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Tech Talk for Tuesday October 13th 2015

 

Jon Vialoux on BNN’s Market Call Tonight

Jon was on Market Call Tonight on Friday evening. Following are links to the show:

Top Picks: http://www.bnn.ca/Video/player.aspx?vid=724381

Market Outlook: http://www.bnn.ca/Video/player.aspx?vid=724319

Full Program: http://www.bnn.ca/Video/player.aspx?vid=722917

 

Economic news this week

September Producer Prices to be released at 8:30 AM EDT on Wednesday are expected to drop 0.3% versus no change in August. Excluding food and energy, September Producer Prices are expected to increase 0.1% versus gain of 0.3% in August.

September Retail Sales to be released at 8:30 AM EDT on Wednesday are expected to increase 0.2% versus a gain of 0.2% in August. Excluding Auto Sales, September Retail Sales are expected to decline 0.1% versus a gain of 0.1% in August.

August Business Inventories to be released at 10:00 AM EDT on Wednesday are expected to increase 0.1% versus a gain of 0.1% in July.

The FOMC Beige Book is released at 2:00 PM EDT on Wednesday

Weekly Initial Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to increase to 269,000 from 263,000 last week.

September Consumer Prices to be released at 8:30 AM EDT on Thursday are expected to slip 0.2% versus a drop of 0.1% in August. Excluding food and energy, September Consumer Prices are expected to increase 0.1% versus a gain of 0.1% last week.

October Empire Manufacturing Index to be released at 8:30 AM EDT on Thursday is expected to improve to -8.0 from -14.7 in September

October Philadelphia Fed Index to be released at 10:00 AM EDT on Thursday are expected to improve to -1.0 from -6.0 in September

September Industrial Production to be released at 9:15 AM EDT on Friday is expected to slip 0.2% versus a drop of 0.4% in August. September Capacity Utilization is expected to slip to 77.4% from 77.6% in August.

October Michigan Sentiment Index to be released at 10:00 AM EDT on Friday is expected to improve to 88.5 from 87.2 in September

 

Earnings news this week

Tuesday: CSX, Intel, Johnson & Johnson, JP Morgan Chase

Wednesday: Blackrock, Delta Air, Wells Fargo

Thursday: Advanced Micro Devices, BB&T Banks, Charles Schwab, Goldman Sachs, Keycorp, Mattel, Schlumberger, UnitedHealth Services

Friday: General Electric, Honeywell, SunTrust Banks

 

The Bottom Line

The easy money in equity markets and economic sensitive sectors has been made already for the current intermediate up cycle. Since August 25th, the S&P 500 Index is up 7.7%, the TSX Composite Index added 9.9% and the Dow Jones Industrial Average gained 11.2%. Third quarter reports will have an influence on equity markets during the next three weeks, one way or the other. Beyond the earnings report season, seasonal influences turn positive. Preferred strategy is to accumulate seasonally attractive equities and economic sensitive sectors on weakness between now and the end of the month.

 

Equities

Daily Seasonal/Technical Equity Trends for October 9th 2015


Green: Increase from previous day

Red: Decrease from previous day

The S&P 500 Index gained 63.53 points (3.26%) last week. Intermediate trend remains neutral. The Index remains above its 20 day moving average. Short term momentum indicators continue to trend up, but are overbought.

Percent of S&P 500 stocks trading above their 50 day moving average jumped last week to 62.60% from 30.80%. Percent is trending up and is slightly overbought, but has yet to show signs of peaking.

Percent of S&P 500 stocks trading above their 200 day moving average jumped last week to 39.60% from 31.60%. Percent is trending up.

Bullish Percent Index for S&P 500 stocks jumped last week to 50.00% from 31.00% and moved above its 20 day moving average. The Index is trending up.

Bullish Percent Index for TSX Composite stocks jumped last week to 48.18% from 32.79% and remained above its 20 day moving average. The Index remains in an intermediate uptrend.

The TSX Composite Index jumped 624.62 points (4.68%) last week. Intermediate trend changed to up from down on a move above 13,876.00 (Score: 2). Strength relative to the S&P 500 Index remains neutral (Score: 0). The Index remains moved above its 20 day moving average last week (Score: 1). Short term momentum indicators are trending up (Score: 1). Technical score improved last week to 4 from -2.

Percent of TSX stocks trading above their 50 day moving average jumped last week to 74.09% from 37.25%. Percent is trending up, but is overbought. However, signs of a peak have yet to appear.

Percent of TSX stocks trading above their 200 day moving average jumped last week to 33.20% from 22.67%. Percent has established an intermediate uptrend.

The Dow Jones Industrial Average jumped 612.12 points (3.72%) last week. Intermediate trend changed to up from neutral on a move above 16,933.43. Strength relative to the S&P 500 Index remains positive. The Average remains above its 20 day moving average. Short term momentum indicators continue to trend up, but are overbought. Technical score improved last week to 6 from 4.

Bullish Percent Index for Dow Jones Industrial Average stocks jumped last week to 63.33% from 33.33% and moved above its 20 day moving average. The Index remains in an intermediate uptrend, but is intermediate overbought. However, signs of a peak have yet to appear.

Bullish Percent Index for NASDAQ Composite stocks jumped last week to 41.49% from 34.13% and moved above its 20 day moving average. The Index continues to recover from an oversold level.

The NASDAQ Composite Index gained 122.70 points (2.61%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains negative. The Index moved above its 20 day moving average. Short term momentum indicators are trending up. Technical score improved to -2 from -4.

The Russell 2000 Index gained 51.24 points (4.60%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains negative. The Index moved above its 20 day moving average. Short term momentum indicators are trending up. Technical score improved last week to -2 from -4

The Dow Jones Transportation Average jumped 379.52 points (4.82%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains neutral. The Average moved above its 20 day moving average. Short term momentum indicators are trending up. Technical score improved last week to 0 from -2

The Australia All Ordinaries Composite Index gained 220.00 points (4.32%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains neutral. The Index moved above its 20 day moving average. Short term momentum indicators are trending up. Technical score improved last week to 0 from -2.

The Nikkei Average added 713.54 points (4.03%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed to neutral from negative. The Average moved above its 20 day moving average. Short term momentum indicators are trending up, but are overbought.

Europe iShares added $1.77 (4.36%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed to positive from negative. Units remained above their 20 day moving average. Short term momentum indicators are trending up, but are overbought.

The Shanghai Composite Index added 130.37 points (4.27%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains neutral. The Index moved above its 20 day moving average. Short term momentum indicators are trending up. Technical score improved last week to 0 from -3.

Emerging Markets jumped $2.09 (6.17%) last week. Intermediate trend changed to up from neutral on a move above $35.35. Strength relative to the S&P 500 Index changed to positive from neutral. Units remain above their 20 day moving average. Short term momentum indicators are trending up, but are overbought. Technical score improved to 6 from 2.

 

Currencies

The U.S. Dollar Index dropped 1.09 (1.14%) last week. Intermediate trend remains up. The Index moved below its 20 day moving average. Short term momentum indicators are trending down and are approaching oversold levels. However, signs of a bottom have yet to appear.

The Euro added 1.47 (1.31%) last week. Intermediate trend remains up. The Euro moved above its 20 day moving average last week. Short term momentum indicators are trending up.

The Canadian Dollar gained U.S1.23 cents (1.62%) last week. Intermediate trend changed to neutral from down on a move above 76.82. The Canuck Buck remained above its 20 day moving average. Short term momentum indicators are trending up, but are overbought. However, sighs of a peak have yet to appear.

The Japanese Yen slipped 0.23 (0.28%) last week. Intermediate trend remains up. The Yen remains below its 20 day moving average. Short term momentum indicators are mixed.

 

Commodities

Daily Seasonal/Technical Commodities Trends for October 9th 2015


Green: Increase from previous day

Red: Decrease from previous day

The CRB Index gained 8.58 points (4.42%) last week thanks mainly to weakness in the U.S. Dollar Index. Intermediate trend changed to up from down on a move above 202.13. Strength relative to the S&P 500 Index remained neutral. The Index moved above its 20 day moving average. Short term momentum indicators are trending up. Technical score improved last week to 4 from -3.

Gasoline added $0.06 per gallon (4.44%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains neutral. Gas moved above its 20 day moving average. Short term momentum indicators are trending up. Technical score rose last week to 0 from 2

Crude Oil gained $3.83 per barrel (8.39%) last week. Intermediate trend changed to up from down on a move above $49.33. Strength relative to the S&P 500 Index changed to positive from neutral. Crude remained above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 6 from -1.

Natural Gas added $0.05 per MBtu (2.02%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains negative. “Natty” remains below its 20 day moving average. Short term momentum indicators are trending up. Technical score improved to -4 from -6.

The S&P Energy Index gained 36.49 points (7.77%) last week. Intermediate trend changed to up from down on a move above 486.07. Strength relative to the S&P 500 Index changed to positive from neutral. The Index remained above its 20 day moving average. Short term momentum indicators are trending up, but are overbought. However, signs of a peak have yet to surface.

The Philadelphia Oil Services Index jumped 20.48 points (12.41%) last week. Intermediate trend changed to neutral from down on a move above 184.90. Strength relative to the S&P 500 Index changed to positive from negative. The Index moved above its 20 day moving average. Short term momentum indicators are trending up, but are overbought. However, signs of a peak have yet to appear.

Gold gained $18.00 per ounce (1.58%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to negative from neutral. Gold remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score last week dipped to 2 from 3.

Silver added $0.59 per ounce (3.87%) last week. Intermediate trend changed to up from down following moves above $15.715 and $15.90. Strength relative to the S&P 500 Index and Gold remained positive. Silver remained above its 20 day moving average. Short term momentum indicators are trending up, but are overbought.

The AMEX Gold Bug Index jumped 18.67 points (16.28%) last week. Intermediate trend remained up. Strength relative to the S&P 500 Index changed to positive from neutral. The Index remained above its 20 day moving average. Short term momentum indicators are trending up, but are overbought. Technical score improved last week to 6 from 0.

Platinum gained $71.10 per ounce (7.87%) last week. Trend remains down. Relative strength improved to neutral. PLAT moved above its 20 day MA. Momentum has turned positive.

Palladium added $12.05 per ounce (1.72%) last week. Trend remains up. Strength relative to S&P 500 and Gold remains positive. PALL remains above its 20 day moving average. Short term momentum indicators are trending up, but are overbought. Technical score remains at 6.

Copper added $0.07 per lb. (2.98%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains neutral. Copper moved above its 20 day moving average. Short term momentum indicators are trending up. Technical score last week improved to 0 from -2

The TSX Metals and Mining Index jumped 124.22 points (33.30%) last week. Intermediate trend changed to neutral on a move above 461.41. Strength relative to the S&P 500 Index changed to positive from negative. The Index moved above its 20 day moving average. Short term momentum indicators are trending up, but are overbought. However, signs of a peak have yet to surface. Technical score last week advanced to 4 from -4

Lumber gained 20.50 99.24%) last week. Intermediate trend remains down. Relative strength remains neutral. Lumber moved above its 20 day MA. Momentum indicators are trending up.

The Grain ETN slipped $0.17 (0.51%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index slipped to neutral. Units fell below their 20 day moving average on Friday. Short term momentum indicators are trending down. Technical score fell to 0 from 6

The Agriculture ETF added $2.09 (4.47%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index improved to neutral from negative. Units moved above their 20 day moving average. Short term momentum indicators are trending up. Technical score improved last week to 0 from -4

 

Interest Rates

The yield on 10 year Treasuries increased 11 basis points (5.53%) last week. Intermediate trend remains down. Yield remains below its 20 day moving average. Short term momentum indicators are trending up.

Conversely, price of the long term Treasury ETF dropped $2.28 (1.83%) last week. Intermediate trend remains up. Units remain above their 20 day moving average.

 

Other Issues

The VIX Index dropped another 3.86%) last week. Intermediate trend changed to down from up on a move below 17.87. The Index remains below its 20 day moving average. Despite the drop last week, the Index remains elevated.

Third quarter earnings report season is off to a rough start. Alcoa and Monsanto recorded significantly lower than consensus results and analysts significantly lowered estimates for major companies including Met Life, Goldman Sachs and Morgan Stanley. Consequently, according to FactSet, the drop in third quarter earnings by S&P 500 companies on a year-over-year basis increase last week to 5.5% from 5.1%. Revenues remained the same at a drop of 3.3%. Moreover, analysts lowered fourth quarter estimates from an increase of 0.3% to a decrease of 0.4%. This week, 35 S&P 500 companies are expected to report including 6 Dow Jones Industrial Average companies. Focus is on the financial services sector. Late in August, investors moved stocks lower in anticipation of difficult year-over-year comparisons. Greatest concerns were impact of the strong U.S. Dollar Index on non-U.S. operations and the lower price of crude oil. Will investors feel relieved after difficult reports finally are released? It’s possible! Analysts probably have over-estimated the decline. Actual earnings and revenues typically exceed analysts’ depressed estimates at this time of year.

The earnings and sales outlook on a year-over-year basis for Canadian companies are somewhat better than U.S. Companies. TSX 60 companies are expected to report an average (median) earnings gain of 2.4%. Energy companies will record the largest declines. A lower Canadian Dollar will help.

Short term momentum indicators for most equity markets around the world as well as most sectors and industry groups are trending up, but are overbought. However, most do not show signs of peaking.

Intermediate technical indicators (e.g. stocks in an index trading above their 50 day moving average) have recovered strongly. Some already are at or near an intermediate overbought level. However, signs of a peak have yet to appear.

Many markets and sectors have moved above intermediate base building and double bottom patterns. However, they face significant overhead resistance at slightly higher than current levels. A good example is the Dow Jones Industrial Average. Overhead resistance exists in a band between 17,500 and 18,350. Gains from current levels are possible, but likely will be won slowly.

Economic focuses this week are on Retail Sales, CPI and PPI. All are expected to be benign.

Technical action by individual S&P 500 stocks was extraordinarily bullish last week. 164 S&P 500 stock broke intermediate resistance levels and only 4 stocks broke support. Upside momentum is likely to continue this week.

Seasonal influences for equity markets frequently turn positive at this time of year. Following are charts showing seasonality of the S&P 500 Index and TSX Composite during the past 20 periods from October 9th

International news is expected to be quiet this week. Focus is on the political mess in the Middle East.

Seasonal influences change significantly at this time of year for a wide variety of equity markets, commodities and sectors. Note the seasonal ratings that have turned “green”.

 

Sectors

Daily Seasonal/Technical Sector Trends for October 9th 2015


Green: Increase from previous day

Red: Decrease from previous day

Special Free Services available through www.equityclock.com

Equityclock.com is offering free access to a data base showing seasonal studies on individual stocks and sectors. The data base holds seasonality studies on over 1000 big and moderate cap securities and indices. To login, simply go to http://www.equityclock.com/charts/

Following is an example:

 

Disclaimer: Seasonality and technical ratings offered in this report by www.timingthemarket.ca 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.