Pre-opening Comments for Monday May 22nd
U.S. equity index futures were higher this morning. S&P 500 futures were up 3 points at 8:30 AM EDT.
Canadian equity markets are closed for the Victoria Day holiday.
Micron dropped $3.01 to $65.16 after the Chinese government sanctioned the company.
Meta Platform fell $3.04 to $242.60 after the company was fined $1.3 billion by the European Union.
![clip_image002[1]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2023/05/clip_image0021-10.png "clip_image002[1]")
Foot Locker dropped $0.65 to $29.56 after Williams Trading downgraded the stock from Hold to Sell. Target was reduced from $38 to $25.
Nike eased $1.76 to $114.76 after Williams Trading downgraded the stock from Hold to Sell.
![clip_image003[1]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2023/05/clip_image0031-10.png "clip_image003[1]")
Technical Scoop
Link to Weekly Technical Scoop offered by David Chapman and www.EnrichedInvesting.com
The Bottom Line
Lots of noise, typical for the month of May and the first three weeks of June! On the positive side, any stock remotely connected to Artificial Intelligence soared last week. The S&P 500 Index and NASDAQ 100 Index briefly touched nine month highs on Friday thanks to their technology equity content connected to AI.
On the other hand,
· Negotiations to extend the U.S. government debt limit were stalled,
· Treasury Secretary Yellen noted that more U.S. bank mergers “may be necessary”
· Several Federal Reserve officials indicated that a reduction in the Fed Fund Rate was unlikely “any time soon” due to “inflation stickiness”,
· Governor for the Bank of Canada offered a similar observation on the Bank of Canada’s interest rate for major Canadian Banks
· Financial analysts on both sides of the border continued to lower second quarter earnings estimates for large cap companies.
Consensus for Earnings and Revenues for S&P 500 Companies
Source: www.Factset.com
Frequency of first quarter results continues to wind down. Another 3% of reports were released last week with 95% of S&P 500 companies reporting to date: 78% have reported higher than consensus earnings per share and 76% have reported higher than consensus revenues (up from 75% last week). Consensus calls for a year-over-year drop in first quarter earnings of 2.2% (versus a drop of 2.5% last week) and an increase in first quarter revenues of 4.1% (up from a gain of 4.0% last week).
Earnings estimates for the second quarter eased again .Consensus for the second quarter calls for a drop of 6.4% in earnings (versus a drop of 6.3% last week) and a drop of 0.3% in revenues (versus a drop of 0.4% last week). Consensus for the third quarter calls for a 0.7% increase in earnings and a 1.1% increase in revenues (down from 1.2% last week). Consensus for the fourth quarter calls for an 8.2% increase in earnings (up from 8.1% last week) and a 3.1% increase in revenues (down from 3.4% last week). For all of 2023, consensus calls for an increase of 1.0% in earnings and a 2.4% increase in revenues (up from 2.3% last week).
Economic News This Week
Source: www.investing.com
April U.S. New Home Sales released at 10:00 AM EDT on Tuesday is expected to drop to 660,000 units from 683,000 units in March.
FOMC Meeting Minutes are released at 2:00 PM EDT on Wednesday
First quarter annualize U.S. GDP released at 8:30 AM EDT on Thursday is expected to increase 1.1% versus a gain of 2.6% in the fourth quarter.
April Durable Goods Orders released at 8:30 AM EDT on Friday are expected to drop 1.1% versus a gain of 2.8% in March. Excluding Transportation Orders April Durable Goods Orders are expected to increase 0.3% versus a gain of 0.3% in March.
April Core PCE Price Index released at 8:30 AM EDT on Friday is expected to increase 0.3% versus a gain of 0.3% in March. On a year-over-year basis, core PCE Price Index is expected to increase 4.6% versus a gain of 4.6% in March.
April Personal Income released at 8:30 AM EDT on Friday is expected to increase 0.4% versus a gain of 0.3% in March. April Personal Spending is expected to increase 0.4% versus unchanged in March.
May Michigan Consumer Sentiment released at 10:00 AM EDT on Friday is expected to drop to 57.7 from 63.5 in April.
Selected Earnings News This Week
Source: www.investing.com
Traders’ Corner
Equity Indices and Related ETFs
Daily Seasonal/Technical Equity Trends for May 19th 2023
Green: Increase from previous day
Red: Decrease from previous day
Commodities
Daily Seasonal/Technical Commodities Trends for May19th 2023
Green: Increase from previous day
Red: Decrease from previous day
Sectors
Daily Seasonal/Technical Sector Trends for May 19th 2023
Green: Increase from previous day
Red: Decrease from previous day
Source for positive seasonal ratings: www.equityclock.com
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
Technical Notes for Friday
Apple $AAPL a Dow Jones Industrial Average stock moved above $175.13 extending an intermediate uptrend.
Accenture $ACN an S&P 100 stock moved above $288.65 completing a base building pattern.
Cadence $CDNS a NASDAQ 100 stock moved above $217.67 to an all-time high extending an intermediate uptrend.
Ross Stores $ROST moved below $99.68 extending an intermediate downtrend.
Restaurant Brands International $QSR.TO a TSX 60 stock moved above Cdn$99.21 to an all-time high extending an intermediate uptrend.
Turkey iShares $TUR moved below $29.09 completing a double top pattern.
Links offered by valued providers
Nvidia Takes Over The Leadership Greg Schnell May 19, 2023
Nvidia Takes Over The Leadership | The Canadian Technician | StockCharts.com
Mark Leibovit: Unexpected U.S. Dollar rally, gold, interest rates.
https://www.howestreet.com/2023/05/unexpected-us-dollar-rally-gold-interest-rates-mark-leibovit/
Michael Campbell’s Money Talks for May 20th
Michael Campbell’s MoneyTalks – Complete Show (mikesmoneytalks.ca)
David Keller says S&P 500 upside is to 4300. May 19th
Fibonacci Says Upside to SPX 4300 | The Mindful Investor | StockCharts.com
Sucker Rally? by Karl Swenlin May 19th
Sucker Rally? | DecisionPoint | StockCharts.com
The Inside Scoop On AI Stocks | Joe Duarte | Your Daily Five (05.19.23)
The Inside Scoop On AI Stocks | Joe Duarte | Your Daily Five (05.19.23) – YouTube
Breakouts and Downtrend Reversals In Key Areas | Mary Ellen McGonagle | The MEM Edge (05.19.23)
Credit card usage will hit an unsustainable level, says Canaccord’s Tony Dwyer
Credit card usage will hit an unsustainable level, says Canaccord’s Tony Dwyer – YouTube
RECESSION EVIDENCE IS BUILDING, TIME TO GET DEFENSIVE, SAYS INFLUENTIAL ECONOMIST DAVE ROSENBERG May 19, 2023
Victor Adair: Trading Desk Notes For May 20, 2023
Trading Desk Notes For May 20, 2023 – HoweStreet
S&P 500 Momentum Barometers
The intermediate term Barometer added 0.40 on Friday and 3.00 last week to 50.60. It remains Neutral.
The long term Barometer slipped 1.40 on Friday, but added 1.20 last week to 50.00. It remains Neutral.
TSX Momentum Barometers
The intermediate term Barometer added 3.88 on Friday and 0.43 last week to 52.59. It remains Neutral.
The long term Barometer slipped 0.43 on Friday and dropped 3.88 last week. It remains Neutral.
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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May 22nd, 2023 at 1:53 pm
B/man/Van
Here is a chart of BNS.to with TD.to and ZEB.to overlaid. BNS.to is far weaker than the other two. There is a one year falling channel on it as well. With the potential of a U.S. financial default on its debt it’s not surprising the banks are not doing well. Once that is resolved which “should be soon” the banks could soar like an eagle again..Unless it really does default!!!!!!!
https://stockcharts.com/h-sc/ui?s=BNS.TO&p=D&yr=4&mn=0&dy=0&id=p13457913449&a=772466157
May 22nd, 2023 at 5:13 pm
Hey Ron/BC,
Thanks for the TD compared to ZEB chart. Here is a way to find out your TFSA contribution room:
https://www.moneysense.ca/save/investing/tfsa-contribution-room-calculator/
May 22nd, 2023 at 7:20 pm
Hey Paula
Thanks for that. I likely over contributed to a TFSA but I was using my 2023 income for a guide even though the year isn’t over. I should have asked my accountant about it. I would be very pizzed off if they charged me 1% per month penalty as that is very extreme and heavy handed. It wouldn’t surprise me though with the Liberals and NDP running things in Ottawa. They are both Socialists by nature and would have difficulty allowing Canadians to make money without being taxed.
May 23rd, 2023 at 7:23 am
It will be interesting where banks go from here. they are reporting Q2 this Wednesday starting with BMO and BNS going.