Pre-opening Comments for Monday August 21st
U.S. equity index futures were higher this morning. S&P 500 futures were up 21 points in pre-opening trade.
Palo Alto gained $25.34 to $235.02 after reporting higher than consensus quarterly results.
![clip_image001[1]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2023/08/clip_image0011-11.png "clip_image001[1]")
Hecla Mining dropped $0.14 to $4.44 following a mine shaft collapse at its Lucky Friday mine in Idaho.
![clip_image002[1]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2023/08/clip_image0021-10.png "clip_image002[1]")
XPeng advanced $0.78 to $15.76 after Bank of America upgraded the stock from Hold to Buy.
EquityClock’s Daily Comment
Headline reads “The recent divergence of the path of corporate bonds versus the S&P 500 Index provides a rather concerning view of the potential trajectory of risk assets moving forward”.
https://equityclock.com/2023/08/19/stock-market-outlook-for-august-21-2023/
The Bottom Line
Intermediate swing traders looking for continuation of an upward trend by North American equity markets were rewarded for their patience last week. The S&P 500 Index at 4,369 moved closer to technical support near 4,200. The TSX Composite Index at 19,818 moved closer to technical support near 19,400.
Economic focus this week is on the Jackson Hole Symposium from August 24th to August 26th. Federal Reserve Chairman Powell’s speech is the highlight. Recent price drops by long term Government Treasuries and related ETFs (e.g. TLT and IEF) hint that the FOMC is leaning toward a higher Fed Fund Rate that will remain elevated until at least late this year.
Economic News This Week
Source: www.investing.com
July U.S. Existing Home Sales released at 10:00 AM EDT on Tuesday are expected to slip to 4.15 million units from 4.16 million units in June.
Canadian June Retail Sales are released at 8:30 AM EDT on Wednesday
July U.S. New Home Sales released at 10:00 AM EDT on Wednesday are expected to increase to 701,000 from 697,000 in June.
July Durable Goods Orders released at 8:30 AM EDT on Thursday are expected to drop 4.0% versus a gain of 4.7% in June.
Discussions on U.S. interest rates are held at the Jackson Hold Symposium from Thursday to Saturday.
August Michigan Consumer Sentiment released at 10:00 AM EDT on Friday is expected to slip to 71.2 from 71.6 in July
Selected Earnings News This Week
Source: www.investing.com
Focuses this week are on U.S. retailers and Canadian banks.
Trader’s Corner
Equity Indices and Related ETFs
Daily Seasonal/Technical Equity Trends for August 18th 2023
Green: Increase from previous day
Red: Decrease from previous day
Source for all positive seasonality ratings: www.EquityClock.com
Commodities
Daily Seasonal/Technical Commodities Trends for August 17th 2023
Green: Increase from previous day
Red: Decrease from previous day
Sectors
Daily Seasonal/Technical Sector Trends for August 18th 2023
Green: Increase from previous day
Red: Decrease from previous day
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
Links offered by valued providers
Michael Campbell’s Money Talks for August 19th
Michael Campbell’s MoneyTalks – Complete Show (mikesmoneytalks.ca)
A Red Bar on the Homebuilders ETF AUGUST 18, 2023 AT 09:00 AM Greg Schnell
https://stockcharts.com/articles/canada/2023/08/a-red-bar-on-the-homebuilders-401.html
Heads Up! 10-Year Treasury Yield Could Go All the Way To FIVE Percent?! | The Final Bar (08.17.23 (Features comments by Tony Dwyer from Canaccord Genuity
We are close to bottoming from recent market decline, says Fundstrat’s Mark Newton
We are close to bottoming from recent market decline, says Fundstrat’s Mark Newton – YouTube
Is NOW the Right Time to be Buying These Commodities? | Your Daily Five (08.18.23)
Is NOW the Right Time to be Buying These Commodities? | Your Daily Five (08.18.23) – YouTube
The August volatility reflects seasonal profit-taking, says BMO’s Brian Belski
The August volatility reflects seasonal profit-taking, says BMO’s Brian Belski – YouTube
El-Erian on Markets, Economy and Powell at Jackson Hole
El-Erian on Markets, Economy and Powell at Jackson Hole – YouTube
August 18, 2023 | More Signs of China’s Crumbling Economy: Bob Hoye
More Signs of China’s Crumbling Economy – HoweStreet
August 17, 2023 | What are the Odds Fed Will Hike Rates? Mark Leibovit
What are the Odds Fed Will Hike Rates? – HoweStreet
August 17, 2023 | China’s Economic Woes Slowing Demand for Oil: Josef Schachter
China’s Economic Woes Slowing Demand for Oil – HoweStreet
Trading Desk Notes For August 19, 2023: Victor Adair
Trading Desk Notes For August 19, 2023 – HoweStreet
Burry, famous for ‘Big Short,’ bought bearish options against S&P, Nasdaq 100
Burry, famous for ‘Big Short,’ bought bearish options against S&P, Nasdaq 100 (yahoo.com)
Links from Mark Bunting and www.uncommonsenseinvestor.com
These Stocks Could Rise Three-to-Five Times. – Uncommon Sense Investor
Technical Notes for Friday
Base Metals ETF XBM.TO moved below intermediate support at $Cdn$18.81.
Israel iShares $EIS moved below $54.01 setting an intermediate downtrend.
Lithium ETF $LIT moved below $57.36 extending an intermediate downtrend.
Colgate $CL an S&P 100 stock moved below $73.75 extending an intermediate downtrend.
Constellation Software $CSU.TO a TSX 60 stock moved below Cdn$2,634.66 and $2,592.00 setting an intermediate downtrend.
Thomson Reuters $TRI.TO a TSX 60 stock moved below intermediate support at Cdn$170.56.
S&P 500 Momentum Barometers
The intermediate term Barometer added 1.00 on Friday, but plunged 20.00 last week to 35.40. It changed from Neutral to Oversold on a drop below 40.00. Daily trend remains down.
The long term Barometer added 0.60 on Friday, but dropped 9.40 last week to 54.20. It changed from Overbought to Neutral on a drop below 60.00. Daily trend remains down.
TSX Momentum Barometers
The intermediate term Barometer slipped 0.44 on Friday and plunged 22.51 to 37.44 last week to 37.44. It changed from Neutral to Oversold on a drop below 40.00. Daily trend remains down.
The long term Barometer was unchanged on Friday and down 8.81 last week to 48.46. It remains Neutral. Daily trend remains 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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August 21st, 2023 at 9:49 am
Paula. Re SU vs CNQ – SU has been doing a little “catch-up”. It’s relative outperformance is very short term and you just have to look at longer term charts. It’s now RSI overbought. CNQ is a much better managed company and it commands a slightly higher multiple. On a technical basis stocks that break resistance to make new highs particularly after a consolidation period are better holds than the laggards. Between the two I would hold CNQ but you can of course split your money between the two. Another consideration is to simply hold XOP or XEG.
August 21st, 2023 at 12:36 pm
Ron/BC, thanks for you updated chart and comments last night. I always appreciate your perspective.
Larry/On, thanks for your comments. FYI, I have been in and out of SU and CNQ for years. I used to write options on them as a way of increasing the already generous dividends. I currently have a position in both of these. I prefer these two stocks as opposed to the XEG, which does not have as high a yield. It also does not really offer the diversification on energy stocks since SU and CNQ make up such a high weighting. Also prefer the Canadian energy stocks since they are undervalued relative to the XOP.
August 21st, 2023 at 1:18 pm
Paula
Here again is the chart I posted yesterday along with CNQ.to. Note both stocks are backing off from their long term downtrendlines and see the negative divergences showing up. If I had a gun to my head I’d short them here,BUTTTTTTTTTTTT I don’t have a gun to my head so I’ll just go enjoy the day instead golfing………………….
https://stockcharts.com/h-sc/ui?s=SU.TO&p=D&yr=2&mn=0&dy=0&id=p38692056514&a=734261051
https://stockcharts.com/h-sc/ui?s=CNQ.TO&p=D&yr=2&mn=0&dy=0&id=p56460536831&a=673066382
August 21st, 2023 at 2:32 pm
Ron
Thanks for the comments last week on AC. Given Don’s tech talk today looks like we continue to be on the same path for the market overall to continue to move down. The real question is will the supports hold when we start to test this limits later this month or next?
August 21st, 2023 at 5:34 pm
Ron/BC, thanks for the updated charts. I see what you mean about the divergences.
Have fun golfing!
August 21st, 2023 at 7:08 pm
Bman
Here is AC.to again. Note the big bearish negative divergence on the peak price along with the perfect Head and Shoulder pattern. But recently the positive divergence on the recent lows.So “IF” price can reclear $23 it would likely run up to $25.79 again. But a break any lower would likely see a selloff to the uptrendline. Also check the seasonal trend chart to see September is the most bearish month of them all.
(This site is not showing my name anymore for some reason.)
https://stockcharts.com/h-sc/ui?s=AC.TO&p=D&yr=2&mn=0&dy=0&id=p33401022926&a=923026297
https://stockcharts.com/freecharts/seasonality.php?symbol=AC.TO