WALL STREET RAW RADIO – SATURDAY, SEPT 22, 2018 WITH YOUR HOST, MARK LEIBOVIT GUESTS INCLUDE: DON VIALOUX, HENRY WEINGARTEN, HARRY BOXER, JIM ROHRBACH AND SINCLAIR NOE https://tinyurl.com/y728rpqc Excerpts from Wall Street Raw by Don Vialoux Highlight last week was strength in cannabis stocks. The Cannabis ETF (HMMJ) surged more than 9% to an all-time high despite not including Tilray in its portfolio content. Tilray has been the hottest stock in the sector in recent weeks. On Friday, Horizons announced its intention to include Tilray in the portfolio. Natural gas led the advance in commodity prices last week. Prices gained over 7%. Inventory levels in the U.S. remains at a 20 year low. Seasonal influences are positive between now and late December Metal prices and related equities and ETF also moved smartly higher. Copper gained 3.5%. Gold gained about 1%. Selected gold stocks such as Barrick Gold broke above short term base building patterns. Prices in natural gas, gold and base metals were helped last week by weakness in the U.S. Dollar Index. The U.S. Dollar Index dropped below 94.34 to a 3 month low setting an intermediate downtrend. Weakness in the U.S. Dollar is ironic. The Federal Reserve is widely expected to increase the Fed Fund rate by 0.25% next Wednesday. The yield on 10 year Treasuries moved above 3%, a scenario that normally leads to strength in the U.S. Dollar Index. The Canadian dollar responded daily last week in response to NAFTA negotiations. Canadian negotiators appear to be delaying a conclusion until after the Quebec election on October 1st The Bottom Line Seasonal influences for major U.S. equity indices have not followed their regular pattern this year. Seasonal influences normally turn Negative from the third week in July to mid-October. The S&P 500 and Dow Jones Industrial Average reached all-time highs. On the other hand, the NASDAQ Composite Index and Russell 2000 Index continued to struggle and continued to move lower from their August 31st highs. Seasonal influences are particularly relevant during U.S. Mid-term election years. Volatility in equity markets normally increases from late April to mid-October due to concerns about a possible change in political control in Congress. These concerns are very real this year. Republicans control the House by 16 votes and the Senate by one vote. On average during a Mid-term election year, the controlling party loses 24 House seats to the opposition party. Recent election polls suggest that history is about to repeat.Anticipation of a possible change, regardless of the final result, is a major reason for a correction in North American equity markets into October In contrast, Canadian equity markets continue to follow their seasonal pattern. They normally are negative from the third week in July to mid-October. This year, the TSX Composite Index has moved lower from its seasonal peak reached on July 13th. Last week the Index recovered to the bottom of its Head & Shoulders pattern . The summer swoon in North American equity markets frequently is related to increased volatility into October. It has not happened yet this year. Last week, the VIX Index slipped lower to 11.68. Traders will continue to monitor closely Most equity markets around the world outperformed North American equity markets last week. The EAFA Index gained 2.8%. Weakness in the U.S. Dollar Index contributed to their strength. Notable was strength in the Shanghai Composite Index, up 4.32%. On Friday the Index moved above 2791.39 completing a double bottom pattern. Economic News This Week August New Home Sales to be released at 10:00 AM EDT on Tuesday are expected to increase to 634,000 from 627,000 in July. FOMC meeting results are released at 2:00 PM EDT on Wednesday. Consensus is that the Fed Fund rate will increase 0.25% to 2.00%-2.25%. Press conference is offered at 2:30 PM EDT. Weekly Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to increase to 210,000 from 201,000 last week. August Durable Goods Orders to be released at 8:30 AM EDT on Thursday are expected to increase 1.8% versus a decline of 1.7% in July. Excluding transportation, August Durable Goods Orders are expected to increase 0.3% versus a gain of 0.1% in July. Next estimate of second quarter U.S. real GDP to be released at 8:30 AM EDT on Thursday is expected to remain unchanged at 4.2%. Bank of Canada Governor Poloz is scheduled to speak at 5:45 PM EDT on Thursday. July Canadian GDP to be released at 8:30 AM EDT on Friday is expected to increase 0.1% versus no change in June. August Personal Income to be released at 8:30 AM EDT on Friday is expected to increase 0.4% versus a gain of 0.3% in July. August Personal Spending is expected to increase 0.3% versus a gain of 0.4% in July. September Chicago PMI to be released at 9:45 AM EDT on Friday is expected to slip to 62.4 from 63.6 in August. September Michigan Consumer Sentiment to be released at 10:00 AM EDT on Friday is expected to slip to 100.6 from 100.8 in August. Earnings News This Week Eight S&P 500 companies (including one Dow Jones Industrials: Nike) are scheduled to report quarterly results this week. Observations Technical action by individual S&P 500 stocks was bullish last week. Number of stocks breaking intermediate resistance totaled 60 (including 13 energy stocks) while number of stocks breaking support totaled 21 (including 11 utilities stocks and several REITs). The Up/Down ratio increased last week to (294/137=) 2.15 from 1.85. U.S. economic focus this week is on the FOMC meeting report released on Wednesday. Canadian economic focus this week is on Bank of Canada’s Governor Poloz speaking on Thursday. Medium term technical indicators for U.S. equity markets (e.g. Percent of stocks trading above their 50 day moving average, Bullish Percent Index) moved higher last week and remain intermediate overbought. Medium term technical indicators in Canada also moved higher last week. They are intermediate neutral and continue to trend lower. Short term technical indicators for U.S. markets and sectors (20 day moving averages, short term momentum) trended higher last week Short term technical indicators for Canadian markets and sectors also trended higher last week. Short term political concerns remain elevated. Issues include heightened tariff wars, stalled NAFTA negotiations, the Mueller investigation, the Rosenstein controversy and ramp up of U.S. mid-term election political rhetoric. Longer term outlook for S&P 500 company earnings remains positive, but less positive than previous. According to FactSet, earnings gains during the next four quarters will be strong on a year-over-year basis, but at a slightly lower rate than previous. Consensus calls for a 20.4% increase in earnings (down from 21.1%) and a 7.6% increase in sales in the third quarter. Consensus calls for a 17.3% increase in earnings (down from 17.5%) and 6.1% increase in sales in the fourth quarter. Consensus calls for a 20.4% increase in earnings (down from 20.6%) and an 8.1% increase in sales for 2018. Consensus calls for a 7.1% increase in earnings (down from 7.2%) and 6.3% is sales in the first quarter 2019. Consensus calls for a 7.3% increase in earnings (down from 7.5%) and 4.5% in sales in the second quarter 2019. Consensus for 2019 calls for a 10.3% increase in earnings and a 5.3% increase in sales. Trader’s Corner Daily Seasonal/Technical Equity Trends for September 21st 2018 Green: Increase from previous day Red: Decrease from previous day Commodities Daily Seasonal/Technical Commodities Trends for September 21st 2018 Green: Increase from previous day Red: Decrease from previous day Sectors Daily Seasonal/Technical Sector Trends for September 21st 2018 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 StockTwits Released on Friday @EquityClock Copper ETN $COPX moved above $22.39 completing a double bottom pattern. Editor’s Note: Nice breakout by copper futures on Friday above $2.757 completing a double bottom pattern. Another Canadian forest product stock breakdown! WFT.CA moved below $76.81. Cisco $CSCO, a Dow Jones Industrial stock moved above $48.06 to an 18 year high extending an intermediate uptrend. Technical action by S&P 500 stocks to 10:00: Bullish. Breakouts: $BKNG $MDLZ $AAP $ILMN $MTD $DAL $CSCO. No breakdowns. Editor’s Comment: After 10:00 AM EDT, breakouts included OMC and FLT. Breakdown: FOX.A Cineplex $CGX.CA moved above $33.78 extending an intermediate uptrend. Another base metal stock breakout! VALE $VALE moved above $14.87 to a 5 year high extending an intermediate uptrend. Canada Retail Trade down 4.0% (NSA) in July, weaker than 1.0% decline that is average for the month. $MACRO #CDNecon #CAD Canada CPI still running well above average in 2018 despite August’s downtick. $MACRO #CDNecon #CAD Brookfield Asset Management $BAM, a TSX 60 stock moved above $44.11 U.S. to an all-time high extending an intermediate uptrend. Tired of seeing your seasonal fund remain stagnant when seasonally favoured sectors move higher? Consider switching to the Seasonal Advantage Portfolio http://www.equityclock.com/About/Seasonal-Advantage-Portfoli... … https://twitter.com/hashtag/SeasonalInvestingDoneRight?src=hash!function(d,s,id){var js,fjs=d.getElementsByTagName(s)[0],p=/^http:/.test(d.location)?'http':'https';if(!d.getElementById(id)){js=d.createElement(s);js.id=id;js.src=p+"://platform.twitter.com/widgets.js";fjs.parentNode.insertBefore(js,fjs);}}(document,"script","twitter-wjs");t S&P 500 Momentum Barometers Percent of S&P 500 stocks trading above their 50 day moving average increased last week to 73.20 from 69.20. Percent remains intermediate overbought. Bullish Percent Index for S&P 500 stocks increased last week to 68.40 from 67.00. The Index remains intermediate overbought. TSX Momentum Barometers Percent of TSX stocks trading above their 50 day moving average increased last week to 40.17 from 38.24. Percent has returned to intermediate neutral from intermediate oversold, but continues to trend down. Bullish Percent Index for TSX stocks increased last week to 55.10 from 53.47. The Index remains intermediate neutral and trending down. 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