Upcoming BNN Appearance: Jon Vialoux will be on BNN’s Market Call Tonight at 5:30pm ET today June 28th taking your calls on Technical Analysis and Seasonal Investing. CALL TOLL-FREE 1-855-326-6266, EMAIL marketcall@bnn.ca, or TWEET @MarketCall Be sure to send in your video questions for priority response on air. Another Milestone Total number of StockTwits followers exceeded 39,000 yesterday. Previous milestone at 38,000 was reached on June 1st 2017 Observations Moves by the S&P 500 Index, Russell 2000 and NASDAQ Composite Index below their 20 day moving average combined with completion of double top patterns by a variety of sector ETFs (e.g. XLU, XLY) indicated below implies the likelihood of a short term peak by the S&P 500 Index at 2,453.82, by the Dow Jones Industrial Average at 21,535.03 and the NASDAQ Composite Index at 6,341.70. Early technical signs that U.S. Treasury Yields have reached a short term bottom! Yield moved above its 20 day moving average. Strength relative to the S&P 500 Index turned positive. Short term momentum indicators are starting to trend up. StockTwits Released Yesterday @EquityClock The YTD change in NYSE Margin Debt suggests that we have yet to reach euphoric levels. See http://www.equityclock.com/2017/06/26/stock-market-outlook-for-june-27-2017/ Technical action by S&P 500 stocks to 10:00: Quietly bullish. Breakouts: $SIG $DRI $TIF $CCI. No breakdowns. Editor’s Note: After 10:00 AM EDT, breakout included VLO and breakdowns included AMAT, EIX, QRVO, MKC, AEP, ETR, STX, GIS, K, MDLZ, BHI, UAL and PCG. Many of the breakdowns occurred in late trading Base Metals ETN (1/3 copper/zinc/aluminum) moved above $16.08. Nice China play! Good for base metal stocks! Editor’s Note: A short term breakout by copper helped. Steel stocks also moved higher as part of the China play. ‘Tis the season for strength in Base Metal stocks and ETFs to the end of July! Cdn. lumber stocks move higher despite alleged dumping charge by U.S. $CAS.CA $CFP.CA Aerospace & Defense iShares $ITA moved below $155.71 completing a double top pattern. Utilities SPDRs $XLU moved below $52.84 completing a double top pattern. Also breakdowns by $AEP $ETR $EIX Semiconductor ETFs $SOXX and $SMH completed double top patterns. Second Quarter Consensus Earnings per Share For Dow Jones Industrial Average Companies The outlook for second quarter earnings by Dow Jones Industrial Average companies is encouraging, but not as optimistic as the outlook for S&P 500 companies. Consensus for DJIA companies is an average (median) gain on a year-over-year basis of 3.0%. Twenty companies are scheduled to report higher earnings than last year, one company is expected to report no change and nine companies are expected to report lower earnings. In contrast, consensus of year-over-year quarterly earnings by S&P 500 companies calls for an average increase of 6.6%. Dow Jones Industrial Average companies expected to report the highest percent increase include Boeing, Chevron and ExxonMobil. Companies expected to report the highest percent decrease include American Express and General Electric Sell in May and Go Away? By Don Vialoux CMT Following is a copy of a report recently published in the June edition of IFTA Update Equity investors often hear about “Sell in May and Go Away” at this time of year. The saying implies that investors should sell their equity securities in early May and buy them back in late October at a lower price. Dates most frequently connected to the strategy by technical and seasonal analysts are May 5 and October 27. Data during the past 66 periods using May 5 and October 27 does not support the expression. An updated study by EquityClock on the S&P 500 Index applying October 27 as the buy date and May 5 as the sell date recorded a nice profit as expected: the S&P 500 Index gained an average of 8.42% per period and was profitable 80.6% of the periods. However, the study also found that applying May 5 as the buy date and October 27 as the sell date recorded a profit averaging 0.20% per period (i.e., not a loss) and was profitable 62.7% of the time. A shorter study of the past 20 periods confirmed that most profits by the S&P 500 Index were recorded during the October to May period. However, the date for the average optimal time for a seasonal low by the S&P 500 Index was adjusted to October 15, and the date for the average optimal time for the Index to reach a seasonal top was adjusted to June 15. A “grain of truth” has been found in the “Sell in May and Go Away” expression. A study of the past 20 May–October periods found that the S&P 500 Index experienced a correction in every period from their seasonal high to their seasonal low. Losses ranged from a low of 5.3% in 2003 to the “grand-daddy” of losses in 2008 at 41.7%. Average loss per period was 14.9%. Moreover, most losses were abrupt and severe: They tended to happen within one month during the May–October period. All corrections during May–October periods were triggered by unexpected events: For example, the correction last year was triggered by Brexit, the correction in 2015 was triggered by a temporary meltdown by the Chinese equity market, and the correction in 2008 was triggered by a general meltdown by world financial markets. Corrections occur at random times during the May–October period. What will be the trigger this year? Not known at this time (North Korea, U.S. health care and taxes, trade wars?)! In conclusion, the May to October period has a history of proving to be a danger and an opportunity. Investors are wise to be aware of the danger of a correction and should look for an opportunity to buy at annual/seasonal lows after the correction has passed. Investors can avoid most of the damage to North American equity portfolio values during the May–October period by using two simple technical indicators, the 50-day moving average for an Index such as the S&P 500 Index and the VIX Index. These indicators are not perfect and occasionally are whip sawed, but have proven to be reliable during most of the past 20 periods. When the S&P 500 Index moves below its 50-day moving average and the VIX Index spikes, it’s time to lighten portfolio weights in ETFs and stocks related to the S&P 500 Index. What is “Sell in May and Go Away” currently telling us about U.S. equity markets? The VIX Index is quiet: It touched a 24-year low on Monday, May 8. Major U.S. equity indices remain nicely above their 50-day moving average, including the S&P 500 Index at 2,399 with a 50-day moving average at 2,366, the Dow Jones Industrial Average at 21,007 with a 50-day moving average, and the NASDAQ Composite Index at 6,101 with a 50-day moving average at 5,904. The TSX Composite Index has a similar data profile to the S&P 500 Index. The Index at 15,582 is flirting with its 50-day moving average at 15,563. Triggers to avoid damage in Canadian equities and ETFs during the May–October period frequently occur at the same time as triggers by U.S. equity indices. Based on these two technical indicators, liquidation of U.S. equities and ETFs because the May 5 date has passed is not warranted yet. Current seasonal trades in selected sectors, such as biotech, technology, and aerospace, continue to work and are good hold candidates. However, a correction exceeding 5% between May and October this year is highly likely. Watching technical parameters closely to know when to take trading profits prior to the expected correction is preferred. Data showing return by the S&P 500 from seasonal high to seasonal low (May/ October) Editor’s Late Note: Chances are increasing that the S&P 500 Index and Dow Jones Industrial Average reached an intermediate peak on June 19th Trader’s Corner Daily Seasonal/Technical Equity Trends for June 27th 2017 Green: Increase from previous day Red: Decrease from previous day Daily Seasonal/Technical Commodities Trends for June 27th 2017 Green: Increase from previous day Red: Decrease from previous day * Excludes adjustment from rollover of futures contracts Daily Seasonal/Technical Sector Trends for June 27th 2017 Green: Increase from previous day Red: Decrease from previous day S&P 500 Momentum Barometer The Barometer dropped 2.40 to 65.40 yesterday. It remains intermediate overbought and trending down. TSX Momentum Barometer The Barometer slipped 0.41 to 44.21 yesterday. It remains intermediate neutral. Disclaimer: Seasonality and technical ratings offered in this report and 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