Morning Technical Notes for Friday February 19th
NextEra Energy (NEE), an S&P 100 stock moved below $79.61 completing a double top pattern.
![clip_image001[7]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2021/02/clip_image0017-4.png "clip_image001[7]")
Pre-opening Comments for Friday February 19th
U.S. equity index futures were higher this morning. S&P 500 futures were up 15 points in pre-opening trade.
The Canadian Dollar was virtually unchanged at US79.28 cents following release following release of Canada’s December Retail Sales report at 8:30 AM EST. Consensus was a drop of 2.5% versus a gain of 1.3% in November. Actual was a drop of 3.4%
Magna International gained $3.25 to US$78.70 after reporting higher than consensus fourth quarter revenues and earnings. The company also raised its dividend.
![clip_image001[5]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2021/02/clip_image0015-8.png "clip_image001[5]")
Deere gained $16.75 to $317.00 after reporting higher than consensus quarterly revenues and earnings. The company also raised guidance.
![clip_image002[5]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2021/02/clip_image0025-5.png "clip_image002[5]")
Roku added $9.91 to $462.90 after Deutsche Bank, Truist and Susquehanna raised their target price on the stock.
EquityClock’s Daily Comment
Following is a link:
http://www.equityclock.com/2021/02/18/stock-market-outlook-for-february-19-2021/
Note seasonality chart on U.S. Housing Starts.
Technical Notes for Thursday February 18th
Wal-Mart (WMT), a Dow Jones Industrial Average stock moved below $139.19 extending an intermediate downtrend following release of fourth quarter results.
Shanghai Composite Index advanced 20.27 to 3,675.36 following resumption of trade after the one week celebration of Chinese New Year. Chinese New Year was slightly later than usual this year.
The Shanghai Composite Index has a history of moving higher on a real and relative basis until mid-April following the Chinese New Year holiday.
Canadian Tire (CTC.A), a TSX 60 stock moved above $180.30 to an all-time high extending an intermediate uptrend after releasing higher than consensus fourth quarter results.
Gold stocks remain under technical pressure. Kinross Gold moved below US$6.76 and Cdn$8.65 extending an intermediate downtrend.
Solar ETF (TAN) moved below $106.88 and $106.81 completing a Head & Shoulders pattern.
BMO Equal Weight Bank ETF (ZEB) moved above $30.23 to an all-time high extending an intermediate uptrend. Canadian banks stocks and related ETFs are moving higher in anticipation of encouraging fiscal first quarter results scheduled to be released next week.
Royal Bank (RY), a TSX 60 stock moved above $107.75 to an all-time high extending an intermediate uptrend.
Base metal stocks continue moving higher with higher base metal prices (particularly copper). Teck Resources (TECK.B TECK) moved above Cdn$27.08 and US$21.34 extending an intermediate uptrend.
Trader’s Corner
Equity Indices and Related ETFs
Daily Seasonal/Technical Equity Trends for February 18th 2021
Green: Increase from previous day
Red: Decrease from previous day
Commodities
Daily Seasonal/Technical Commodities Trends for February 18th 2021
Green: Increase from previous day
Red: Decrease from previous day
Sectors
Daily Seasonal/Technical Sector Trends for February 18th 2021
Green: Increase from previous day
Red: Decrease from previous day
S&P 500 Momentum Barometers
The intermediate Barometer slipped another 0.40 to 68.54 yesterday. It remains overbought and continues to roll over.
The long term Barometer eased 0.80 to 88.98 yesterday. It remains extremely overbought.
TSX Momentum Barometers
The intermediate Barometer dropped another 3.20 to 59.90 yesterday. It changed from overbought to neutral on a move below 60.00 and has established a downtrend.
The long term Barometer added 0.11 to 76.33 yesterday. It remains 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
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February 19th, 2021 at 3:03 pm
Bernie
Bernie:
Re: Last night’s post – “expect a huge drop in the stock market”
So many people tried to forecast the Canadian Real Estate market. The U.S. big shots were shorting Canadian banks. The consensus was to expect a crash or ?% pull back since 2010 or so. Well the real estate market proved them wrong year after year. Yesterday on the R.E. news channel there well 70 Offers registered on a property. That is the kind of interest we have from coast to coast with very few exceptions.
Ms Yellen calling for more stimulus so maybe the trend continues for much longer just my opinion.
February 19th, 2021 at 3:16 pm
Bernie…above message is from Mary
February 19th, 2021 at 6:29 pm
Mary
I used to buy older homes and renovate them and resell them. I sold the last speculative house deal in 1981 as prices were peaking inspite of the media talking about higher prices. Interest rates hit 21% but people were still buying. It’s been that way with everything when you think about it. Prices back then fell about 25% from 1981 to mid 1984 on the West Coast overall. I know I sold my house in 1983 for $82K and I could have got 120K in 1981 but it was my family home so wasn’t trying to make a buck then. But I did buy a newer home for $115 that had been for sale for $150 so didn’t complain.The point is whenever you see extremes in anything “look out” as the end is near,at least in the short term and is enough to scare the crap out of them with much lower prices.
Here is the WEEKLY $SPX and see how price rallies way past the 200ema and uptrendline and when stretched out like a rubber band does snap and come back down to that 200ema and uptrendline. Right now the $SPX is about 1000 points above the 200ema and over 1300 points above the long term uptrendline. Do you really believe the $SPX and related stocks are not going to come back to its long term averages inspite of all the bullish b.s. Things never change, they just dress up differently.
https://stockcharts.com/h-sc/ui?s=%24SPX&p=W&yr=20&mn=0&dy=0&id=p06329057762&a=720876860
February 19th, 2021 at 6:49 pm
Mary
Here is the Seasonal trend for the market monthly. Note March historically has the worst record of any month.
Also I heard that new stock traders have swamped brokerages with new accounts and are trading like crazy with dollar signs in their eyes. I know I have 4 extension numbers at Questrade to speak to someone and none of them can answer the phone. I called in November to remind them to send me U.S. dollars for my percentage of my U.S. RIF money I must take yearly and they just sent me CD$ and charged me the exchange. They didn’t have time to even email me. So I think I can assume the market is in a frenzy swamping the brokerages.
Thankfully the condo market here while still busy and healthy isn’t anything like the single family house market. You wont see a for sale sign on almost any house here without a SOLD sign on it also. Nothing new about this type of frenzy and it always ends badly. So don’t be impressed with extreme activity as it’s always a warning of trouble ahead. Just don’t know ‘exactly’ when………….
February 19th, 2021 at 6:50 pm
Mary
Here is the seasonal trend chart I mentioned.
https://stockcharts.com/freecharts/seasonality.php?symbol=%24SPX
February 19th, 2021 at 7:27 pm
Ron/BC
NTR
RE #5: I always thought October was the worst month for stocks, thanks for the chart. I agree with you everything that goes up must come down, however maybe not now until interest rates goes up and Governments stops adding stimulus, until then …….
Condo rental inventory is high in Toronto. Students and ABnB no where to be found yet every week new projects are opening up. My guess is one day we will have an oversupply but until then 1.54%—5 year interest rate is accelerating the HOT market.
February 20th, 2021 at 11:21 am
Mary
This is all I’m saying………………
https://www.youtube.com/watch?v=6X7Sx62plCw
February 20th, 2021 at 2:41 pm
Ron/BC,
Thank you for reminding us to be cautious about this highly value market.
https://www.longtermtrends.net/market-cap-to-gdp-the-buffett-indicator/
Mary,
From what I read, Sept is the worst month for stock market on average for a long stretch of time. But Oct has had a few terrible months such as Black Monday, 1987. The chart #5 is only from 5 years data, last Mar should weight heavily on it.
February 20th, 2021 at 8:42 pm
I wonder what is taking so long for the next stimulus to be implemented. What if it’s not as big as they been saying and or what if they start tapering after this one. If they mention that they will start to taper after this package, people are going to hold on to their cheques and probably massive lay offs as yields keep increasing.
What does anyone think about this?
February 20th, 2021 at 8:50 pm
Mary,
Re: #1 & 2
You may very well be right. I’m just going by my gut. Valuations are extremely high, I just feel they will come down soon rather than later. I sure hope anyway. I’m sitting on a bit of cash I want to deploy, I’m usually fully invested.
xh,
Re: #8
March is still the worst month measured with data up to the past 10 years. Beyond 10 years its Sept.
February 20th, 2021 at 10:38 pm
XH
Thanks for the link.
Here is a 20 YEAR Weekly chart of XIU.to with SPY overlaid. The chart is marked in green where the price goes below the 200ema. Just as the sun will go down at night the price will also come down back below the 200ema at some point as it always has. So one strategy would be to get long once price re-clears the 200ema after its selloff. Or buy when price begins its rebound after a selloff with a “portion” of your funds and invest the balance of you funds after price re-clears the 200ema. All the bullish b.s. stories out there will never change the fact that over exuberance at price extremes will reverse price direction. One just never knows exactly when………………
https://stockcharts.com/h-sc/ui?s=XIU.TO&p=W&yr=20&mn=0&dy=0&id=p01505078278&a=775484261
February 21st, 2021 at 5:32 pm
Ron/BC,
Thanks as always, and I’ll pay more attention to the charts.
Bernie,
Thanks for pointing that out. It looks like RRSP contribution deadline may not be able to have a big effect on TSE performance in March, since TSE follows S&P.
February 21st, 2021 at 6:02 pm
Ron/BC and others
Thanks for your input and charts and reminder life is not a gamble because losing our nest egg will have great consequences.
Tony
If your indicator shows a “sell” signal on the market could you please post. Thanks in advance.
February 21st, 2021 at 7:25 pm
Hi Ron/BC,
Wanted to thank you for your chart on MU. Has worked out well so far. Making new highs. Targets from analysts are as high as $130. What would indicate to you that it is time to get out? Appreciate your thoughts.
Thanks for the OVV and OVV.TO chart as well. You make them look so simple.
February 21st, 2021 at 7:26 pm
BTW, does anybody trade USD and CAD using DLR and DLR/U charts? Thanks in advance.
February 21st, 2021 at 9:09 pm
Tina
When analysts predict price to go up to $130 that to me would be a warning. The stock has had a good run but the negative divergences on both RSIs mean there is a loss of momentum on each new high peak. In other words perhaps smart money is getting out with their pockets full. But the chart right now is healthy with no price signs of a selloff yet. The emas are still intact along with the uptrendline. Price is a very long ways from home (200ema), which suggests an overdone market. If I owned it I would not want to see price close below 85. But with price at almost $91 that would be a lot to leave on the table. Selloffs tend to be sharp and catch people by surprise. A close trailing stop would work as long as you can live with getting stopped out and then seeing price go to new highs. That never bothered me as I was always happy to have filled my pockets and moved on. There is always another stock…………
And OVV still looks good after clearing $18 and is pulling back. A pullback to $18 would be support as long as price held there without breaking below.
https://stockcharts.com/h-sc/ui?s=MU&p=D&yr=1&mn=6&dy=0&id=p55762895148&a=882695752
https://stockcharts.com/h-sc/ui?s=OVV&p=D&yr=2&mn=0&dy=0&id=p64821028628&a=893802423