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Tech Talk for Monday June 24th 2019

 

The Bottom Line

Bad news was good news for equity prices last week: Conflicts with Iran escalated and oil and oil equity prices moved higher. The Fed hinted that the Fed Fund rate will decline at the end of July due to a slowdown in growth by the U.S. economy and equity prices moved higher. The U.S. Dollar Index plunged 1.4%, normally a sign of less confidence in the currency and the S&P 500 Index advanced to an all-time high. U.S. analysts lowered their earnings estimates again and money flows into U.S. equities escalated. Let the merry-go-round continue for a while longer fully realizing that the end includes dizziness and discomfort.

 

Observations

Technical action by individual S&P 500 stocks remained bearish last week. Number of stocks breaking intermediate resistance totaled 46 while number of stocks breaking support totaled 6. The Up/Down ratio advanced last week to (240/162=) 1.48 from 1.12.

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 again last week. They are intermediate overbought. See charts near the end of this report

Medium term technical indicators in Canada also moved higher last week. They changed from intermediate neutral to intermediate overbought. See charts near the end of this report.

Short term technical indicators for U.S. markets and sectors (20 day moving averages, short term momentum) remained elevated at overbought levels last week.

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

Short term political concerns in the U.S. remain elevated. Issues include tariff wars between the U.S., Mexico and China, increased tensions with Iran and anti-Trump hearings initiated by the Democrat controlled House of Representatives. Release of the Mueller report continues to elevate political rhetoric.

Frequency of S&P 500 and TSX Composite quarterly earnings reports is low again this week. Most companies are in a quiet period prior to release of second quarter results. Only 12 S&P 500 companies and two Dow Jones Industrial stocks are scheduled to report this week.

Forecasts for S&P 500 sales and earnings moved slightly lower again last week. According to FactSet, second quarter earnings are expected to drop 2.6% on a year-over-year basis (versus 2.5% last week) and second quarter revenues are expected to increase 3.9%. Eighty seven companies have issued negative second quarter guidance and 25 companies have issued positive guidance. Third quarter earnings are expected to drop 0.3% (versus unchanged last week) and revenues are expected to increase 4.0%. Fourth quarter earnings are expected to increase 6.7% (versus 6.8% last week) and fourth quarter revenues are expected to increase 4.5%. For all of 2019, earnings are expected to increase 2.8% (versus 3.0% last week) and revenues are expected to increase 4.5%. First quarter 2020 earnings are expected to increase 10.3% (versus 10.7% last week) and revenues are expected to increase 6.0 %.(versus 6.1% last week) Second quarter earnings are expected to increase 13.3% and revenue are expected to increase 6.8%.

Changes in currency trends are having a significant impact on commodity and equity market. The U.S. Dollar Index ETN completed a short term Head & Shoulders pattern last week. Commodity and commodity equity prices, notably gold and silver, quickly responded

Canadian investors holding equity investments in U.S. Dollars saw gains last week recorded by U.S. indices cut in half due to the 1.11 gain by the Canadian Dollar relative to the U.S.

 

Economic News This Week

OPEC meeting is held on Tuesday

May New Home Sales to be released at 10:00 AM EDT on Tuesday are expected to increase to 680,000 from 673,000 in April.

May Durable Goods Orders to be released at 8:30 AM EDT on Wednesday are expected to increase 0.2% versus a drop of 2.1% in April. Excluding Transportation, May Durable Goods Orders are expected to increase 0.1% versus no change in April.

Weekly Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to increase to 220,000 from 216,000 last week.

Third estimate of first quarter GDP to be released at 8:30 AM EDT on Thursday is expected to increase to 3.2% from 3.1%.

May Personal Income to be released at 8:30 AM EDT on Friday is expected to increase 0.3% versus a gain of 0.5% in April. May Personal Spending is expected to increase 0.4% versus a gain of 0.5% in April.

April Canadian GDP to be released at 8:30 AM EDT on Friday is expected to increase 0.1% versus a gain of 0.8% in April.

June Chicago PMI to be released at 9:45 AM EDT on Friday is expected to slip to 53.8 from 54.2 in May.

Group of 20 Summit meets on Friday and Saturday. Lots of side negotiations!

 

Earnings News This Week

 

Trader’s Corner

 

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for June 21st 2019

Green: Increase from previous day

Red: Decrease from previous day

 

Commodities

Daily Seasonal/Technical Commodities Trends for June 21st 2019

Green: Increase from previous day

Red: Decrease from previous day

 

Sectors

Daily Seasonal/Technical Sector Trends for June 21st 2019

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

US Existing Home Sales up 18.4% (NSA) in May, one of the strongest increases for this time of year on record. The average increase for May is 10.6%. $MACRO #Economy #Housing

Technical action by S&P 500 stocks: Mixed. Intermediate breakouts: $DLTR $XOM $HUM. Breakdown: $RCL $MO

Commerce Bank $CM.CA, a TSX 60 stock moved above $105.15 completing a short term double bottom pattern.

George Weston $WN.CA, a TSX 60 stock moved below $100.43 completing a short term double top pattern.

 

Don and Jon Vialoux at the Toronto MoneyShow

Once again Jon and I are presenting at the MoneyShow this September. Following is a link giving background:

 

      T H E

 

· SPEAKERS

 

· SCHEDULE

o Summary of Events

o Full Schedule

o Opening Ceremonies

· SPECIAL EVENTS

o Canadian MoneySaver Day

o All Stars of Options Trading

o Cannabis Investment Symposium

o World of ETF Investing

· PAID EVENTS

o Master Classes

· EXHIBIT HALL

o Overview

o Participating Companies

o Exhibit Contact

· HOTEL

 

· ATTEND FREE

 

September 20 – 21, 2019 | Toronto

Questions? Call: 1-800-970-4355

Panel Workshop Details

Sep. 21, 2:45 PM – 3:30 PM EST

 

Saturday

Improving Investment Returns by Combining Seasonal, Fundamental, and Technical Analysis

The end of September is the opportune time to review your investment portfolio prior to start of the traditional period of seasonal strength for equity markets in October. Which markets, sectors and securities have the best technical and fundamental profiles this year?

Join the father-and-son team of Don and Jon Vialoux for an update!

Donald Vialoux

Founder

Tech Talk

 

Jon Vialoux

Founder

EquityClock.com

 

S&P 500 Momentum Barometers

Percent of S&P 500 stocks trading above their 50 day moving average increased last week to 69.54 from 57.11. Percent changed to intermediate neutral to intermediate overbought on a move above 60.

Bullish Percent Index for S&P 500 stocks increased last week to 68.00 from 62.00. The Index remains intermediate overbought.

 

TSX Momentum Barometers

Percent of TSX stocks trading above their 50 day moving average increase last week to 58.47 from 51.49. Percent remains intermediate neutral.

Bullish Percent Index for TSX stocks increased last week to 61.57 from 59.92. The Index changed to intermediate overbought from intermediate neutral on a move above 60.

 

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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