Tech Talk for Monday January 10th 2022

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Pre-opening Comments for Monday January 10th

U.S. equity index futures were lower this morning. S&P 500 futures were down 28 points in pre-opening trade.

Lululemon dropped $24.49 to $330.72 after the company lowered fourth quarter guidance.

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Nike fell $3.12 to $153.85 after HSBC downgraded the stock due to lowered than expected sales in China.

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Alibaba lost $1.20 to $127.60 after Citigroup lowered its target price from $234 to $216.

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EquityClock’s Daily Comment

Following is a link:

http://www.equityclock.com/2022/01/08/stock-market-outlook-for-january-10-2022/

Technical Scoop

A link to David Chapman’s weekly comment

https://enrichedinvesting.com/wp-content/uploads/2022/01/Topping-rhyme-rising-rates-unfriendly-jobs-energy-highs-golden-rebound-be-prepared.pdf

 

The Bottom Line

Comments by the Federal Reserve dominated action by North American equity markets last week. Comments in FOMC meeting minutes implied that the Federal Reserve is willing to temper monetary stimulus sooner than Wall Street expected. The yield on 10 year Treasuries moved above 1.765% to a two year high.

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Observations

Intermediate term technical indicator for U.S. equity markets (Percent of S&P 500 stocks trading above their 50 day moving average) moved lower last week. It remained Overbought. Trend has turned down. See Momentum Barometer chart at the end of this report.

Long term technical indicator for U.S. equity markets (Percent of S&P 500 stocks trading above their 200 day moving average) moved lower last week. It remained Overbought. Trend has turned down. See Momentum Barometer chart at the end of this report.

Intermediate term technical indicator for Canadian equity markets remained Neutral last week. . See Momentum Barometer chart at the end of this report.

Long term technical indicator for Canadian equity markets (Percent of TSX stocks trading above their 200 day moving average) changed from Overbought to Neutral last week. See Momentum Barometer chart at the end of this report.

Consensus estimates for earnings and revenues for 2021 by S&P 500 companies moved slightly higher from our last report on December 20th. According to www.FactSet.com earnings in the fourth quarter are projected to increase 21.7% (versus previous 21.3%) and revenues are projected to increase 12.9% (versus previous 12.8%). Earnings for all of 2021 are projected to increase 45.2% (versus previous 45.1) and revenues are projected to increase 15.9% (versus previous15.8%).

Consensus estimates for earnings and revenues for 2022 by S&P 500 companies also increased slightly. Consensus earnings on a year-over-year basis for the first quarter are projected to increase 6.3% (versus previous 6.2%) and revenues are expected to increase 9.7% (versus previous 9.5%) Earnings in the second quarter are expected to increase 4.2% (versus previous 4.1%) and revenues are expected to increase 7.6% (versus previous 7.5%). Consensus earnings in 2022 by S&P 500 companies are projected to increase 9.4% (versus previous 9.2%) and revenues are projected to increase 7.6% (versus previous7.5%.

 

Economic News This Week

December Consumer Price Index to be released at 8:30 AM EST on Wednesday is expected to increase 0.4% versus a gain of 0.8% in November. Excluding food and energy, the December Consumer Price Index is expected to increase 0.5% versus a gain of 0.5% in November.

December Producer Price Index to be released at 8:30 AM EST on Thursday is expected to increase 0.4% versus a gain of 0.8% in November. Excluding food and energy, the December Producer Price Index increase 0.5% versus a gain of 0.7% in November.

December Retail Sales to be released at 8:30 AM EST on Friday are expected to decline 0.1% versus a gain of 0.3% in November.

December Capacity Utilization to be released at 9:15 AM EST on Friday is expected to increase to 77.0% from 76.8% in November. December Industrial Production is expected to increase 0.3% versus a gain of 0.5% in November.

November Business Inventories to be released at 10:00 AM EST on Friday are expected to increase 1.1% versus a gain of 1.2% in October.

January Michigan Consumer Sentiment to be released at 10:00 AM EST on Friday is expected to slip from 70.6.

 

Selected Earnings News This Week

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Trader’s Corner

Equity Indices and Related ETFs

Daily Seasonal/Technical Equity Trends for Jan.7th 2022

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Green: Increase from previous day

Red: Decrease from previous day


Commodities

Daily Seasonal/Technical Commodities Trends for Jan.7th 2022

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Green: Increase from previous day

Red: Decrease from previous day

Sectors

Daily Seasonal/Technical Sector Trends for Jan.7th 2021

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Green: Increase from previous day

Red: Decrease from previous day

All seasonality ratings are based on performance relative to the S&P 500 Index (except TSX)

 

Links offered by Valued Providers

Greg Schnell focuses on “The Copper Conundrum”. Following is a link:

Copper Conundrum | ChartWatchers | StockCharts.com

 

David Keller from StockCharts notes that “The S&P 500 tests 50 day moving average (again)”.

https://www.youtube.com/watch?t=283&v=D6GueZX7oZ0&feature=youtu.be

 

Mark Leibovit discusses “Inflation, Cryptos, Crude Oil, Lithium and Uranium.

Inflation, Cryptos, Crude Oil, Lithium, Uranium – HoweStreet

 

Michael Campbell’s Money Talks

January 8th Episode (mikesmoneytalks.ca)

 

Links from Mark Bunting and www.uncommonsenseinvestor.com

Top Five Dogs of the Dow For This Year – Uncommon Sense Investor

Best Stock Ideas From Our All-Star Roster – Uncommon Sense Investor

All 71 Stock Market Panic Attacks Since 2009 Have Been Buying Opportunities – Uncommon Sense Investor

 

Technical Scoop from David Chapman and www.EnrichedInvesting.com

 

Seasonality Chart of the Day from www.EquityClock.com

The Steel sector and related ETF (Symbol; SLX) currently is in the middle of its period of seasonal strength from November 27th to February 15th and can last to early May.

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Steel ETF (SLX $55.85) moved above $54.93 last Thursday resuming an intermediate uptrend. The sector is a major beneficiary of the $1.1 trillion U.S. Infrastructure program.

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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

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Technical Notes released on Friday at

StockTwits.com@EquityClock

While the S&P 500 Equally Weighted Index is not immune to January volatility, a trend of outperformance has become apparent versus its capitalization weighted counterpart as positive seasonal tendencies materialize. equityclock.com/2022/01/06/… $SPX $SPY $SPXEW $RSP $EQAL $EQWL $RSPE

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Financials SPDRs $XLF moved above $40.66 extending an intermediate uptrend.

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Bank of America $BAC moved above $48.46 extending an intermediate uptrend

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MetLife $MET an S&P 100 stock moved above $66.64 to an all-time high extending an intermediate uptrend.

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Travelers $TRV a Dow Jones Industrial Average stock moved above $163.00 to an all-time high extending an intermediate uptrend.

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Texas Instruments $TXN moved below $182.43 completing a double top pattern.

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Another tech sector breakdown! Copart $CPRT a NASDAQ 100 stock moved below $138.87 extending an intermediate downtrend.

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Another technology stock breakdown! Xilinx $XLNX moved below $193.10 completing a double top pattern.

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Base metal stocks and related ETFs are moving higher this morning. Rio Tinto $RIO moved above $71.35 extending an intermediate uptrend. Seasonal influences are favourable until at least mid-February and frequently to early May. If a subscriber to EquityClock, see seasonality chart at charts.equityclock.com/rio-…

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Another major base metals breakout! VALE $VALE moved above $14.23 extending an intermediate uptrend. Seasonal influences are favourable to the end of February and frequently to early May. If a subscriber to EquityClock, see seasonality chart at charts.equityclock.com/vale..

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Philip Morris International $PM an S&P 100 stock moved above $98.39 extending an intermediate uptrend. Seasonal influences are favourable to mid-April. If a subscriber to EquityClock, see seasoanlity chart at charts.equityclock.com/phil…

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Johnson & Johnson $JNJ a Dow Jones Industrial Average stock moved above $173.51 extending an intermediate uptrend.

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Wheaton Precious Metals $WPM a TSX 60 stock moved below $38.07 setting an intermediate downtrend.

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Franco-Nevada $FNV a TSX 60 stock moved below US$125.76 extending an intermediate downtrend.

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S&P 500 Momentum Barometers

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The intermediate term Barometer slipped 3.81on Friday and 6.81 last week to 64.13. It remains Overbought and trending down.

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The long term Barometer eased 0.20 on Friday and 2.81 last week. It remains Overbought and trending down.

 

TSX Momentum Barometers

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The intermediate term Barometer eased 0.22 on Friday and 5.83 last week. It remains Neutral.

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The long term Barometer added 0.64 on Friday but slipped 1.35 last week to 58.74. It changed from Overbought to Neutral on a move below 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




7 Responses to “Tech Talk for Monday January 10th 2022”

  1. Ron/BC Says:

    I can’t help but notice how similar real estate prices are rising compared to 1981. Home prices rose sharply from about 1979 to 1981 and were a hot investment then making the news all the time. The stock market was also on a tear and was also doing very well. Interest rates were rising sharply as they have started doing now. Then prices stopped rising and started falling in all categories. A recession began and was brutal on the economy right into 1984 when real estate prices bottomed and the economy started back up again. They say history repeats itself and it appears that’s just what is happening once again.

  2. Paula Says:

    Ron/BC,
    I remember very well the boom in real estate that started in the last half of the 1980’s. Then it was another brutal start to the early 1990’s. People these days don’t believe that real estate can go down. They think it is a one way ride to riches. Of course, having lived through some of these roller coaster ride cycles, makes it harder to get on the ride even when it is going up again. I guess the lesson is to know when to get off. BUT the problem with ACTUAL real estate is that there isn’t a chart and you can’t put a stop loss on it. It’s a lot easier to push a button to sell a stock or ETF than to sell ACTUAL real estate.

  3. Paula Says:

    Ron/BC,
    Awhile ago you posted a chart of SHOP.TO with a potential head and shoulders top. I think at the time you speculated on what the effect would be on the TSX (XIU.TO) would be if SHOP were to fulfill that chart pattern. BUT it went on to make a new all time high. BUT that was a false break out. So where is it now and how will it affect the TSX? (SHOP has been battling it out with RY (Royal Bank) for top dog of the TSX – very different companies.) Can the high flyer drag down the supposed value stocks/rest of the TSX which is mostly banks/financials, energy and materials?

    Perhaps others may have a comment on this question.

  4. Ron/BC Says:

    Paula
    Re#2
    True enough about just pushing a button and buying a stock or ETF to get in and out again. But with real estate you make thousands of dollars on each trade even with commissions and moving costs and property purchase tax (B.C. only) With a stock you are looking at maybe making hundreds of dollars at best each time. Way too many variables with stocks as well. Stocks can drop sharply on a wide variety of reasons. Just look at this chart of the $TSX. See the price drop of 6800 points in a short time period. Note the gap in the middle of the drop. No one got out of that drop easily. With real estate there is plenty of warning of a slow down. In 1981 I bought and sold my last house back then on speculation and when prices were topping and rates were soaring I got out easily and never touched another speculative real estate deal again for years. The slow down in sales was a good warning along with high rates. And when you feel like an expert and are at the top of the world that should tell you to exit as your own ego is about to kill you. I knew a lot of stock traders that you didn’t dare talk about the stock market with along with house prices back then as most got hammered. Many lost everything they had by being over extended. But I agree that perhaps buying a Real Estate type ETF “could be” the answer but I just haven’t found one yet. I need to spend more serious time on that it seems……………and I could short one at highs too.

  5. Ron/BC Says:

    Paula
    The top charts will pull down the broad market every time from what I have seen. They are the Generals and the troops will follow. I’ll post some charts later but now is TIM’S time and a walk on the beach.

  6. Paula Says:

    Ron/BC
    Of course, take your time with Timmy and enjoy your beach walk.

  7. Ron/BC Says:

    Paula
    The big dogs in the XIU.to will determine its direction. I don’t know what weight SHOP.TO has relative to the other big name stocks as I don’t focus on that sort of thing. But if the big name stocks take the lead in a selloff the XIU.to will fall regardless of what the rest of them do. See the two ratio charts above the price chart. The last new high saw price stall at the double top and spin its wheels for awhile with big money trying to force novice traders to cover their shorts and drive the price higher. Didn’t work well as the chart shows and a major selloff occurred. But I don’t think SHOP.to can do any more damage to the XIU.to than the bank stocks. P.S. The seagulls said to say Hi………………

    https://stockcharts.com/h-sc/ui?s=SHOP.TO&p=D&yr=2&mn=0&dy=0&id=p38836700620&a=1050504654

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