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Tech Talk for Monday June 15th 2020

 

The Bottom Line

Equity markets around the world moved lower last week. North American equity markets started to drop from extremely intermediate overbought levels. Concern about a second wave of the coronavirus and possibility of a vaccine before the end of the year continue to influence equity prices. The VIX Index moved higher and remains elevated, typical for North American equity markets between May and October.

 

Observations

The VIX Index (better known as the Fear Index) rose sharply on Thursday advancing 11.57 last week to 36.09 by Friday.

Medium term technical indicators for U.S. equity markets (e.g. Percent of S&P 500 stocks trading above their 50 day moving average) remained intermediate overbought and have started to trend down. See Barometer chart at the end of this report.

Medium term technical indicators for Canadian equity markets also remained intermediate overbought and have started to trend down. See Barometer chart at the end of this report.

Most short term short term momentum indicators for U.S. markets and sectors (20 day moving averages, short term momentum indicators) have peaked and are moving lower

Short term momentum indicators for Canadian markets and sectors also have peaked and are moving lower.

Year-over-year consensus earnings for S&P 500 companies were virtually unchanged last week. According to FactSet, second quarter 2020 earnings are expected to fall 43.5% (versus a drop of 43.3% last week) and revenues are expected to drop 11.2% (versus 11.5% last week). Third quarter earnings are expected to fall 25.1% and revenues are expected to decrease 5.5% (versus a drop of 5.8% last week). Fourth quarter earnings are expected to decrease 12.6% and revenues are expected to decline 1.3% (versus a drop of 1.4% last week). Earnings for all of 2020 are expected to decrease 21.4% (versus a decline of 21.3% last week) and revenues are expected to decrease 4.0% (versus a drop of 3.0% last week). Earnings for all of 2021 are expected to increase 28.6% (versus an increase of 28.1% last week) and revenues are expected to increase 8.5% (versus an increase of 8.6% last week).

 

Economic News This Week

June Empire State Manufacturing Survey to be released at 8:30 AM EDT on Monday is expected to improve to -27.50 from -48.59 in May.

May U.S. Retail Sales to be released at 8:30 AM EDT on Tuesday are expected to improve 8.0% versus a drop of 16.4% in April. Excluding auto sales, May U.S. Retail Sales are expected to improve 5.1% versus a drop of 17.2% in April.

May Industrial Production to be released at 9:15 AM EDT on Tuesday is expected to increase 3.0% versus a drop of 11.2% in April. May Capacity Utilization is expected to improve to 66.9% from 64.9% in April.

April Business Inventories to be released at 10:00 AM EDT on Tuesday are expected to drop 0.8% versus a decline of 0.2% in March.

May Housing Starts to be released at 8:30 AM EDT on Wednesday are expected to increase to 1.100 million units versus 0.891 million units in April.

May Canadian Consumer Price Index to be released at 8:30 AM EDT on Wednesday is expected to increase 0.7% versus a fall of 0.7% in April.

June Philly Fed Index to be released at 8:30 AM EDT on Thursday is expected to improve to -25.0 from -43.1 in May.

Canadian April Retail Sales to be released at 8:30 AM EDT on Friday are expected to drop 15.1% versus a drop of 10.1% in March. Excluding auto sales, April Retail Sales are expected to drop 5.0% versus a decline of 0.4% in March.

 

Selected Earnings News This Week

Five S&P 500 stocks are scheduled to release quarterly results this week.

 

Trader’s Corner

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for June 12th 2020

Green: Increase from previous day

Red: Decrease from previous day

 

Commodities

Seasonal/Technical Commodities Trends for June 12th 2020

Green: Increase from previous day

Red: Decrease from previous day

.

Sectors

Daily Seasonal/Technical Sector Trends for June 12th 2020

Green: Increase from previous day

Red: Decrease from previous day

 

The Canadian Technician

Comment released by Greg Schnell on Friday. Headline reads, “Some Charts Of Interest After Thursday’s Bear Claw”. Following is a link:

https://stockcharts.com/articles/canada/2020/06/some-charts-of-interest-after-493.html

 

The Pitch

Released on Friday by StockCharts. Greg Schnell comments on the favourable outlook for copper and base metal stocks. Following is a link:

 

Technical Notes

No broadly based equity indices, commodities and sectors broke intermediate support or resistance levels on Friday.

 

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

 

S&P Momentum Barometer

The Barometer dropped last week from 96.99 to 80.96. It remains extremely intermediate overbought and has started to trend down.

 

TSX Momentum Barometer

The Barometer dropped last week from 90.58 to 75.57. It remains extremely intermediate overbought and has started to trend 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

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