Tech Talk for Monday January 11th 2021

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Morning Technical Notes for Monday January 11th

Biogen (BIIB), a NASDAQ 100 stock moved above $254.00 and $254.41 completing a base building pattern.

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Lockheed Martin (LMT), an S&P 100 stock moved below $334.78 setting an intermediate downtrend.

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Pre-opening Comments for Monday January 11th

U.S. equity index futures were lower this morning. S&P 500 futures were down 27 points in pre-opening trade.

The U.S. Dollar moved higher in overnight trade. Conversely, the Canadian Dollar dropped 0.66 to US 78.15 cents in pre-opening trade.

Twitter dropped $3.44 to $48.04 after the company suspended President Trump’s twitter account.

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Eli Lilly advanced $24.94 to $191.35 after announcing that its experimental Alzheimer drug shows a slowdown in cognitive decline.

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Moderna added $1.45 to $114.20 in anticipation of an update later today at the JP Morgan Healthcare conference on its pipeline to develop three new vaccines.

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Kinder Morgan dropped $0.17 to $14.32 after Raymond James downgraded the stock from Outperform to Market Perform.

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EquityClock’s Daily Comment

Following is a link:

http://www.equityclock.com/2021/01/09/stock-market-outlook-for-january-11-2021/

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

 

The Bottom Line

Major equity indices around the world moved higher last week. Greatest influences remain growing evidence of a second wave of the coronavirus (negative) and timing of distribution of a vaccine (positive)

 

Observations

The Dow Jones Industrial Average and S&P 500 Index are following their historic trend after a U.S. Presidential Election. The strongest 12 week period during the four year U.S. Presidential Cycle has occurred from U.S. Presidential Election Day to Inauguration Day on January 20th. Since Election Day this year, the Dow Jones Industrial Average has advanced 13.2%, the S&P 500 Index has gained 13.5%. and the TSX Composite Index has increased.13.2%.

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What about this time? Biden was confirmed as President last week, Democrats effectively will take control of the Senate on January 20th with Kamala Harris controlling the majority vote in the Senate and Democrats maintained control of the House of Representatives with a smaller majority. Democrats theoretically will have full control of all three political levels of the U.S. government on January 20th. Caveat: votes by Senator Joe Manchin, a Democrat with Republican leanings is likely to regulate the amount of “progressive” legislation that the Democrats plan to launch.

The “Santa Claus rally” worked exceptionally well this time. The rally period normally occurs from the close on December 14th to January 7th. Prior to this year, the S&P 500 Index gained in 22 of the past 30 periods since 1990 for an average return per period of 1.53%. The TSX Composite gained in 25 of the past 30 periods for an average return per period of 2.13%. During this past period, the S&P 500 Index added 4.29% and the TSX Composite Index gained 3.68%. Reasons for the Santa Claus rally include yearend “window dressing” by institutional investors, favourable comments by investment dealers about prospects for next year, the end of tax loss selling pressures by individual investors, start of investment of yearend bonuses received by individual investors (frequently placed into RRSPs in Canada) and a buoyant investment attitude by all investors related to the Christmas/New Year season.

What about the “Santa Claus Hangover? Following is a link to a recent video by Larry Williams that explains the “Santa Claus Rally” as well as the “Santa Claus Hangover” in the U.S. equity market:

Santa Claus Rally Exposed | Larry Williams | Real Trading Special (12.07.20) – YouTube

On average, the S&P 500 Index during the past 20 periods from January 8th to February 14th has dropped 1.5% per period. Effectively, on average, all of the historic gains recorded during the Santa Claus Rally period were lost during the Santa Claus Hangover period. This is the time of year when U.S. consumers and investors are paying down debts accrued during the Santa Claus Rally period.

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Note that the “Santa Claus Hangover” normally does not happen in the Canadian equity market. The main reason: Canadian investors focus on contributing to their RRSPs during the first 60 days in the New Year and subsequently invest more funds into the equity market. Strongest period in the year for the TSX Composite Index relative to the S&P 500 Index is from mid-December to the first week in March. As indicated in the chart below, average gain per period for the TSX Composite Index relative to the S&P 500 Index during the past 20 periods was 3.3%. Performance of the TSX Composite Index relative to the S&P 500 Index last week suggests that history is repeating.

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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 slightly lower last week. It remained extremely intermediate overbought above 80.00%. See Barometer chart at the end of this report.

Medium term technical indicator for Canadian equity markets moved slightly higher last week. It remained 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) moved higher last week and remain elevated.

Short term momentum indicators for Canadian markets/sectors also moved higher last week and remain elevated.

Year-over-year 2020 consensus earnings declines by S&P 500 companies ebbed again from our last report on December 21st. According to www.FactSet.com, fourth quarter earnings are expected to drop 8.8% on a year-over-year basis (versus previous 9.7% decline) and revenues are expected to increase 0.4% (versus previous 0.1% increase). Earnings for all of 2020 are expected to fall 13.3% (versus previous 13.6% decline) and revenues are expected to decline 1.6% (versus previous 1.8% decline).

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 on a year-over-year basis are expected to increase 16.5% (versus previous 15.6% increase) and revenues are expected to increase 3.9% (versus previous 3.6% increase). Earnings in the second quarter are expected to increase 46.1 % (versus previous 45.0% increase) and revenues are expected to increase 14.1% (versus previous 13.7% increase). Earnings for all of 2021 are expected to increase 22.6% (versus previous 22.1% increase) and revenues are expected to increase 8.2% (versus previous 7.9% increase).

 

Economic News This Week

December U.S. Consumer Price Index to be released at 8:30 AM EST on Wednesday is expected to increase 0.4% versus a gain of 0.2% in November. Excluding food and energy, December Consumer Price Index is expected to increase 0.1% versus a gain of 0.2% in November.

Beige Book is released at 2:00 PM EST. on Wednesday.

December U.S. Producer Price Index to be released at 8:30 AM EST on Friday is expected to increase 0.3% versus a gain of 0.1% in November. Excluding food and energy, December Producer Price Index is expected to increase 0.2% versus a gain of 0.1% in November.

January Empire State Manufacturing Survey to be released at 8:30 AM EST on Friday is expected to increase to 6.15 from 4.90 in December.

December U.S. Retail Sales to be released at 8:30 AM EST on Friday are expected to slip 0.3% versus a decline of 1.1% in November. Excluding auto sales, December Retail Sales are expected to slip 0.3% versus a decline of 0.9% in January.

December Capacity Utilization to be released at 9:15 AM EST on Friday is expected to improve to 73.5% from 73.3% in November. December Industrial Production is expected to increase 0.4% versus a gain of 0.4% in November.

November Business Inventories to be released at 10:00 AM EST on Friday are expected to increase 0.4% versus a gain of 0.7% in October.

 

Selected Earnings News This Week

Nine S&P 500 (including one Dow Jones Industrial Average stock: JP Morgan) are scheduled to report quarterly results this week. Focus is on the U.S. Financial sector.

Changes Jan 11

 

Trader’s Corner

Equity Indices and Related ETFs

Daily Seasonal/Technical Equity Trends for January 8th 2021

spx jan 11

Green: Increase from previous day

Red: Decrease from previous day

 

Commodities

Daily Seasonal/Technical Commodities Trends for January 8th 2021

crb jan 11

Green: Increase from previous day

Red: Decrease from previous day

 

Sectors

Daily Seasonal/Technical Sector Trends for January 7th 2021

xlk jan 11

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

other changes jan 11

Technical Notes for Friday January 8th

Dow Jones Transportation Average moved above 12,917.86 to an all-time high extending an intermediate uptrend. Its related ETF: IYT also moved to an all-time high.

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CVS Health (CVS), an S&P 100 stock moved above $74.64 and $74.66 extending an intermediate uptrend.

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UnitedHealth Group (UNH), an S&P 100 stock moved above $366.63 to an all-time high extending an intermediate uptrend.

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Lam Research (LRCX), a NASDAQ 100 stock moved above $516.65 to an all-time high extending an intermediate uptrend.

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Bank of Montreal (BMO), a TSX 60 stock moved above $99.45 to an all-time high extending an intermediate uptrend.

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Algonquin Power (AQN), a TSX 60 stock moved above $21.52 to an all-time high extending an intermediate uptrend.

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Oil Service stocks on both sides of the border continue moving higher. Precision Drilling moved above $28.88 extending an intermediate uptrend.

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Russia ETF (RSX) moved above $25.72 to a nine year high extending an intermediate uptrend. Responding to higher crude oil prices!

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S&P 500 Momentum Barometer

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The Barometer added 0.72 on Friday, but slipped 2.60 last week to 83.97. It stayed above 80.00 and, therefore, remains extremely intermediate overbought.

 

TSX Momentum Barometer

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The Barometer was unchanged on Friday and added 5.57 last week to 76.19. It remains intermediate overbought.

 

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




19 Responses to “Tech Talk for Monday January 11th 2021”

  1. Larry/ON Says:

    NIO – Broke out of a short consolidation period and made a new all-time high Friday. JPM put a new 75 target and it is up roughly 10% in pre-market to 65. NIO had its yearly NIO Day on Saturday unveiling a new sedan that will be produced in 2022. They offer a leasing arrangement with batteries and will have battery swap stations in China so you dont have to wait to charge.

  2. Larry/ON Says:

    My wife is a primary care physician. There are two offices in the building and Covid has infected staff now on both floors. We closed our office today after our lead secretary developed symptoms on the weekend and has now tested positive. My wife now needs to be tested due to exposure to her secretary and I have to isolate from her until we know the result. Take this virus seriously.

  3. still_learning Says:

    Gold is hanging in there, around support at 1850. Pressure on gold from rising USD. Something is temporarily? holding gold up?

  4. Mary Says:

    Larry/ON

    Hope all goes well with your her test. Indeed some people aren’t taking this virus seriously and very inconsiderate of health care workers.

  5. Pat/Vic Says:

    Larry/ON
    Speedy recovery to your wife and staff

    Mary, TLRY starting to look like a trade again?

    Cheers,Pat

  6. Ron/BC Says:

    Mary NTR

    Want to start a rip roaring business?????????. Start a bone crushing HUGS business.(with precautionary gear of course) I know I’d sign up,lol…….

    But in all seriousness people everywhere are isolating from most everyone with little to no physical contact and that is having and will continue to have negative consequences in all aspects of society.

  7. Mary Says:

    Pat/Vic

    I traded TLRY last week and today but sold out, market very jittery. I looked at the chart and think its going to be soon overbought. BUT I am not good at charts.

    Ron/BC

    Maybe we all have to invest in Robots that can hug us and keep our company. I am single so I feel trapped staying at home for long periods of time. Two of my kids in health care so they asked for my support. They are overwhelmed at work.

  8. Ron/BC Says:

    Still_Learning

    Here is a Weekly chart of GLD. Right at a double top from 2011 which is always difficult to blow through. And the U.S.$ is rarely weak for any length of time.

    https://stockcharts.com/h-sc/ui?s=GLD&p=W&yr=20&mn=0&dy=0&id=p00509187689&a=719481576

    Also here is an $SPX chart that shows price 1100 points above its long term uptrendline plus 900 points above its 200ema, plus negative divergences on just about every oscillator invented. As always draw your own conclusions. Being under the bed with the dust bunnies might be a good place to be for a variety of reasons.

    https://stockcharts.com/h-sc/ui?s=%24SPX&p=W&st=1998-06-26&id=p86034484995&a=673066405

    https://stockcharts.com/h-sc/ui?s=%24SPX&p=W&st=1998-06-26&id=p86034484995&a=673066405

  9. Mary Says:

    Ron/BC

    Trading UVXY for past couple days to keep myself entertained.

  10. Ron/BC Says:

    Mary NTR

    Well I wont stay at home alone all the time or I’d off myself. And the robots wouldn’t be the same.
    I now appreciate how nice it was to bump into someone I know that used to give me a big hug. Really made the day. Perhaps I’ll go back on the dating site,lol. The weather most of the time here tends to be ok to walk in and there are lots of beaches to walk. You wouldn’t believe how packed with people with their kids and dogs that are walking the beaches here. You’d think it’s summer time. Hard to find parking a lot of the time right along the beach. I noticed the golf courses are also busy even in the pouring rain. I haven’t been that dedicated as my partner isn’t a fan of the rain and I gave up walking the beaches in the rain alone several years ago. It can get very depressing with gray skies and crashing gray waves after awhile. So now it’s going through the drive through at Tims and then driving to the beach to eat and drink the coffee. She doesn’t like to go inside to dine anymore it seems. She’s a retired nurse so is paranoid about the virus. I told her that “you attract what you focus on”.

  11. Paula Says:

    Larry,

    Re: #2. I hope you don’t mind this question, but how do you isolate from your wife if you are living in the same house. I don’t care how big the house is, it sounds very difficult from a practical point of view.

  12. still_learning Says:

    Ron/BC re#8:

    Thanks for the warnings. I should have bailed on my XGD when you did recently.

    cough, cough …that’s me, got a dust bunny caught in my throat …smile.

  13. Mary Says:

    Ron/BC

    NTR

    Seems like not much Covid-19 rules are in place in BC. Prior to October last year I went for walks etc. almost everyday but got off my routine once I started renovating a condo. Physical distancing is very much in place in certain parts of Ontario, anyone caught not adhering can and will be fined $1,000…. Don’t mind quiet days as I still work sometimes and help out my family. Scared of being someone’s nurse or purse so enjoying myself at the moment :). We did some travelling but still would like to see a few more places. I was planning to go to Alaska this summer but that is out of the question right now.

  14. Ron/BC Says:

    Mary
    The Covid thing isn’t bad in Victoria compared to a lot of places from what I see on the news.
    My younger daughter was working in health care clinics a few years ago giving needles all day long. I advised her to get the hell out of health care as health care is a losing cause for the government so there will always be shortages of everything and disappointment. So she did and got trained in finance. Now she makes good money and there is always lots of money for new supplies etc as the more equipment they supply the more money they bring in. It’s a good life with less hassle and less danger.
    I took a solo cruise to Alaska several years ago and enjoyed it. It’s nice to get off the ship too and visit several places on land on those short stops. Kayaking to a small Island is enjoyable plus off the ship travels during the day. One of my daughters also has a travel license and can book people anywhere and she does her homework. She’s used to fussy people too so is on top of everything all the time.

  15. Larry/ON Says:

    Re 11 – Hi Paula.
    We both have masks. My wife has her own bedroom with ensuite and a desk where she is working with a laptop and telephone. I do the cooking and bring her food to her at the door. If she comes downstairs she has a mask on and we keep a six foot distance but we really try to limit being close. I sanitize surfaces. She has test appointment tomorrow and we should have a result by Thursday latest if it’s positive. When I drive her to her test we will both have N95 masks on in the car and she will sit in the back diagonally and we will keep windows open for ventilation. Another doctor in the office tested positive. It’s very infectious.

  16. Mary Says:

    Ron/BC
    IMO I think we should get our spouses CPP and full OAS. Mine contributed for years but passed too early so did not receive $$$

  17. Ron/BC Says:

    Mary

    I agree. I recall after my wife passed away I was talking to some government official to find out exactly what to expect. They said I would continue to receive her Hospital Pension or Union Pension (whatever it was called) which wasn’t much. But I would not get her CCP that she had paid into for over 18 years. I was shocked as that was a pension that I would have expected would be paid to the survivor,me. And at 58 she wasn’t old enough to receive OAP but also had paid into it for years. I know all kinds of people that lost a spouse and the survivor always received their CCP and any other pensions etc they had paid into. That’s what most of my contracting customers lived on and paid the bills with. Never did get an acceptable answer to that.

  18. Paula Says:

    Larry,
    Thanks for explaining how you and your wife are managing distancing within your house. Very useful information and reliable considering the source.

  19. dave/ab Says:

    NTR

    There are some hotels here in Calgary that offer rooms for covid family members.

    Hi Ron/BC

    Have you been hitting balls yet. Just to get out of the house been going to these heated outdoor driving range -Cabin fever is getting me

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