Tech Talk for Thursday January 28th 2021

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Pre-opening Comments for Thursday January 28th

U.S. equity index futures were lower this morning. S&P 500 futures were down 6 points in pre-opening trade.

Index futures recovered slightly following release of economic news at 8:30 AM EST. Consensus for fourth quarter annualized real U.S. GDP was an increase of 4.0% versus a gain of 33.4% in the third quarter. Actual was 4.0%. Consensus for Weekly Jobless Claims was 875,000 versus upwardly revised 914,000 last week. Actual was 847,000.

American Airlines advanced $7.20 to $25.76 after the company reported a lower than consensus fourth quarter loss. The company also offered positive guidance.

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Apple slipped $3.13 to $138.33 despite reporting higher than consensus sales and earnings.

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Tesla dropped $25.16 to $839.00 after reporting lower than consensus fourth quarter earnings.

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Facebook added 3.06 to $275.20 after reporting higher than consensus quarterly earnings.

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EquityClock’s Daily Comment

Following is a link:

http://www.equityclock.com/2021/01/27/stock-market-outlook-for-january-28-2021/

Note seasonality charts on Crude Oil Days of Supply and Durable Goods Orders.

 

The Raid against the Shorts

One of the reasons for weakness by major U.S. equity indices yesterday was a social media raid against hedge funds. Hedge funds holding large short positions were forced to cover and subsequently were forced to liquidate long positions to cover margin calls. After the close yesterday, the SEC expressed its concern about “market volatility” related to the event.

Examples of equities with large short positions that were squeezed include GameStop, AMC Sirius and Blackberry.

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The VIX spiked in response.

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Technical Notes for Wednesday January 27th

Editor’s Note: The “Santa Claus Hangover” struck with vengeance yesterday. Weakness in U.S. equities was “across the board” and extensive. Exceptions were the “bull raid” stocks.

Starbucks (SBUX), a Dow Jones Industrial Average stock moved below support at $100.02 after releasing lower than consensus U.S. comps.

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Sirius (SIRI), a NASDAQ 100 stock moved above $6.70, $6.72, $7.33 and $7.52 to an all-time high extending an intermediate uptrend.

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Trip.com (TCOM), a NASDAQ 100 stock moved below $31.19 extending an intermediate downtrend.

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American Express (AXP), a Dow Jones Industrial Average stock moved below support at $113.32 despite reporting higher than consensus fourth quarter results.

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FedEx (FDX), an S&P 100 stock moved below $242.42 completing a Head & Shoulders pattern.

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MMM (MMM), an S&P 100 stock moved above $179.62 extending an intermediate uptrend. Response to stronger than expected quarterly report.

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Union Pacific (UNP), an S&P 100 stock moved below support at $197.46

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Industrial SPDRs (XLI) moved below $85.92 completing a double top pattern.

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Wheaton Precious Metals (WPM), a TSX 60 stock moved below US$38.11 extending an intermediate downtrend.

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Base Metals ETN (i/3 each in copper, zinc and aluminum) moved below $17.19 completing a double top pattern.

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TSX Gold iShares (XGD) moved below Cdn$18.73 extending an intermediate downtrend.

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Peleton (PTON), a NASDAQ 100 stock moved below $140.74 completing a double top pattern.

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Barrick Gold (ABX), a TSX 60 stock moved below Cdn$28.59 extending an intermediate downtrend.

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Kinross (K), a TSX 60 stock moved below Cdn$8.75 and US$6.85 extending an intermediate downtrend.

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Aerospace iShares (ITA) moved below $90.44 completing a double top pattern.

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O’Reilly (ORLY), a NASDAQ 100 stock moved below $435.26 setting an intermediate downtrend.

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Waste Connections (WCN), a TSX 60 stock moved below $127.42 completing a Head & Shoulders pattern.

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Canadian National Railway (CNR), a TSX 60 stock moved below $130.90 completing a double top pattern. Thirteen brokers either downgraded the stock or lowered their target price after the company issued lower than consensus guidance.

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Verizon (VZ), a Dow Jones Industrial Average stock moved below intermediate support at $55.43.

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Seattle Genetics (SGEN), a NASDAQ 100 stock moved below $163.54 completing a double top pattern.

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Phillip Morris (PM), an S&P 100 stock moved below $79.86 completing a double top pattern.

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Microchip Technologies (MCHP), a NASDAQ 100 stock moved below intermediate support at 133.96.

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Saputo (SAP), a TSX 60 stock moved below $34.67 completing a double top pattern.

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Trader’s Corner

Equity Indices and Related ETFs

Daily Seasonal/Technical Equity Trends for January 27th 2021

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Green: Increase from previous day

Red: Decrease from previous day

Commodities

Daily Seasonal/Technical Commodities Trends for January 27th 2021

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Green: Increase from previous day

Red: Decrease from previous day

 

Sectors

Daily Seasonal/Technical Sector Trends for January 27th 2021

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Green: Increase from previous day

Red: Decrease from previous day

 

S&P 500 Momentum Barometers

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The intermediate Barometer plunged 21.24 to 46.29 yesterday. It changed from intermediate overbought to intermediate neutral on a move below 60.00. Trend remains down.

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The long term Barometer slipped 3.21 to 88.38 yesterday. It remains extremely long term overbought and has started to trend down.

 

TSX Momentum Barometers

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The intermediate Barometer plunged 15.53 to 44.66 yesterday. It changed from intermediate overbought to intermediate neutral on a move below 60.00 and continues to trend down.

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The long term Barometer dropped 3.88 to 74.27 yesterday. It remains long term overbought and continues to trend 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




10 Responses to “Tech Talk for Thursday January 28th 2021”

  1. bruce Says:

    the aaii survey for the week ending jan.27th shows the bulls down 4.8% to 37.7% and the bears up 3.8 to 38.3%……

  2. Larry/ON Says:

    Looks like the drop is over for now. MSFT really proved why you should maintain a core position in that stock which you never sell.
    GME etc – It all brought up something about stocks I have complained about for years which is that short positions can end up being higher than the entire share float. I object to my broker being able to lend my shares without my permission to someone else to sell short which works against my interests as an investor. To be correct when you set up your account it will be in the contract you sign. You have no choice if you want an account. Someone actually buys my shares and then his/her broker can lend it again to another short seller. On the books I own these shares but they are sold and bought over and over again. If you have a stock with a 148% short position you can generate the mother of all short squeezes.

  3. tony Says:

    Be fearful when others are greedy, and be greedy only when others are fearful.

  4. dutchcanuck Says:

    I had a small position in Blackberry (BB) of 1200sh. Sold it at $24.99 then whined when it went to $36.00. Watsa and the BB execs sold at $17. I have mixed feelings about these Reddit people, some of which are gambling with their next tuition payments. On the other hand it’s about time someone is sticking it to the hedgefunds and the banks.

  5. Vik Says:

    Hope everyone is doing well.
    Curious to learn your thoughts on MU. Semi conductor which has pulled back from its recent high. Lot of positive news/fundamentals behind it as well.
    RSI bullish divergence and so far has respected support.
    https://schrts.co/iqGmscVk

    thanks all

  6. Tina Says:

    Hi Vik!
    I have been looking at MU as well. I agree with the news and fundamentals. On daily it is forming a bullish flag. But my only concern is volume to push it higher.

    I would love to hear from the more experienced here. Thanks!

    dutchcanuck: Good going here!

  7. Larry/ON Says:

    Re 5 – I went completely out of semis two days ago and put the trade back on this morning. MU would be the value play of the sector. I also like TSM or just hold SMH to take stock pick risk out.

  8. Tina Says:

    Larry/ON
    #5 and 6
    What do you think of bullish flag on daily chart of MU?

  9. Ron/BC Says:

    Here is my take on MU along with the SMH. Note the ratio chart of MU:SMH that shows MU outperforming SMH evenly since August and remains in the uptrending channel. On the recent selloff price held the last breakout point over 74.61. All 3 moving averages are rising and remain positive. Only negatives are negative divergences on the last high as well as on both RSIs and the MACD but the recent correction is dealing with that. So overall it’s a bullish chart. BUTTTTTTTTTTTTTTTTTT if price breaks below 74.61 the stock could be in for a more sizeable correction in price and time.

    https://stockcharts.com/h-sc/ui?s=MU&p=D&yr=1&mn=0&dy=0&id=p70048243602&a=882695752

    https://stockcharts.com/h-sc/ui?s=SMH&p=D&yr=1&mn=0&dy=0&id=p12925624260&a=882700822

  10. Larry/ON Says:

    Semis – Long-term great. Short-term volatile. I took my money out as a successful day trade today. This is a bit of a wild market right now and you have to do what you know works for you. I think we will maintain upward trend but I don’t want to be reckless here. On semis I think you want more confirmation. SMH stalled at the 4 day MA and drifted back after filling a bit of the gap from yesterday. I think solid support will be found at 220-215 and there is some short-term risk we may make a brief drop to that level. If semis are strong tomorrow it’s probably good.
    FM – Hat’s off to the successful traders today.

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