Pre-opening Comments for Wednesday September 21st
U.S. equity index futures were higher this morning. S&P 500 futures were up 14 points in pre-opening trade.
Focus today is on results from the FOMC meeting scheduled for release at 2:00 PM EDT. Consensus calls for an increase in the Fed Fund Rate by 0.75% and continuation of a program to reduce the Federal Reserve’s balance sheet by $95 billion per month.
Berkshire Hathaway added $0.27 to $277.40 after Edward Jones upgraded the stock from Hold to Buy.
![clip_image001[1]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2022/09/clip_image0011-10.png "clip_image001[1]")
General Mills added $1.07 to $76.48 after reporting higher than consensus fiscal first quarter results. The company also offered positive guidance.
![clip_image002[1]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2022/09/clip_image0021-13.png "clip_image002[1]")
Western Digital dropped $0.86 to $34.68 after Mizuho downgraded the stock from Buy to Neutral
![clip_image003[1]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2022/09/clip_image0031-8.png "clip_image003[1]")
Micron dropped $1.20 to $49.60 after Mizuho downgraded the stock from Buy to Neutral.
![clip_image004[1]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2022/09/clip_image0041-4.png "clip_image004[1]")
EquityClock’s Daily Comment
Headline reads “Unlike the US, Canada is showing that shelter inflation is rolling over, something that the broader equity market has been seeking to confirm that the worst of inflationary pressures have past”.
http://www.equityclock.com/2022/09/20/stock-market-outlook-for-september-21-2022/
Technical Notes for yesterday
EAFA iShares $EFA moved below $59.54 extending an intermediate downtrend.
Financials SPDRs $XLF moved below $32.48 setting an intermediate downtrend.
Healthcare SPDRs $XLV moved below $124.39 setting an intermediate downtrend.
Pfizer $PFE a Dow Jones Industrial Average stock moved below $44.69 setting an intermediate downtrend.
Medical Devices iShares $IHI moved below $49.80 setting an intermediate downtrend.
Retail SPDRs $XRT moved below $61.47 setting an intermediate downtrend.
eBay $EBAY a NASDAQ 100 stock moved below $40.32 extending an intermediate downtrend.
Micron $MU a NASDAQ 100 stock moved below $51.30 extending an intermediate downtrend.
Cdn. REIT iShares $XRE.TO moved below $16.56 and $16.18 extending an intermediate downtrend.
Trader’s Corner
Equity Indices and Related ETFs
Daily Seasonal/Technical Equity Trends for September 20th 2022
Green: Increase from previous day
Red: Decrease from previous day
Commodities
Daily Seasonal/Technical Commodities Trends for September 20th 2022
Green: Increase from previous day
Red: Decrease from previous day
Sectors
Daily Seasonal/Technical Sector Trends for September 20th 2021
Green: Increase from previous day
Red: Decrease from previous day
EquityClock’s Toronto Money Show Presentation
“On the weekend, we had the pleasure of presenting at the Toronto Money Show on the topic of “Using Seasonality to Determine Where We are in the Economic Cycle.” It was great to see so many of you in person after more than two years of presenting virtually at these events. For those that could not make it, we have uploaded our slide deck to the following link:
https://charts.equityclock.com/featured/toronto_money_show_september_2022
Chart of the day
Technical score for Europe iShares $IEV changed from 0 to -4 when intermediate trend changed from Neutral to Down on a move below $40.25 and when strength relative to the S&P 500 changed from Positive to Neutral. Units remain below their 20 day moving average and their momentum indicators (Stochastics, RSI and MACD) continue to trend down.
S&P 500 Momentum Barometers
The intermediate term Barometer dropped 8.80 to 23.20 yesterday. It remains Oversold. Trend is down.
The long term Barometer dropped 2.80 to 26.20 yesterday. It remains Oversold. Trend is down.
TSX Momentum Barometers
The intermediate term Barometer plunged 9.70 to 37.55 yesterday. It changed from Neutral to Oversold on a drop below 40.00.
The long term Barometer dropped 2.11 to 31.22 yesterday. It remains Oversold. Trend is down.
Disclaimer: Seasonality ratings and technical ratings offered in this report and at
www.equityclock.com are for information only. They should not be considered as advice to purchase or to sell mentioned securities. Data offered in this report is believed to be accurate, but is not guaranteed
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September 21st, 2022 at 2:03 pm
The Fed hiked the rate .75 as expected. They are playing hard ball. Most of my cash is in U.S.$ and I hope GIC rates keep rising. I recall in about 1980 rates were around 20%. That would be nice to get again……………..
September 21st, 2022 at 10:52 pm
I’ve posted this before, and I’ll do it again, with detailed explanations to make sure we really understand this thing. This is the Dynamic Yield Curve page on StockChart at the bottom of this post. Look for the Yield curve Inversion, where the short-term rate is higher than the long-term rate. This “inversion” has been a predictor of Recessions 99% of the time since WW2.
There are two panels:
1) The first panel on the left, is the US Yield Fixed Income Chart, from Short Term 3 months yields, to 30 Yr., at the bottom horizontal. The vertical scale is from 0% to 6.97%, a high in yields that we haven’t seen since before the year 2000.
2) The second panel on the right, is the S&P 500, the benchmark for US equities, from about 1,000 to nearly 5,000 points over the past 20 years or so.
If you click on the Button named “ANIMATE” at the bottom left of the S&P 500 chart, it will animate and take you through the various yield curves over the past 20 years….This will take a few minutes. You can pause it, or refresh the page to take you back to square one.
You will note:
1) The Yield Curve Inverts in 2000, just before the Tech Bubble Crash of 2001-2002.
2) The Yield Curve Inverts in 2007, just before the 2008-2009 Great Recession Crash.
3) The Yield Curve Inverts in 2019, just before the 2020 COVID Pandemic Crash.
4) The Yield Curve Inverts, since early 2022, but very pronounced today…hard to miss the potential impact.
Therefore, logic dictates that we can expect a similar Recession Crash probably sometime soon, maybe even next year. In 2008 the S&P 500 corrected by 48% or so. I would expect a similar Crash. Why a crash? Because nobody believes it. Why? Because too many younger people have only known a Bull market where they have bought the “dips” since 2009, and made money. They expect this trend to continue. Plus, they have never seen interest rates above near zero in 14 years. It will be a shock, as they see this trend as temporary, which it is not. Powell has said so, but they don’t believe it.
The final moments of a Bear Market are always punctuated by what is known as a “Capitulation Low”, where everything is sold in desperation on high volume, after months of chronic grinding lower of the major indexes. This is the proverbial:” I can’t take any more, just get me out of stocks at any price” type of panic. Throwing the proverbial “baby with the bathwater” moment.
This what I am waiting for…..a great buying opportunity, it will be a wonderful gift, for those who are patient. At that point, hold no cash, borrow what you can at maximum and buy the best names. You will make several hundred percent in gains. I’ve done it many times before over the past 40 plus years of trading and investing. It is the one time, where it is as close to a sure thing as you can get in equities.
https://stockcharts.com/freecharts/yieldcurve.php
https://www.investopedia.com/articles/basics/06/invertedyieldcurve.asp
https://www.investopedia.com/terms/c/capitulation.asp
September 21st, 2022 at 11:02 pm
Hi Canuck2004,
Long time no talk.How is the Island living for you?
Thanks for your input. Makes sense. I have been chopped too but trying to HODL cash as much as I can.
September 22nd, 2022 at 9:59 am
Hi Kam,
Don’t come here too often, only when something interesting happens in the markets. Trading accounts are 80% cash, holding just a few equity ETFs for increased income. I use cash ETFs, like CASH, PSA, CSAV and CMR. As rates go up, the cash flow goes up, can use them for margin, fully liquid on the click of a mouse. I like the flexibility.
Island living is ok, miss Vancouver as Victoria is quite small, not much to do here….a quiet life. No Harry Rosen here….lol.
Getting ready to move to our winter home in Phoenix AZ Nov. 1st.