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Tech Talk for Monday November 11th 2019

 

The Bottom Line

World equity markets continued moving higher last week in line with their historic period of seasonal strength. Recent concerns have been discounted including an earnings recession by major U.S. companies until the first quarter next year, growing efforts by the Democrats to impeach Donald Trump, continuing trade uncertainties between China and the U.S. and growing Middle East tensions. Despite uncertainties, broadly based European, emerging markets and U.S. equity indices are testing and moving to one year highs, and in some instances, to all-time highs. Seasonal influences remain positive for most equity markets until the first week in January

 

Observations

Seasonal influences this year continue to follow their historic pattern. Seasonal influences on U.S. and Canadian equity markets turned positive in the second half of October. Seasonal influences for equity markets in other developed nations turned positive in early October.

Medium term technical indicators for U.S. equity markets (e.g. Percent of stocks trading above their 50 day moving average, Bullish Percent Index) remain intermediate overbought, but have yet to show signs of peaking.

Medium term technical indicators for Canadian equity markets continued moving higher last week.

Most short term technical indicators for U.S. markets and sectors (20 day moving averages, short term momentum indicators) maintained overbought levels last week.

Short term technical indicators for Canadian markets and sectors remained overbought levels last week.

Third quarter corporate reports start to wind down this week: Another 15 S&P 500 companies are scheduled to report this week including two Dow Jones Industrial company (Cisco Systems and Wal-Mart). The flood by major Canadian companies continues this week. About 89% of S&P 500 companies have reported to date: Consensus for S&P 500 companies now calls for a 2.4% drop in third quarter earnings and a 3.2% increase in third quarter revenues.

Beyond third quarter results, analysts continue to reduce earnings estimates for S&P 500 companies. According to FactSet, fourth quarter earnings are expected to decrease 1.1% (versus a drop of 0.4% last week) and fourth quarter revenues are expected to increase 2.6%. For all of 2019, earnings are expected to increase 0.1% (down from 0.3% last week) and revenues are expected to increase 4.0%. First quarter 2020 earnings are expected to increase 5.3% (down from 5.8%) and revenues are expected to increase 4.5 % . Second quarter 2020 earnings are expected to increase 6.6% (down from 6.7%) and revenues are expected to increase 5.0%. Earnings for all of 2020 are expected to increase 9.7% (down from 9.8%) and revenues are expected to increase 5.4%.

 

Economic News This Week

October Consumer Price Index to be released at 8:30 AM EST on Wednesday is expected to increase 0.3% versus a gain of 0.1% in September. Excluding food and energy, October Consumer Price Index is expected to increase 0.2% versus a gain of 0.1% in September.

Federal Reserve Chairman Jerome Powell gives testimony at 11:00 AM EST on Wednesday.

October Producer Price Index to be released at 8:30 AM EST on Thursday is expected to increase 0.3% versus a decline of 0.3% in September. Excluding food and energy, October Producer Price Index is expected to increase 0.2% versus a decline of 0.3% in September.

Weekly Initial Jobless Claims to be released at 8:30 AM EST on Thursday are expected to increase to 215,000 from 211,000 last week

November Empire State Manufacturing Survey to be released at 8:30 AM EST on Friday is expected increase to 5.0 from 4.0 in October.

October Retail Sales to be released at 8:30 AM EST on Friday are expected to increase 0.2% versus a decline of 0.3% in September. Excluding auto sales, October Retail Sales are expected to increase 0.4% versus a decline of 0.1% in September.

October Industrial Production to be released at 9:15 AM EST on Friday is expected to slip 0.3% versus a decline of 0.4% in September. October Capacity Utilization is expected to slip to 77.2 from 77.5 in September.

 

Selected Earnings News This Week


Trader’s Corner

 

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for November 8th 2019

Green: Increase from previous day

Red: Decrease from previous day

 

Commodities

Daily Seasonal/Technical Commodities Trends for November 8th 2019

Green: Increase from previous day

Red: Decrease from previous day

 

Sectors

Daily Seasonal/Technical Sector Trends for November 8th 2019

Green: Increase from previous day

Red: Decrease from previous day

 

Jeff Parent on BNNBloomberg

Market Comment

https://www.bnnbloomberg.ca/video/jeff-parent-s-market-outlook~1825164

Past Picks

https://www.bnnbloomberg.ca/video/jeff-parent-s-past-picks~1825198

Top Picks

https://www.bnnbloomberg.ca/video/jeff-parent-s-top-picks~1825236

 

Greg Schnell’s Market Buzz

Released at mid-day on Friday. Note Greg’s comments on the U.S. Treasury Note market See:

 

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

Inter Pipeline $IPL.CA, a TSX 60 stock moved below $21.75 setting an intermediate downtrend

Silver ETN $SLV moved below $15.83 setting an intermediate downtrend.

Gold Miners ETF $GDX moved below $26.18 extending an intermediate downtrend. Response to a downgrade of the sector by JP Morgan

IDEXX Labs $IDXX, a NASDAQ 100 stock moved below $257.01 and $256.27 completing a extensive intermediate topping pattern

S&P 500 Momentum Barometers

Percent of S&P 500 stocks trading above their 50 day moving average slipped last week to 66.53 from 70.54. Percent remains intermediate overbought.

Bullish Percent Index of S&P 500 stocks increased last week to 69.20 from 67.60. The Index remains intermediate overbought.

 

TSX Momentum Barometers

Percent of TSX stocks trading above their 50 day moving average increased last week to 59.28 from 56.82. Percent remains intermediate neutral.

Bullish Percent Index for TSX stocks increased last week to 63.95 from 61.80. The Index remains intermediate overbought.

 

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

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