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Tech Talk for Monday August 14th 2017

 

Latest Edition of Investors Digest

Tech Talk was asked to offer a “Top Pick” selection for the latest edition of Investors Digest. The top pick was iShares TSX Global Gold ETF (XGD on the TSX). See this week’s edition for the full story.

 

Mark Leibovit’s WALL STREET RAW RADIO – AUGUST 12, 2017:

GUESTS INCLUDE:   DON VIALOUX, ARCH CRAWFORD, JEFF BISHOP, KYLE DENNIS,  SINCLAIR NOE , AND HENRY WEINGARTEN.

http://tinyurl.com/yamx59b6

The Bottom Line

Seasonal influences have a history of turning negative until mid-October for a wide variety of equity indices and sectors. The exception is the precious metal sector which continues to gain strength. Volatility started to move higher last week and equity markets around the world moved lower (as has happened in 20 of the past 20 periods from mid-June to mid-October). Holding a robust positon in cash continues to make sense.

 

Economic News This Week

July Retail Sales to be released at 8:30 AM EDT on Tuesday are expected to increase 0.4% versus a decline of 0.2% in June. Excluding auto sales, July Retail Sales are expected to increase 0.4% versus a decline of 0.2% in June.

August Empire State Manufacturing Survey to be released at 8:30 AM EDT on Tuesday is expected to remain unchanged from July at 9.8

June Business Inventories to be released at 10:00 AM EDT on Tuesday are expected to increase 0.4% versus a gain of 0.3% in May.

July Housing Starts to be released at 8:30 AM EDT on Wednesday are expected to increase to 1.225 million units from 1.215 million units in June.

FOMC Meeting minutes for the July 25-26 meeting are scheduled to be released at 2:00 PM EDT

August Philly Fed Index to be released at 8:30 AM EDT on Thursday is expected to slip to 17.0 from 19.5 in July.

Weekly Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to slip to 241,000 from 244,000 last week.

July Industrial Production to be released at 9:15 AM EDT on Thursday is expected to increase 0.3% versus a gain of 0.4% in June. July Capacity Utilization is expected to increase to 76.7 from 76.6 in June.

July Leading Economic Indicators to be released at 10:00 AM EDT on Thursday are expected to increase 0.3% versus a gain of 0.6% in June.

July Canadian Consumer Prices to be released at 8:30 AM EDT on Friday are expected to increase 0.1% versus a decline of 0.1% in June.

August Consumer Sentiment to be released at 10:00 AM EDT on Friday are expected to increase to 93.9 from 93.4 in July.

 

Earnings News This Week

 

Observations

Interesting comment released by MarketWatch on Friday entitled, “North Korea may not be the main cause of this stock market slump: Six reasons why this selloff is just getting started” ! Following is a link:

http://www.marketwatch.com/story/north-korea-may-not-be-the-main-cause-of-this-stock-market-slump-2017-08-11?siteid=nwtpm

Technical action by individual S&P 500 stocks was bearish again last week. Notable among stocks breaking resistance were Utility stocks. Notable among stocks breaking support were Consumer Discretionary, Industrial, Healthcare and Financial stocks. Number of stocks breaking resistance totaled 16 while number of stocks breaking support totaled 53. Number of stocks trading in an uptrend dropped to 248 from 269, number of stocks trading in a neutral trend increased to 66 from 62 and number of stocks in a downtrend increased to 186 from 169. The Up/Down ratio dropped last week to (248/186=) 1.33 from 1.59.

The earnings and sales outlook for S&P 500 stocks remain promising: According to FactSet, 91% of companies have reported second quarter results to date. 73% reported higher than consensus earnings and 69% reported higher than consensus revenues. Accordingly, consensus for blended second quarter earnings on a year-over-basis for all companies increased last week to 10.2% from 10.1%. Consensus for blended second quarter revenues remained at 5.1% This week another 18 S&P 500 companies are scheduled to report (including 3 Dow Jones Industrial companies). Beyond the second quarter, consensus by FactSet shows a 5.2% increase in third quarter earnings (down from 5.6% last week) and a 4.9% increase in revenues. Consensus for fourth quarter shows an 11.2% increase in earnings (down from 11.4% last week) and a 5.3% increase in revenues (down from 5.4% last week). For 2017, earnings are expected to increase 9.4% (down from 9.5% last week) and revenues are expected to increase 5.5%.

Second quarter earnings reports for TSX 60 companies have been and are expected to continue to be impressive. On a year-over-year basis, earnings per share on average (median) were expected to increase 11.3%. Results to date have slightly exceeded consensus.

Medium term technical indicators (Percent of stocks trading above their 50 day moving average, Bullish Percent Index) mostly are overbought and trending down.

Short term technical indicators (short term momentum, above/below 20 day moving average) turned down last week for most equity markets, commodities and sectors (exception: precious metals and precious metal stocks)

Seasonality on a wide variety of equity indices, commodities and sectors turned negative at the end of July.

Weakest months for equity markets are August and September. Current technical indicators for North American equity indices suggest that history has started to repeat.

The S&P 500 Index and Dow Jones Industrial Average have a history of moving significantly lower from August to October in years ending in 7.

Following is a link to an article warning about investing in years ending in seven and about investing in the second decade of the century.

https://www.markettamer.com/market-forecast/889-aug-12-2017-stock-market-crash-seasonality?cm_mmc=Act-On%20Software-_-email-_-Stock%20Market%20Crash%20Seasonality-_-889-aug-12-2017-stock-market-crash-seasonality

The Dow Jones Industrial Average and S&P 500 Index have a history of moving lower between now and late October is Post-U.S. Presidential Election years.

Tis the season for gold, gold equities and related Exchange Traded Funds to move higher until the end of September

 

Equity Indices and Related ETFs

Daily Seasonal/Technical Equity Trends for August 11th 2017

Green: Increase from previous day

Red: Decrease from previous day

 

Calculating Technical Scores

Technical scores are 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.

The S&P 500 Index lost 35.51 points (1.43%) last week. Intermediate trend remains up. The Index dropped below its 20 and 50 day moving average. Short term momentum indicators are trending down.

Percent of S&P 500 stocks trading above their 50 day moving average (also known as the S&P 500 Momentum Barometer) dropped last week to 43.69 from 63.20. Percent dropped to a neutral level and continues to trend down.

Percent of S&P 500 stocks trading above their 200 day moving average dropped last week to 68.54 from 73.00. Percent remains intermediate overbought and trending down.

Bullish Percent Index for S&P 500 stocks dropped last week to 66.80 from 69.40 and remained below its 20 day moving average. The Index remains intermediate overbought and trending down.

Bullish Percent Index for TSX stocks dropped last week to 57.66 from 60.89 and remained below its 20 day moving average. The Index remains intermediate overbought and trending down.

The TSX Composite Index dropped 224.59 points (1.47%) last week. Intermediate trend remains down (Score: -2). Strength relative to the S&P 500 Index improved last week to Neutral from Negative (Score: 0). The Index moved below its 20 day moving average (Score: -1). Short term momentum indicators turned down (Score: -1). Technical score dropped last week to -4 from -2.

Percent of TSX stocks trading above their 50 day moving average (also known as the TSX Momentum Barometer) dropped last week to 40.42 from 45.38. Percent is slightly intermediate oversold, but continues to trend down.

Percent of TSX stocks trading above their 200 day moving average dropped last week to 45.83 from 50.00. Percent is intermediate neutral and trending down.

The Dow Jones Industrial Average dropped 234.49 points (1.07%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains positive. The Average remained above its 20 day moving average. Short term momentum indicators have turned down. Technical score dropped last week to 4 from 6.

Bullish Percent Index for Dow Jones Industrial stocks was unchanged last week at 80.00 and remained below its 20 day moving average. The Index remains intermediate overbought.

Bullish Percent Index for NASDAQ Composite stocks dropped last week to 56.68 from 60.20 and remained below its 20 day moving average. The Index remains intermediate overbought and trending down.

The NASDAQ Composite Index dropped 95.00 points (1.50%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed last week to negative from neutral. The Index dropped below its 20 and 50 moving average. Short term momentum indicators are trending down. Technical score dropped last week to -2 from 2.

The Russell 2000 Index dropped another 38.09 points (2.70%) last week (5.5% during the past two weeks). Intermediate trend changed to neutral from up. Strength relative to the S&P 500 Index remained negative. The Index remained below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to -4 from -2

Dow Jones Transportation Average dropped 78.58 points (0.85%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remained negative. The Average remained below its 20 day moving average. Short term momentum indicators continue to trend down. Technical score remained last week at -2.

The Australia All Ordinaries Composite Index dropped 29.80 points (0.52%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed to positive from negative. The Index dropped below its 20 day moving average on Friday. Short term momentum indicators are trending down. Technical score improved last week to -2 from -6.

The Nikkei Average dropped 222.59 points 91.12%) last week. Intermediate trend changed last week to down from up on a move below 19,856. Strength relative to the S&P 500 remained negative. The Average remained below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to -6 from -2.

Europe iShares dropped $1.08 (2.35%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to neutral from positive. Units dropped below their 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to 0 from 6.

Shanghai Composite Index dropped 53.54 points (1.64%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains positive. The Index dropped below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to 2 from 4.

Emerging Markets ETF dropped $1.03 (2.34% last week. Intermediate trend remains up. Strength relative to the S&P 500 Index dropped to neutral from positive. Units dropped below their 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to 0 from 4.

 

Currencies

The U.S. Dollar Index gained 0.50 (0.58%) last week. Intermediate trend remains down. The Index remained below its 20 day moving average. Short term momentum indicators are trending up.

The Euro added 0.50 (0.42%) last week. Intermediate trend remains up. The Euro remains above its 20 day moving average. Short term momentum indicators are trending down.

The Canadian Dollar slipped US 0.14 cents (0.18%) last week. Intermediate trend remains up. The Canuck Buck dropped below its 20 day moving average. Short term momentum indicators are trending down.

The Japanese Yen added 1.31 (1.45%) last week. Intermediate trend remains down. The Yen remains above its 20 day moving average. Short term momentum indicators are trending up.

The British Pound dipped 0.33 (0.25%) last week. Intermediate trend remains up. The Pound dropped below its 20 day moving average. Short term momentum indicators are trending down.

 

Commodities and Related ETFs

Daily Seasonal/Technical Commodities Trends for August 11th 2017

Green: Increase from previous day

Red: Decrease from previous day

* Excludes adjustment from rollover of futures contracts

The CRB Index dropped 1.07 points (0.59%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains positive. The Index remained above its 20 day moving average. Short term momentum indicators are trending down. Technical score remained last week at 4.

Gasoline dropped 3.3 cents per gallon (2.00%) last week. Intermediate trend remained neutral. Strength relative to the S&P 500 Index remains positive. Gas remains above its 20 day moving average. Short term momentum indicators are trending down. Technical score remained last week at 2.

Crude Oil slipped $0.76 per barrel (1.53%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remained positive. Crude remained above its 20 day moving average. Short term momentum indicators are trending down. Technical score remained last week at 4.

Natural Gas gained $0.21 per MBtu (7.58%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed to positive from negative. “Natty” moved above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 2 from -6.

The S&P Energy Index lost 13.89 points (2.87%) last week. Intermediate trend remained neutral. Strength relative to the S&P 500 Index turned from neutral to negative. The Index dropped below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to -4 from 0.

The Philadelphia Oil Services Index dropped 10.56 points (2.87%) last week. Intermediate trend changed to down from neutral. Strength relative to the S&P 500 Index changed to negative from neutral. The Index remained below its 20 day moving average. Short term momentum indicators were trending down. Technical score dropped last week to -6 from -2.

Gold gained $29.40 per ounce (2.32%) last week. Intermediate trend remains neutral. Strength relative to the S&P 500 Index remained positive. Gold remained above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 4 from 2.

Silver gained $0.82 per ounce (5.05%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index turned positive. Silver moved above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 2 from -4.

The AMEX Gold Bug Index added 6.15 points (3.20%) last week. Intermediate trend remained down. Strength relative to the S&P 500 Index remained positive. The Index remained above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 2 from 0.

Platinum gained $20.70 per ounce (2.14%) last week. Intermediate trend turned positive. Relative strength remained positive. Trades above 20 day MA. Momentum: Positive

Palladium gained $19.90 per ounce (2.27%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remained positive. PALL remained above its 20 day moving average. Short term momentum indicators are trending up. Tech score increased to 6.

Copper added 2.5 cents per lb. (0.87%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remained positive. Copper remains above its 20 day moving average. Short term momentum indicators turned down. Technical score slipped last week to 4 from 6.

BMO Base Metals ETF dropped $0.32 (2.94%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to neutral from positive. Units dropped below their 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to 0 from 4.

Lumber dropped 8.40 (2.25%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index turned negative. Lumber remained below its 20 day MA. Momentum: Down

Grain ETN dropped $0.64 (2.35%) last week. Trend changed to down from up. Strength relative to the S&P 500 Index remained negative. Units remained below their 20 day moving average. Short term momentum indicators are trending down. Score dropped to -6 from -2.

The Agriculture ETF lost $1.20 (2.09%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains positive. Units dropped below their 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to 2 from 6.

 

Interest Rates

Yield on 10 year Treasuries dropped 7.8 basis points (3.44%) last week. Intermediate trend remains down. Yield dropped below its 20 day moving average. Short term momentum indicators are trending down.

Conversely, price of long term Treasury Bond ETF gained $1.50 (1.20%) last week. Intermediate trend remains up. Units remain above their 20 day moving average.

 

Volatility

The VIX Index spiked 5.48 (54.64%) last week. Intermediate trend changed to up. The Index moved above its 20 day moving average.

 

Sector ETFs

Daily Seasonal/Technical Sector Trends for August 11th 2017

Green: Increase from previous day

Red: Decrease from previous day

 

StockTwits Released on Friday

S&P 500 Index breaks trend as fears return to Wall Street. See

http://www.equityclock.com/2017/08/10/stock-market-outlook-for-august-11-2017/

Homebuilders SPDRs $XHB moved below $37.90 completing a double top pattern.

Water ETF $PHO moved below $26.64 completing a double top pattern.

TSX Financials iShares $XFN.CA moved below $35.24 setting a short term downtrend.

Technical action by S&P 500 stocks to 10:00: Bearish. No breakouts. Breakdowns: SSLB $TMO $EXPD $GE $TXT $MAR, $DFS $AAL $ADBE

Editor’s Note: After 10:00 AM EDT, breakout included JBHT. Breakdown included MTB, XOM and RF

Wheaton Precious Metals $WPM moved below support at $18.77.

 

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