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Tech Talk for Monday April 11th 2016

 

Economic News This Week

March Producer Prices to be released at 8:30 AM EDT on Wednesday are expected to increase 0.2% versus a decline of 0.2% in February. Excluding food and energy, March Producer Prices are expected to increase 0.3% versus unchanged in February

March Retail Sales to be released at 8:30 AM EDT on Wednesday are expected to increase 0.1% versus a decline of 0.1% in February. Excluding auto sales, March Retail Sales are expected to increase 0.4% versus a decline of 0.1% in February.

Bank of Canada Policy announcement to be released at 10:00 AM EDT on Wednesday is expected to maintain the overnight lending rate at 0.5%.

February Business Inventories to be released at 10:00 AM EDT on Wednesday are expected to decline 0.1% versus a gain of 0.1% in January

Fed Beige Book is to be released at 2:00 PM EDT on Wednesday.

March Consumer Prices to be released at 8:30 AM EDT on Thursday are expected to increase 0.3% versus a decline of 0.2% in February. Excluding food and energy, CPI is expected to increase 0.2% versus a gain of 0.3% in February.

Weekly Initial Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to increase to 268,000 from 267,000 last week

April Empire State Manufacturing Index to be released at 8:30 AM EDT on Friday is expected to increase to 2.3 from 0.6 in March.

March Capacity Utilization to be released at 9:15 AM EDT on Friday is expected to dip to 75.5 from 76.7 in February. March Industrial Production is expected to remain unchanged versus a decline of 0.5% in February.

April Michigan Sentiment Index to be released at 10:00 AM EDT on Friday is expected to improve to 92.0 from 01.0

 

Earnings News This Week

Monday: Alcoa

Thursday: Bank of America, Blackrock, Delta Air, Wells Fargo

Friday: Charles Schwab, Citigroup

 

The Bottom Line

Two strategies: Short term traders can take profits where momentum has rolled over. Investors holding seasonal opportunities lasting until May can buy on weakness when short term momentum indicators show signs of bottoming.

 

Interesting Observations

Economic news this week is expected to confirm slow, but steady growth in the U.S.

First quarter reports start to trickle in this week. Eighteen S&P 500 companies are scheduled to report. Focus is on reports by the money center banks. Consensus for S&P 500 companies is for a year-over-year decline of 9.1% in earnings and a 1.2% decline in revenues. Among primary sectors, seven of ten are expected to report lower earnings.

Prospects beyond the first quarter for S&P 500 stocks are more encouraging. According to FactSet, consensus earnings by S&P 500 companies on a year-over-year basis are expected to decline 2.7% in the second quarter, improve 3.8% in the third quarter and increase 11.0% in the fourth quarter. Consensus revenues are expected to dip 0.7% in the second quarter, improved 1.9% in the third quarter and increased 4.3% in the fourth quarter.

Prospects for first quarter results by major Canadian companies are more encouraging. Consensus for TSX 60 companies shows an average (median) year-over-year earnings gain of 1.2%.

Short and intermediate technical indicators for most equity markets and primary sectors are overbought and have rolled over.

Seasonal influences by most developed nation equity markets and economically sensitive sectors (Materials, Industrials, Consumer Discretionary, Financials) are positive until at least early May.

U.S. equity trends during U.S. Presidential election years are down between now and late May.

Technical action by S&P 500 stocks turned mixed last week: 16 stocks broke resistance and 15 stocks broke support. This is a clear sign that short term momentum by individual equities in the Index has peaked.

 

Equity Indices and Related ETFs

Daily Seasonal/Technical Equity Trends for April 8th 2016

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 fell 25.18 points (1.21%) last week. Intermediate trend remains up. The Index recovered to above its 20 day moving average on Friday. Short term momentum indicators are trending down.

Percent of S&P 500 stocks trading above their 50 day moving average dropped last week to 84.60% from 93.40%. Percent remains intermediate overbought and is trending down.

Percent of S&P 500 stocks trading above their 200 day moving average slipped last week to 60.40% from 63.00%. Percent remains intermediate overbought and is showing early signs of rolling over.

Bullish Percent Index for S&P 500 stocks slipped last week to 76.40% from 78.40% and dropped below its 20 day moving average. The Index is intermediate overbought and showing early signs of rolling over.

Bullish Percent Index for TSX Composite stocks increased last week to 63.60% from 62.76% and remained below its 20 day moving average. The Index remains intermediate overbought and showing early signs of rolling over.

The TSX Composite Index slipped 43.60 points (0.32%) last week. Intermediate trend remains up (Score: 2). Strength relative to the S&P 500 Index remained Negative (Score:-2). The Index remained below its 20 day moving average (Score: -1). Short term momentum indicators are trending down (Score: -1). Technical score remained at -2.

Percent of TSX stocks trading above their 50 day moving average slipped last week to 74.90% from 76.57%. Percent remains intermediate overbought and is trending down.

Percent of TSX stocks trading above their 200 day moving average increased last week to 56.07% from 53.56%. Percent remains intermediate overbought and showing early signs of peaking.

The Dow Jones Industrial Average lost 215.79 points (1.21%) last week. Intermediate trend remained up. Strength relative to the S&P 500 Index changed to Neutral from Positive. The Average remained above its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to 2 from 5.

Bullish Percent Index for Dow Jones Industrial Average stocks slipped last week to 90.00% from 93.33% and matched its 20 day moving average. The Index is intermediate overbought and showing early signs of rolling over.

Bullish Percent Index for NASDAQ Composite stocks increased last week to 52.45% from 51.09% and remained above its 20 day moving average. The Index is intermediate overbought.

The NASDAQ Composite Index dropped 63.85 points (1.30%) last week. Intermediate trend remained Neutral. 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 down. Technical score slipped last week to 2 from 3.

The Russell 2000 Index dropped 23.91 points (2.1%) last week. Intermediate trend remained Neutral. Strength relative to the S&P 500 remained Neutral. The Index recovered to above its 20 day moving average on Friday. Short term momentum indicators are trending down. Technical score slipped last week to 0 from 1.

The Dow Jones Transportation Average fell 151.49 points (1.92%) last week. Intermediate trend remained down. Strength relative to the S&P 500 Index changed to Negative from Neutral. The Average fell below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to -6 from -2.

The Australia All Ordinaries Composite Index dropped 55.80 points (1.10%) last week. Intermediate trend remained Neutral. Strength relative to the S&P 500 Index remained Negative. The Index remains below its 20 day moving average. Short term momentum indicators are trending down. Technical score slipped last week to -4 from -3.

The Nikkei Average lost another 342.64 points (2.12%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remained Negative. Short term momentum indicators are trending down. Technical score remained at -6.

Europe 350 iShares slipped $0.09 (0.23%) last week. Intermediate trend remains Neutral. 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. Technical score slipped to -4 from -3.

The Shanghai Composite Index slipped 24.57 points (0.82%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index improved to Positive from Neutral. The Index remains above its 20 day moving average. Short term momentum indicators are trending down. Technical score slipped last week to 4 from 5.

Emerging Markets iShares dropped $0.77 (2.25%) last week. Intermediate trend remained up. Strength relative to the S&P 500 Index changed to Negative from Positive. Units dropped below their 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to -2 from 5.

 

Currencies

The U.S. Dollar Index dropped another 0.38 (0.40%) last week. Intermediate trend remains down. The Index remained below its 20 day moving average. Short term momentum indicators are trending down.

The Euro added 0.01 (0.01%) last week. Intermediate trend remained up. The Euro remained above its 20 day moving average. Short term momentum indicators are trending up, but are overbought.

The Canadian Dollar dropped 0.94 (1.22%) last week. Intermediate trend remained up. The Canuck Buck remained above its 20 day moving average. Short term momentum indicators are trending down.

The Japanese Yen jumped 2.85 (3.18%) last week. Intermediate trend remained up. The Yen remained above its 20 day moving average. Short term momentum indicators are trending up, but are overbought.

 

Commodities

Daily Seasonal/Technical Commodities Trends for April 8th 2016

Green: Increase from previous day

Red: Decrease from previous day

 

The CRB Index added 3.01 points (1.79%) last week Intermediate trend remains up. Strength relative to the S&P 500 Index remains negative. The Index remains below its 20 day moving average. Short term momentum indicators improved to mixed on Friday. Technical score improved last week to -1 from -2.

Gasoline added $0.06 per gallon (4.29%) last week. Trend remains up. Strength relative to the S&P 500 Index improved to Neutral from Negative on Friday. Gas moved above its 20 day moving average on Friday. Short term momentum indicators improved to mixed on Friday. Technical score improved last week to 3 from 0.

Crude Oil gained $2.93 per barrel (7.96%) last week. Intermediate trend remained up. Strength relative to the S&P 500 Index changed on Friday to Neutral from Negative. Crude moved above its 20 day moving average on Friday. Short term momentum indicators improved to mixed on Friday. Technical score increased last week to 4 from -2.

Natural Gas added $0.03 per MBtu (1.53%) last week. Intermediate trend improved to up from down. Strength relative to the S&P 500 improved to Positive from Neutral. “Natty” remains above its 20 day moving average. Short term momentum indicators remained mixed. Technical score improved last week to 5 from -1

The S&P Energy Index added 10.03 points (2.20%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index improved to Neutral from Negative. The Index moved above its 20 day moving average on Friday. Short term momentum indicators changed to up from down on Friday. Technical score improved last week to 4 from -2

The Philadelphia Oil Services Index added 1.09 points (0.71%) last week. Intermediate trend remained 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 remained last week at -2.

Gold added $21.00 per ounce (1.72%) last week. Intermediate trend remained up. Strength relative to the S&P 500 Index improved to Neutral from Negative. Gold moved above its 20 day moving average. Short term momentum indicators are trending up. Technical score improved last week to 4 from -1.

Silver added $0.28 (1.86%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remained negative. Silver remains below its 20 day moving average. Short term momentum indicators changed to up from down. Technical score improved last week to 0 from -2

The AMEX Gold Bug Index gained 14.16 points (7.87%) last week. Intermediate uptrend was confirmed on Friday on a move above 189.13. Strength relative to the S&P 500 Index turned to Positive from Neutral. The Index remained above its 20 day moving average. Short term momentum indicators are trending up. Technical score improved last week to 6 from 1.

Platinum gained $13.20 per ounce (1.38%) last week. Trend remained up. Relative strength remained Negative. PLAT moved above its 20 day MA. Momentum is mixed.

Palladium dropped $22.25 per ounce (3.97%) last week. Intermediate trend remains up. Strength relative to the S&P 500 remained Negative. PALL remains below its 20 day moving average. Short term momentum indicators are trending down. Technical score remained at -2.

Copper dropped $0.07 per lb. (3.24%) last week. Intermediate trend remained Neutral. Strength relative to the S&P 500 Index remained Negative. Copper remained below its 20 day moving average. Short term momentum indicators are trending down. Technical score remained at -4.

The TSX Metals and Mining Index plunged 27.00 points (6.17%) last week. Intermediate trend changed to down 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 -6 from 0.

Lumber dropped $10.20 (3.40%) last week. Trend remains up. Relative strength changed to Negative. Lumber fell below its 20 day MA. Momentum is trending down. Score: -2

The Grain ETN slipped $0.05 (0.16%) last week. Trend remained down. Relative strength remained Negative. Units remained below their 20 day moving average. Short term momentum indicators are trending down. Technical score remained at -6.

The Agriculture ETF slipped $0.61 91.31%) last week. Intermediate trend remained up. Strength relative to the S&P 500 Index remained Negative. Units moved below their 20 day moving average. Short term momentum indicators are trending down. Technical score slipped last week to -2 from 0.

 

Interest Rates

Yield on 10 year Treasuries dropped 7.2 basis points (4.02%) last week. Intermediate trend remains down. Yield remained below its 20 day moving average. Short term momentum indicators are trending down.

Conversely, price of the long term Treasury ETF added $1.33 (1.01%) last week. Intermediate trend remains up. Short term momentum indicators are trending up.

 

Volatility

The VIX Index gained 2.26 (17.25%) last week. Intermediate trend remains down.

 

Sectors

Daily Seasonal/Technical Sector Trends for March April 8th 2016

Green: Increase from previous day

Red: Decrease from previous day

 

StockTwits Released on Friday

S&P 500 Index diverging from global equity benchmarks and U.S. Treasury yields: Something has to give.

Technical action by S&P 500 stocks to 10:00 AM: Bullish. Breakouts: $XEC, $DVN, $HES, $PXD, $ZBH, $OI. No breakdowns.

Editor’s Note: After 10:00 AM, two more energy stocks broke resistance, FTI and MPC. One breakdown: NDAQ

Breakouts this morning focused on the energy sector: $XEC, $DVN, $PXD, $ERF.CA

Nice reverse head and shoulders pattern completed by $DVN on a move above $28.85

Nice breakout by S&P/TSX Gold Index above resistance at $196.56. $XGD.CA

Breakouts by TSX Gold Index was prompted by breakouts by $YRI.CA, DGC.CA, $NGD.CA

 

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