one important event in 2008 when Obama first became President with a “super majority” in Congress. Regardless of final results of the recent election, the “super majority” scenario recorded in 2008 did not happen. Accordingly, the stage is set for higher U.S. equity indices by Inauguration Day on January 20th.

image

image

Results of the U.S. President and Congressional elections (as reported to last Saturday) suggest that history by U.S. equity indices is about to repeat between Election Day and Inauguration Day. Biden became President, control of the Senate remained Republican with a smaller majority and control of the House of Representatives remained Democrat with a smaller majority. Net result is political gridlock for the next two years, a scenario that historically has been mildly bullish for U.S. equity markets.

Medium term technical indicator for U.S. equity markets (e.g. Percent of S&P 500 stocks trading above their 50 day moving average) moved sharply higher last week. It changed from intermediate oversold to intermediate overbought. See Barometer chart at the end of this report.

Medium term technical indicator for Canadian equity markets also moved higher last week. It changed from intermediate oversold to intermediate overbought. See Barometer chart at the end of this report.

Short term short term momentum indicators for U.S. markets/commodities/sectors (20 day moving averages, short term momentum indicators) turned higher last week

Short term momentum indicators for Canadian markets/sectors turned higher last week

Year-over-year 2020 consensus earnings and revenues declines by S&P 500 companies ebbed again last west. According to www.FactSet.com, third quarter earnings are expected to fall 7.5% (versus a decline of 9.8% last week) and revenues are expected to slip 1.7% (versus previous decline of 2.1%). Fourth quarter earnings are expected to drop 10.9% (versus previous decline of 11.2%) and revenues are expected to decline 0.3% (versus 0.5% last week). Earnings for all of 2020 are expected to fall 14.8% (versus previous decline of 15.5%) and revenues are expected to decline 2.2% (versus previous decline of 2.3%).

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 www.FactSet.com earnings in the first quarter of 2021 are expected to increase 14.5% and revenues are expected to increase 3.3% (versus previous 3.4%). Earnings in the second quarter are expected to increase 44.0% (versus previous increase of 44.2%) and revenues are expected to increase 13.7%. Earnings for all of 2021 are expected to increase 22.4% (versus previous increase of 23.0%) and revenues are expected to increase 7.9%.

 

Economic News This Week

U.S. October Consumer Price Index to be released at 8:30 AM EST on Thursday is expected to increase 0.2% versus a gain of 0.2% in September. Excluding food and energy, U.S. October Consumer Price Index is expected to increase 0.2% versus a gain of 0.2% in September.

U.S. October Producer Price Index to be released at 8:30 AM EST on Friday is expected to increase 0.2% versus a gain of 0.4% in September. Excluding food and energy, U.S. October Producer Price Index is expected to increase 0.2% versus a gain of 0.4% in September.

November Michigan Consumer Sentiment to be released at 10:00 AM EST on Friday is expected to increase to 81.9 from 81.8 in October.

 

Selected Earnings News This Week

Frequency of quarterly reports from major U.S. and Canadian companies winds down this week: 89% of S&P 500 companies have reported to date with 86% reporting higher than consensus quarterly earnings and 79% reporting higher than consensus quarterly revenues. Another 15 S&P 500 companies (including three Dow Jones Industrial Average companies) are scheduled to release results this week. Selected U.S. and Canadian reports include:

earnings nov 9

 

Trader’s Corner

Equity Indices and Related ETFs

Daily Seasonal/Technical Equity Trends for November 6th 2020

spx nov 9

Green: Increase from previous day

Red: Decrease from previous day


Commodities

Daily Seasonal/Technical Commodities Trends for November 6th 2020

crb nov 9

Green: Increase from previous day

Red: Decrease from previous day


Sectors

Daily Seasonal/Technical Sector Trends for November 6th 2020

xlk nov 9

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

changes nov 9

Technical Notes for Friday November 6th

The Nikkei Average advanced 219.35 to 24,325.23 to a 24 month high.

image

Globex Copper Miners (COPX) moved above $22.90 extending an intermediate uptrend.

image

Lundin Mining (LUN.TO), a base metals producer moved above Cdn$8.55 extending an intermediate uptrend.

image

Chile iShares (ECH) moved above $25.83 extending an intermediate uptrend. Units responded to higher base metal prices.

image

Micron (MU), a NASDAQ 100 stock moved above $54.82 extending an intermediate uptrend.

image

T-Mobile (TMUS), a NASDAQ 100 stock moved above $123.42 to an all-time high extending an intermediate uptrend.

image

CVS Health (CVS), an S&P 100 stock moved above $66.60 resuming an intermediate uptrend.

image

Natural Gas ETN (UNG) moved below $10.73 setting an intermediate downtrend.

image

Palladium ETN (PALL) moved above $232.40 extending an intermediate uptrend.

image

The U.S. Dollar Index dropped 2.24% last week. The drop prompted strength in the prices of industrial and precious metals commodities.

image

 

Changes in Seasonal Ratings

Rating on the following markets change from Neutral to Positive this week:

image

image

image

image

 

S&P 500 Momentum Barometer

image

The Barometer slipped 3.28 on Friday, but gained 34.00 to 64.46 last week. It changed from intermediate oversold to intermediate overbought on moves above 40.00 and 60.00.

 

TSX Momentum Barometer

image

The Barometer slipped 1.90 on Friday, but gained 32.70 last week. It changed from intermediate oversold to intermediate overbought on moves above 40.00 and 60.00.

 

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




20 Responses to “Tech Talk for Monday November 9th 2020”

  1. Larry/ON Says:

    KBE (US bank ETF) up 12.5% breaking the June high taking it all the way back to the beginning of March. I would beware chasing anything making huge moves based on an early result from a vaccine maker. Prices may settle back. IMO I would look at Pfizer’s news as simply positive for the overall market going forward. The stay at home stocks obviously are being sold in favour of banks, industrials, etc. The automakers are really doing well. GM is close to taking out its’ Aug 2019 high and F is up a lot. At the same time TSLA is doing well on the idea that Biden is good for promotion of electric vehicles. If you are looking at economic recovery auto stocks would be one area to look at and I would want to split my bet between TSLA and the other two names. URI is probably an even better play on economic recovery.

  2. Larry/ON Says:

    GLD, TLT – Large gaps down with GLD breaking Sept low. Money is being pulled out of bonds in favour of equities. On TLT the next major support level is the Jun low at 152.32. Once you break that it is a total equity rout over bonds. $VIX has collapsed.
    CNN Market Sentiment Indicator has taken a large swing higher into the low end of the Greed range at 58. With the possibility of very short-term volatility the overall market wants to go higher medium term. The risk is if we get the Coronavirus pandemic causing shut downs in the US if it truly gets catastrophic

  3. Mary Says:

    Bernie or anyone

    Could you please suggest some dividend paying Canadian stocks. I bought a few shares of BMO so far. Appreciate!

  4. bruce Says:

    Mary
    zwb and zeb are baskets of canadian bank stocks……..

  5. Ron/BC Says:

    Of all the indicators for buy and sell signals out there the RSI 21 indicator dropping below 30 and then recrossing back above 30 with the Daily $BPNA has had a very good buy signals track record without a lot of whipsaws. The overbought sell signals don’t address sell signals as well but focusing on buy signals it has worked very well in the past. And the run ups after a buy signal are impressive and consistent.

    https://stockcharts.com/h-sc/ui?s=%24BPNYA&p=D&yr=2&mn=0&dy=0&id=p64603318235&a=673066466

  6. Ron/BC Says:

    #5 should read $BPNYA (NOT $BPNA)

  7. Ron/BC Says:

    Here is another good buy signal indicator $BPSPX that is similar to the $BPNYA. Also with a good track record. The shorter RSI 8 above works for short term bounces but does not have the track record that the RSI 21 has.

    https://stockcharts.com/h-sc/ui?s=%24BPSPX&p=D&yr=2&mn=0&dy=0&id=p49625943789&a=673066278

  8. Bernie Says:

    Mary,

    There are many Canadian dividend payers out there. I wouldn’t know which ones to suggest for you because I don’t know what your objective is. Are you wanting to trade them for capital gains or hold long term for income and/or dividend income growth? I’m retired, conservative and focused on the latter with a, pretty much, set portfolio these days so don’t keep close tabs on trends anymore should you be looking for cheaper valuations on dividend stocks to trade.

    Prices aside I feel the safest Canadian stock bets for long term income/dividend growth are (by sector-Industry):

    Sector Industry Ticker
    Financial Services Banks – Global TD.TO
    Financial Services Banks – Regional – Canada BNS.TO
    Financial Services Banks – Regional – Canada RY.TO

    Financial Services Insurance – Life MFC.TO
    Financial Services Insurance – Diversified POW.TO
    Financial Services Insurance – Property & Casualty IFC.TO
    Financial Services Insurance – Diversified SLF.TO

    Utilities Utilities – Diversified CU.TO
    Utilities Utilities – Regulated Electric FTS.TO
    Utilities Utilities – Diversified EMA.TO
    Utilities Utilities – Independent Power AQN.TO

    Consumer Defensive Grocery Stores EMP-A.TO
    Consumer Defensive Grocery Stores MRU.TO
    Consumer Defensive Grocery Stores ATD-B.TO

    Industrials Railroads CNR.TO
    Industrials Railroads CP.TO
    Industrials Waste Management WCN.TO

    Communication Services Telecom Services T.TO
    Communication Services Telecom Services BCE.TO

    Energy Oil & Gas Midstream ENB.TO
    Energy Oil & Gas Midstream TRP.TO

    Real Estate REIT – Industrial GRT-UN.TO
    Real Estate Real Estate – General BAM-A.TO
    Real Estate REIT – Residential CAR-UN.TO

    Consumer Cyclical Publishing TRI.TO
    Consumer Cyclical Packaging & Containers CCL-B.TO

    Technology Software – Application ENGH.TO
    Technology Software – Application OTEX.TO

    Basic Materials Gold FNV.TO

  9. dutchcanuck Says:

    Bernie So good to hear from you. Hope all is well. Did you ever move?
    Really like your list of div stocks. Own most of them.
    My only fear is that Justin will raise the tax on divs.

  10. DougP Says:

    Bernie, Mary

    I agree with your list, having most of them in my own portfolio (and little else other than US ETFs). In fact I have difficulty in finding suitable additions. I have started to accumulate ZPAY, which offers great stability with a massive injection of 10-year US Treasuries combined with some choice solid US stocks, and offering a 6+% regular, monthly dividend. Comments on ZPAY from anyone would be valued.

  11. Mary Says:

    Bernie
    Thanks for taking the time to list div/l income Growth stocks. My objective is similar to your, not to trade. I will start to average in soon.
    Appreciate!

  12. Mary Says:

    Bruce
    Thanks for your suggestion. I bought ZWB years ago and sold it at a slight loss. But it has gone up a lot since then.

  13. bobj Says:

    DougP

    Zpay looks interesting, inception Jan.2020 at $30.00, down 15% at March low.

    Distribution at 6% must be interest and ROC ?

  14. Bernie Says:

    dutchcanuck,

    Also good to see your moniker on here! I own 9 of the list in my RRIF and 7 in my TFSA. Justin may raise the tax on dividends and probably increase the inclusion percentage on capital gains. I heard they’re also looking into elimination of the exemption on primary residence capital gains and making capital gains taxable, but not income, within TFSAs. I can’t see Justin acting on any of the above without Jagmeet on his side and/or post election should he win a called election.

  15. Bernie Says:

    DougP,

    Re: #10
    I own ZPAY as well (in my RRIF) and plan to add VRIF with the cash I received from the NVU-UN.TO takeover. I don’t expect any dividend growth out of either, only income and modest growth.

  16. Bernie Says:

    Mary,

    You’re welcome. I don’t own ZWB. Its strictly an income ETF. There is no dividend growth and only marginal growth. One would be much further ahead in total return to own all or a portion of the 6 banks stocks it holds.

  17. Bernie Says:

    Mary,

    Further to my #16
    I prefer ZPAY and VRIF to any of the BMO covered call equity ETFs. VRIF is 50% and ZPAY 65% fixed income content so the ride will be less volatile and income safer IMO. The equity content with ZPAY is in US stocks, with VRIF its in globally diversified stocks. Both were incepted this year so there is very little history.

  18. Kam Says:

    Hi Bernie,

    Thanks for the list in #8.
    Believe it or not, I own 7 of those stocks in TFSA. Last year I had none. TD, RY, T, FTS,OTEX, ATD-B, BAMA.
    Atd-b have made me good change in last few months. buy around $42 and sell $46-47, 3 times. This is fourth time around holding from $42.30. Lets see. All good things comes to an end, in the end.;)

  19. Bernie Says:

    Hi Kam,

    Its been tough sledding for the Canadian market in 2020, only 2 of the 7 stocks you own were above water in total return this year. Great to see you did well trading ATD.B. Its up 9.78% YTD at today’s close.

    Many dividend payers cut their distributions this year in Covid-19’s wake. Thankfully investors holding Canadian blue chips did ok. The only blue chip to cut was Suncor (SU). The remainder not only maintained their dividends, most increased them.

  20. Bernie Says:

    dutch,

    Re: #9
    Forgot to mention we made the big move to greater Victoria in mid Sept. Thanks to Ron/BC’s recommended realtor we found a nice 2 year old 4 level (including crawl space) townhouse condo in Langford. We’re very happy out here!

Entries RSS Comments RSS Log in