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Tech Talk for Monday October 26th 2015

 

Economic News This Week

September New Home Sales to be released at 10:00 AM EDT on Monday are expected to slip to 550,000 from 552,000 in August

September Durable Goods Orders to be released at 8:30 AM EDT on Tuesday are expected to decline 1.3% versus a decline of 2.3% in August. Excluding Transportation, September Orders are expected to increase 0.2% versus a drop of 0.2% in August

August Case/Shiller 20 City Home Price Index on an annual basis to be released at 9:00 AM EDT on Tuesday is expected to remain unchanged from July at 5.0%.

October Consumer Confidence to be released at 10:00 AM EDT on Tuesday is expected to slip to 102.5 from 103.0 in September.

FOMC Decision on interest rates to be released at 2:00 PM EDT on Wednesday is expected to maintain the Fed Fund rate at 0.0-0.25%.

Weekly Initial Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to increase to 264,000 from 259,000 last week.

First estimate of third quarter annualized GDP to be released at 8:30 AM EDT on Thursday is 1.6% versus the second quarter gain of 3.9%.

Canadian August Real GDP to be released at 8:30 AM EDT on Friday is expected to increase 0.1% versus a gain of 0.3% in July.

September Personal Income to be released at 8:30 AM EDT on Friday is expected to increase 0.2 versus a gain of 0.3% in August. September Personal Spending is expected to increase 0.2% versus a gain of 0.4% in August

October Chicago PMI to be released at 9:45 AM EDT on Friday is expected to improve to 49.0 from 48.7 in September.

October Michigan Sentiment to be released at 10:00 AM EDT on Friday is expected to improve to 92.6 from 92.1 in September.

 

Earnings News This Week

The Bottom Line

The easy money in equity markets and economic sensitive sectors has been made already for the current intermediate up cycle. Third quarter reports will have an influence on equity markets again this weeks. Earnings released to date have been mixed. Beyond the earnings report season, seasonal influences turn positive for most equity markets and primary sectors. Preferred strategy is to accumulate seasonally attractive equities and economic sensitive sectors on weakness.

Equities

Daily Seasonal/Technical Equity Trends for October 23rd 2015

Green: Increase from previous day

Red: Decrease from previous day

The S&P 500 Index gained 42.04 points (2.07%) last week. Intermediate trend remains up. The Index remains above its 20 day moving average. Short term momentum indicators are trending up and are overbought. However, signs of a peak have yet to appear.

Percent of S&P 500 stocks trading above their 50 day moving average rose last week to 76.20% from 62.80%. Percent is trending up and is overbought. However, signs of a peak have yet to arrive

Percent of S&P 500 stocks trading above their 200 day moving average increased last week to 47.40% from 42.00%. Percent continues to trend higher.

Bullish Percent Index for S&P 500 stocks jumped to 62.60% from 52.80% last week and remained above its 20 day moving average. The Index continues to trend higher.

Bullish Percent Index for TSX Composite stocks advanced to 51.82% from 49.39% last week and remained above its 20 day moving average. The Index continues to trend up.

The TSX Composite Index added 115.56 points last week. Intermediate trend remains up (Score: 2.0). Strength relative to the S&P 500 Index remains negative (Score: -2). The Index remains above its 20 day moving average (Score: 1). Short term momentum indicators are mixed (Score: 0). Technical score remained at 1 last week.

Percent of TSX stocks trading above their 50 day moving average increased last week to 72.87% from 65.18%. Percent remains intermediate overbought.

Percent of TSX Composite stocks trading above their 200 day moving average increased last week to 31.17 from 29.15%. Percent continues to trend up.

The Dow Jones Industrial Average gained 430.73 points (2.50%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains positive. The Average remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score remains at 6.

Bullish Percent Index for Dow Jones Industrial Average stocks jumped last week 83.33% from 70.00% and remained above its 20 day moving average. The Index continues to trend higher, but is overbought.

Bullish Percent Index for NASDAQ Composite stocks increased last week to 45.58% from 44.00% and remained above its 20 day moving average. The Index continues to trend higher.

The NASDAQ Composite Index gained 145.17 points (2.97%) last week. Intermediate trend changed to up from down on Friday on a move above 4,960.87. Strength relative to the S&P 500 Index turned positive on Friday. The Index remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score improved last week to 6 from -2.

The Russell 2000 Index added 3.75 points (0.32%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains negative. The Index remains above its 20 day moving average. Short term momentum indicators are mixed. Technical score improved last week to -3 from -4.

The Dow Jones Transportation Average added 207.97 points (2.57%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains negative. The Average remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score improved last week to -2 from -3.

The Australia All Ordinaries Composite Index added 84.40 points (1.59%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index is neutral. The Index remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score improved last week to 2 from -3.

The Nikkei Average gained 533.50 points (2.92%) last week. Intermediate trend changed to neutral from down on Friday on a move above 18,770.51. Strength relative to the S&P 500 Index changed to neutral from negative. The Average remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score improved to 2 from 0.

Europe iShares added $0.30 (0.71%) last week. Intermediate trend remains neutral. Strength relative to the S&P 500 Index turned negative. Units remain above their 20 day moving average. Short term momentum indicators are trending up. Technical score slipped last week to 0 from 3

The Shanghai Composite Index gained 21.08 points (0.62%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains positive. The Index remains above its 20 day moving average. Short term momentum indicators are mixed. Technical score slipped last week to 5 from 6.

Emerging Markets ETF advanced $0.04 (0.11%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index slipped to neutral from positive. Units remain above their 20 day moving average. Short term momentum indicators are trending down. Technical score slipped last week to 2 from 5.

 

Currencies

The U.S. Dollar Index soared 2.49 (2.63%) last week. Intermediate trend changed on Friday to up from neutral. The Index remains above its 20 day moving average. Short term momentum indicators are trending up and are overbought. However, signs of a peak have yet to appear.

The Euro plunged 3.42 (3.01%) last week. Intermediate trend changed to down from up on a move below 110.85. The Euro fell below its 20 day moving average. Short term momentum indicators are trending down and are oversold, but have yet to show signs of bottoming.

The Canadian Dollar dropped US 1.58 cents (2.04%) last week. Intermediate trend remains neutral. The Canuck Buck fell below its 20 day moving average. Short term momentum indicators are trending down and are oversold. However, they have yet to show signs of bottoming.

The Japanese Yen dropped 1.33 (1.59%) last week. Intermediate trend remains up. The Yen fell below its 20 day moving average. Short term momentum indicators are trending down and are oversold. However, signs of a bottom have yet to appear.

 

Commodities

Daily Seasonal/Technical Commodities Trends for October 23rd 2015

Green: Increase from previous day

Red: Decrease from previous day

The CRB Index fell 5.74 points (2.88%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains negative. The Index moved below its 20 day moving average. Short term momentum indicators are trending down. Technical score slipped to -2 from 0.

Gasoline dropped $0.07 per gallon (4.96%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains negative. Gas remains below its 20 day moving average. Short term momentum indicators are trending down. Technical score remains at -6.

Crude Oil dropped $1.77 per barrel (3.58%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to negative. Crude fell below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped to -2 from 2 last week.

Natural gas dropped another $0.09 per MBtu (3.58%) 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 down. Technical score slipped to -6 from -5.

The S&P Energy Index dropped 5.10 points (1.00%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to neutral from positive. The Index remains above its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to 2 from 5.

The Philadelphia Oil Services Index added 1.03 points (0.58%) last week. Intermediate trend remains neutral. Strength relative to the S&P 500 Index changed to neutral from positive. The Index remains above its 20 day moving average. Short term momentum indicators are trending down.

Gold dropped $20.30 per ounce (1.72%) last week in response to a higher U.S. Dollar Index. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to negative from positive. Gold remains above its 20 day moving average. Short term momentum indicators are trending down. Technical score last week dropped to 0 from 6.

Silver dropped $0.28 per ounce (1.74%) last week. Intermediate trend remains up. . Strength relative to the S&P 500 Index changed to neutral from positive. Silver remains above its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped to 2 from 6. Strength relative to gold remains positive.

The AMEX Gold Bug Index added 1.83 points (1.36%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains positive. The Index remains above its 20 day moving average. Short term momentum indicators are trending down. Technical score last week slipped to 4 from 6.

Platinum dropped $22 per ounce (2.15%) last week. Trend remains down. Strength relative to S&P 500 slipped to neutral. PLAT remains above its 20 day MA. Momentum: Mixed.

Palladium dropped $5.55 per ounce (0.79%) last week. Trend remains up. Strength relative to the S&P 500 Index changed ton Neutral. PALL remains above its 20 day moving average. Short term momentum indicators are trending down. Strength relative to Gold remains neutral.

Copper dropped $0.05 per lb. (2.08%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index turned negative. Copper dropped below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped to -6 from 0.

The TSX Metals & Mining Index added 20.53 points (4.56%) last week. Intermediate trend changed to neutral. The Index remains above its 20 day moving average. Short term momentum indicators are mixed. Technical score last week slipped to 1 to 2.

Lumber added $2.90 (1.12%) last week. Intermediate trend remains neutral. Strength relative to the S&P 500 Index remains positive. Lumber remains above its 20 day MA. Momentum: up.

The Grain ETN slipped $0.08 (9.25%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains negative. Units remain below their 20 day moving average. Short term momentum indicators are trending down. Technical score remains at -2

The Agriculture ETF added 1.30 points (2.69%) last week. Intermediate trend changed to up. Strength relative to the S&P 500 Index remains neutral. Units remained above their 20 day moving average. Short term momentum indicators are trending up. Technical score improved to 4 from 0.

 

Interest Rates

Yield on 10 year Treasuries dropped 6.0 basis points (2.97%) last week. Intermediate trend remains down. Yield moved above its 20 day moving average. Short term momentum indicators are mixed.

Conversely, price of the long term Treasury ETF slipped $0.73 (0.59%) last week. Intermediate trend remains up. Units remain above their 20 day moving average.

 

Other Issues

The VIX Index dropped 0.76 (5.00%) last week. Intermediate trend remains down. The Index remains below its 20 day moving average.

Third quarter results released to date have been mixed. According to FactSet, 173 S&P 500 companies have released quarterly results: 77% reported above mean earnings estimates while 43% reported above mean sales estimates. On a year-over-year basis, earnings declined 3.8%. 19 companies have issued negative guidance and 7 companies have issued positive guidance. Fourth quarter projections are for a 2.0% decline in earnings and a 2.0% decline in sales. First quarter projections are for a 3.6% increase in earnings and a 3.8% increase in sales.

Short and intermediate technical indicators for most equity markets and primary sectors are trending higher and are overbought. However, technical signs of a peak have yet to appear.

Technical action by individual S&P 500 stocks was exceptionally bullish last week:78 stocks broke resistance and 27 broke support.

Economic data this week focuses on the FOMC meeting on Wednesday. Consensus is that the FOMC wants to increase the Fed Fund rate to reflect improving economic conditions, but wants more evidence of sustainable growth.

Seasonal influences for most equity markets in the world as well as economically sensitive primary sectors turn positive this week.

Both the S&P 500 Index and Dow Jones Industrial Average moved above their 200 day moving average, an encouraging technical sign. However, overhead resistance is formidable. Upside potential remains, but likely will be gained begrudgingly between now and year-end

Tax loss selling transactions will become a focus between now and mid-December.

 

Sectors

Daily Seasonal/Technical Sector Trends for October 23rd 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:

 

FP Trading Desk Headline

FP Trading Desk headline reads, “Views on international developments key to Fed’s path forward”. Following is a link:

http://business.financialpost.com/investing/trading-desk/views-on-international-developments-key-to-feds-path-forward

 

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.