Pre-opening Comments for Monday February 12th
U.S. equity index futures were mixed this morning. S&P 500 futures were down 1 point at 8:30 AM EST.
Diamondback Energy gained $1.24 to $152.98 after announcing a merger with Endeavor Energy Resources in a deal valued at $26 billion. Endeavour shareholder will receive $8 billion cash and 117.3 million shares of Diamondback. Diamondback also increased its dividend by 7%.
XPO Logistics dropped $2.18 to $118.66 after Morgan Stanley downgraded the stock from Equal Weight to Underweight.
![clip_image002[1]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2024/02/clip_image0021-2.png "clip_image002[1]")
Monday.com dropped $20.96 to $214.96 after the company offered 2024 guidance below consensus.
Big Lots dropped $0.63 to $4.73 on a report that the company is seeking additional financing.
![clip_image004[1]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2024/02/clip_image0041-2.png "clip_image004[1]")
The Bottom Line
Headline reads “S&P 500 Index closes at an all-time high”. The “Magnificent Four” (Microsoft, Amazon, Meta and Nvidia), recently narrowed down from the “Magnificent Seven”, continued to move higher. Their extraordinary overweight in the S&P 500 Index and the NASDAQ 100 Index was the main reason why all-time highs were reached on Friday. Other broadly based U.S. equity indices (e.g. Russell 2000 Index, S&P 500 Equal Weight Index, Dow Jones Transportation Average) remain significantly below their all-time highs set in December 2021.
Ditto for the TSX Composite Index and its related TSX 60 Index! Both reached their all-time highs in the first quarter of 2022.
Note intermediate and long term momentum scores for the S&P 500 stocks and TSX Composite stocks at the end of this report. Their scores continue to roll over from Overbought levels. That does not mean that S&P 500 Index and TSX Composite Index will move lower. It does mean that intermediate upside potential for North American equities is limited. Short term performance will continue to depend on a small number of big cap U.S. equity securities.
Consensus for Earnings and Revenues for S&P 500 Companies
Source: www.FactSet.com
Earnings estimates for the fourth quarter of 2023 were raised again thanks to increased estimates by analysts for the “Magnificent Four” companies following release of their better-than expected fourth quarter results. Sixty seven percent of S&P 500 companies have reported to date. Fourth quarter earnings now are expected to increase 2.9% on a year-over-year basis (versus an increase last week of 1.6%). Estimate for fourth quarter revenues was increased to a gain of 3.9% from a gain of 3.5% last week.
A significant earnings recovery by S&P 500 companies first surfaces in the first quarter of 2024, but at a slightly lower than a previous rate. Consensus for the first quarter on a year-over-year basis calls for an earnings increase of 4.0% (versus increase last week of 4.5%) and a revenue increase of 3.6% (unchanged)
Earnings gains accelerate thereafter to the end of 2024, all-be-it at a slower pace. Consensus for the second quarter calls for a 9.1% earnings increase (versus a 9.4% increase last week) and a 4.8% increase in revenues (versus a 4.7% last week). Consensus for the third quarter calls for an 8.1% increase in earnings (versus previous 8.0% increase) and a 5.0% increase in revenues (versus a 4.7% increase last week). Consensus for the fourth quarter calls for a 17.7% increase in earnings (versus previous 19.0% increase) and a 5.6% increase in revenues. For all of 2024, consensus calls for a 10.9% increase in earnings (versus previous 11.2% increase) and a 5.4% increase in revenues.
Economic News This Week
Source: www.Investing.com
January U.S. Consumer Price Index released at 8:30 AM EST on Tuesday is expected to increase 0.2% versus a gain of 0.2% in December. On a year-over-year basis January CPI is expected to increase 3.0% versus a gain of 3.3% in December. January Consumer Price Index excluding food and energy is expected to increase 0.3% versus a gain of 0.3% in December. On a year-over-year basis January core CPI is expected to increase 3.8% versus a gain of 3.9% in December.
January U.S. Retail Sales ex auto sales released at 8:30 AM EST on Thursday are expected to increase 0.2% versus a gain of 0.4% in December.
February Philly Fed Index released at 8:30 AM EST on Thursday is expected to improve to -8.0 from -10.6 in January.
February Empire State Manufacturing Survey released at 8:30 AM EST on Thursday is expected to improve to -12.50 from -43.70 in January.
January U.S. Capacity Utilization released at 9:15 AM EST on Thursday is expected to increase to 78.8 from 78.6 in December. January Industrial Production is expected to increase 0.3% versus a gain of 0.1% in December.
December U.S. Business Inventories released at 10:00 AM EST on Thursday are expected to increase 0.3% versus a decline of 0.1% in November.
January U.S. Producer Price Index released at 8:30 AM EST on Friday are expected to increase 0.1% versus a decline of 0.1% in December. Excluding food and energy, January PPI is expected to increase 0.1% versus unchanged in December On a year-over-year basis core PPI is expected to increase 1.7% versus a gain of 1.8% in December.
February Michigan Consumer Sentiment released at 10:00 AM EST on Friday is expected to increase to 80.0 from 79.0 in January.
Selected Earnings News This Week
Source: www.Investing..com
Trader’s Corner
Equity Indices and Related ETFs
Daily Seasonal/Technical Equity Trends for Feb.9th 2024
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 Feb.9th 2024
Green: Increase from previous day
Red: Decrease from previous day
Sectors
Daily Seasonal/Technical Sector Trends for Feb.9th 2024
Green: Increase from previous day
Red: Decrease from previous day
Technical Notes for Friday
Chevron $CVX an S&P 100 stock moved above $154.35 resuming an intermediate uptrend.
Synopsys $SNPS a NASDAQ 100 stock moved above $573.77 to an all-time high extending an intermediate uptrend.
Kinross Gold a TSX 60 stock moved below Cdn$5.30 and US$7.14 completing a Head & Shoulders pattern.
Simon Property $SPG an S&P 100 stock moved above $146.91 extending an intermediate uptrend.
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
Your Questions, Answered! Price Gaps, Bull Flags, Inverse Patterns and MORE: David Keller
https://www.youtube.com/watch?v=0roUFdkeHgI
The Bull Case For Stocks as S&P Hits 5,000 with @LukeGromenFFTTLLC: Guy Adami
https://www.youtube.com/watch?v=s485QZIPyEY
Mike’s Money Talks for February 10th
February 10th Episode (mikesmoneytalks.ca)
Best Way To Participate in Stronger Areas of The Market: Mary Ellen McGonagle
https://www.youtube.com/watch?v=-YVJgNev8_4
Master Momentum Using Price Swings and Fibonacci: Joe Rabil
https://www.youtube.com/watch?v=RUMev2kyeYI
Beware the Hindenburg Omen! David Keller
Beware the Hindenburg Omen! | The Mindful Investor | StockCharts.com
Generals March On, but Fewer Troops are Following – Get the Essential Breadth Indicator ChartList
Sentiment Lopsided – Is It a Problem? Erin Swenlin
Sentiment Lopsided – Is It a Problem? | DecisionPoint | StockCharts.com
Lower Interest Rates Do Not Equal Good Times: Bob Hoye
Lower Interest Rates Do Not Equal Good Times – HoweStreet
Is the Stock Market Too Hot? Mark Leibovit
Is the Stock Market Too Hot? – HoweStreet
Trading Desk Notes for February 10th: Victor Adair
Trading Desk Notes For February 10, 2024 – HoweStreet
Danielle Park presents at VRIC 2024: Capital Prospects in 2024
Danielle presents at VRIC 2024: Capital Prospects in 2024 – HoweStreet
Technical Scoop from David Chapman and www.EnrichedInvesting.com
S&P 500 Momentum Barometers
The intermediate term Barometer slipped 1.80 on Friday and dropped 3.40 last week to 63.00. It remains Overbought. Daily trend remains down.
The long term Barometer was unchanged on Friday and dropped 1.80 last week to 70.80. It remains Overbought. Daily trend remains down.
TSX Momentum Barometers
The intermediate term Barometer added 2.67 on Friday, but dropped 9.34 last week to 53.33. It changed from Overbought to Neutral on a drop below 60.00. Daily trend remains down.
The long term Barometer slipped 1.33 on Friday and dropped 6.22 last week to 56.89. It changed from Overbought to Neutral on a drop below 60.00, 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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February 12th, 2024 at 9:01 am
CNQ – Hi Paula. I would not worry too much about this stock. It is a matter of time which can be frustrating when you are watching other stocks rise. I think oil stocks have been used as a source of funds to make other purchases. Everything has washed out of the sector. Burrows has not pulled out of CNQ as far as I know. An argument is being made that when money comes out of other sectors such as tech on a peak some of it will rotate into energy. The old “Shingles Doesn’t Care” commercial goes through my head. CNQ reaches its’ net debt target this quarter and will distribute 100% of its’ cash flow to shareholders. The market doesn’t care. It pays a 5% dividend. The market doesn’t care. Oil inventories are at historic lows. The market doesn’t care. CNQ is dormant but it will come back to life unexpectedly.
February 12th, 2024 at 9:08 am
FFH – Fairfax made an excellent refutation this morning of the phony short selling report. I put my money where my mouth is on Friday and bought. I suspect their earnings report on Thursday will dispel any doubts about this company. Muddy Waters picked the wrong company to try this BS on.
February 12th, 2024 at 2:48 pm
Ron/BC,
Thanks for your updated CNQ chart. Even though it is a daily, it is a longer term chart so shows a bigger perspective. I’ve been trying to hold onto winners longer and thought that a weekly chart would help with that. But I tend to see topping patterns and sell too soon just based on what “might happen”. I’ve recognized this problem but it is a hard one to overcome. I suspect that I have a deep rooted issue with success. Lol
February 12th, 2024 at 3:01 pm
Larry/ON
Thanks for your comment on CNQ. Burrows is probably watching the same chart that Ron/BC created. You are right, the market doesn’t care. It seems to me that the demand for certain stocks as opposed to others is mostly a matter of fashion – what is the most talked about, hyped product out there. That is why some stocks will continue to go up way past their “fundamental value”, whatever that is, according to some very high paid analyst who has to make his/her numbers or lose that bonus. The shiny stock will continue to go up until all of sudden it doesn’t, for who know what reason. This is why charts work and fundamentals don’t matter.
February 12th, 2024 at 3:14 pm
Anyone else interested in ATRL.TO (SNC-Lavalin)? Could be a good entry point?
February 12th, 2024 at 3:43 pm
Here is an etf on the US side that I am interested in. I have watched this on and off for years. First heard about it from Arthur Hill. It is the equivalent of the $SML: S&P 600 small cap index. It is possible for this to outperform QQQ like it did late last year.
https://schrts.co/NwZArWsZ
February 12th, 2024 at 4:20 pm
Still_Learning
Here is a one year Daily chart of ATRL.TO. Not an easy long term chart to read really, but the trend has been up, but has triple topped and is consolidating in an Ascending Triangle,which is a bullish chart pattern overall. I’d prefer a buy at 42 support or on a breakout over 47. The Modified MACD isn’t especially happy but inside a triangle they don’t tend to be as there is too much sideways choppy price action. Watch that short term downtrendline.
https://stockcharts.com/h-sc/ui?s=ATRL.TO&p=D&yr=1&mn=0&dy=0&id=p68243393396&a=1602421304
https://stockcharts.com/freecharts/seasonality.php?symbol=ATRL.TO
February 12th, 2024 at 4:42 pm
Still_Learning
Here is a bigger chart of ATRL.TO. It”s acting much like it did last October.
https://stockcharts.com/h-sc/ui?s=ATRL.TO&p=D&yr=0&mn=6&dy=0&id=p07302435333&a=1602652823
February 12th, 2024 at 5:00 pm
Market Pullback Coming? – My spider sense is tingling a bit. I don’t think anything dramatic is going to happen but I got the sense that there was some profit taking on tech stocks today. Maybe we get a pullback to the 20 day MA on SPX and QQQ. As I said above this could precipitate some rotation into energy. XOP wants to break its’ downtrend line.
February 13th, 2024 at 8:49 am
CNQ is the largest Nat gas producer. It’s this side of their business that is dragging down its performance. When Coastal link comes on stream it will help.