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Tech Talk for Monday November 2nd 2015

 

Globe and Mail Article on the Halloween Effect

The following article published on Saturday is entitled, “Halloween: a good time to stock up on equity treats”. Following is a link:

http://www.theglobeandmail.com/globe-investor/inside-the-market/halloween-a-good-time-to-stock-up-on-equity-treats/article27053287/

 

Economic News

September Construction Spending to be released at 10:00 AM EST on Monday is expected to increase 0.4% versus a gain of 0.7% in August

October ISM Manufacturing Index to be released at 10:00 AM EST on Monday is expected to slip to 50.0 from 50.2 in September

October ADP Private Payrolls to be released at 8:15 AM EST on Wednesday is expected to drop to 180,000 from 200,000 in September.

September Traded Deficit to be released at 8:30 AM EST on Wednesday is expected to drop to $43.0 billion from $48.3 billion in August.

Canadian September Merchandise Trade Deficit to be released at 8:30 AM EST on Wednesday is expected to drop to $1.9 billion from 2.5 billion in August.

October ISM Services to be released at 8:30 AM EST on Wednesday is expected to slip to 56.6 from 56.9 in September.

U.S. Initial Jobless Claims to be released at 8:30 AM EST on Thursday is expected to increase to 262,000 from 260,000 last week

Third quarter Non-farm Productivity to be releases at 8:30 AM EST on Thursday is expected to drop to -0.2% from 3.3% in the second quarter

October Canadian Unemployment Rate to be released at 8:30 AM EST on Friday is expected to remains unchanged at 7.1% in September. Net increase in October employment is expected to drop to 2,500 from 12,100 in September

October Non-farm Payrolls to be released at 8:30 AM EST on Friday are expected to increase to 181,000 from 142,000 in October. October Private Non-farm Payrolls are expected to increase to 160,000 from 118,000 in September. October Unemployment Rate is expected to remain unchanged from September at 5.1%. October Average Hourly Earnings are expected to increase 0.2% versus no change 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 are 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 30th 2015

Green: Increase from previous day

Red: Decrease from previous day

S&P 500 Index added 4.21 points (0.20%) last week. Intermediate trend remains up. The Index remains above its 20, 50 and 200 day moving averages. Short term momentum indicators are trending up and are overbought. However, thy have yet to show signs of peaking.

Percent of S&P 500 stocks trading above their 50 day moving average increased last week to 78.40% from 76.20%. 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 51.00% from 47.40%. Percent continue to trend up.

Bullish Percent Index for S&P 500 stocks increased last week to 69.40% from 62.60% and remained above its 20 day moving average. The Index continues to trend higher and is intermediate overbought. However, signs of a peak have yet to appear.

Bullish Percent Index for TSX Composite Index was unchanged last week at 51.82%.and remained above its 20 day moving average. The Index continues to trend higher.

The TSX Composite Index dropped 424.49 points (3.04%) last week. Intermediate trend remains up (Score: 2). Strength relative to the S&P 500 Index remains negative (Score: -2). The Index fell below its 20 day moving average on Friday (Score:-1). Short term momentum indicators are trending down (Score: -1). Technical score dropped last week to -2 from 1

Percent of TSX stocks trading above their 50 day moving average dropped last week to 55.87% from 72.87%. Percent is intermediate overbought and trending down.

Percent of TSX stocks trading above their 200 day moving average fell last week to 25.51% from 31.17%. Percent is trending down.

The Dow Jones Industrial Average added 16.84 points (0.10%) 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 remained at 6.

Bullish Percent Index for Dow Jones Industrial Average increased last week to 90.00% from 83.33% and remains above its 20 day moving average. The Index continues to trend higher and is intermediate overbought. However, signs of a peak have yet to appear.

Bullish Percent Index for NASDAQ Composite stock increased last week to 47.85% from 45.48% and remained above its 20 day moving average. The Index continues to trend higher.

The NASDAQ Composite Index gained 21.89 points (0.44%) last week. Intermediate trend remains up. The Index continues to outperform the S&P 500 Index. The Index remains above its 20 day moving average. Short term momentum indicators are trending higher and are overbought. However, signs of a peak have yet to appear.

The Russell 2000 Index slipped 4.20 points (0.36%) last week. Intermediate trend changed to up from down on a move above 1169.71. 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 last week improved to 1 from -3

The Dow Jones Transportation Average dropped 167.51 points (2.02%) last week. Intermediate trend changed to up from down on a move above 8320.04. 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 improved last week to -2 from -4.

The Australia All Ordinaries Composite Index dropped 99.50 points (1.85%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to negative from neutral. The Index remains above its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to 0 from 2.

The Nikkei Average added 257.80 points (1.37%) last week. Intermediate trend remains neutral. Strength relative to the S&P 500 Index remains neutral. The Average remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score last week remained at 2.

iShares Europe 350 units slipped $0.51 (1.19%) last week. Intermediate trend remains neutral. Strength relative to the S&P 500 Index remains negative. Units remain above their 20 day moving average. Short term momentum indicators are trending down. Technical score slipped last week to -2 from 0.

The Shanghai Composite Index dropped 29.87 points (0.88%) 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 starting to turn down. Technical score last week dropped to 2 from 5.

Emerging Markets ETF dropped $1.42 (3.91%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to negative from neutral. Units fell below their 20 day moving average. Short term momentum indicators are trending down. Technical score dropped to -2 from 2.

 

Currencies

The U.S. Dollar Index slipped 0.19 (0.20%) 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, but showing early signs of rolling over

The Euro added 0.64 (0.84%) last week. Intermediate trend remains down. The Euro remains below its 20 day moving average. Short term momentum indicators are trending down and are oversold. Early signs of a bottom have appeared.

The Canadian Dollar added US 0.54 cents (0.66%) last week. Intermediate trend remains neutral. The Canuck Buck remains below its 20 day moving average. Short term momentum indicators are mixed and showing early signs of bottoming.

The Japanese Yen added 1.90 (0.98%) last week. Intermediate trend remains up. The Yen remains below its 20 day moving average. Short term momentum indicators are trending down.

 

Commodities

Daily Seasonal/Technical Commodities Trends for October 30th 2015

Green: Increase from previous day

Red: Decrease from previous day

The CRB Index added 1.90 points (0.98%) last week. Intermediate trend changed to neutral from up on a move below 191.17. Strength relative to the S&P 500 Index remains negative. The Index remains below its 20 day moving average. Short term momentum indicators are mixed. Technical score slipped to -3 from -2

Gasoline gained $0.06 per gallon (4.62%) last week. Intermediate trend remains down. Relative strength improved on Friday to neutral from negative. Gas moved above its 20 day moving average on Friday. Short term momentum indicators turned positive on Friday. Technical score improved last week to 0 from -6.

Crude Oil gained $1.79 per barrel (4.01%) last week. Intermediate trend changed to neutral from up on a move below $43.36. Crude remains below its 20 day moving average. Short term momentum indicators are trending up

Natural Gas added $0.02 per MBtu (0.87%) 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 oversold and mixed. Technical score improve last week to -5 from -6.

The S&P Energy Index dipped 2.74 points (0.54%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to negative from neutral. The Index remains above its 20 day moving average. Short term momentum indicators are mixed. Technical score last week slipped to 1 from 2.

The Philadelphia Oil Services Index dropped 2.23 points (1.24%) last week. Intermediate trend remains neutral. Strength relative to the S&P 500 Index changed to negative from neutral. The Index moved below its 20 day moving average. Short term momentum indicators are mixed. Technical score slipped last week to 1 from 2

Gold dropped $21.10 per ounce (1.81%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains negative. Gold moved below its 20 day moving average. Short term momentum indicators are trending down. . Technical score dropped last week to -2 from 0

Silver dropped $0.30 per ounce (1.90%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to negative from neutral. Silver fell below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to -2 from 2Strength relative to Gold is neutral

The AMEX Gold Bug Index dropped 13.25 points (8.75%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to negative from positive. The Index fell below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to -2 from 4. Strength relative to gold is neutral.

Platinum dropped $15.20 per ounce (1.52%) last week. Trend remains down. Strength relative to S&P 500 turned negative. PLAT remains above its 20 day MA. Momentum is trending down.

Palladium dropped $17.35 per ounce (2.50%) last week. Trend remains up. Strength relative to S&P 500 changed to negative. PALL dropped below its 20 day MA. Momentum is trending down

Copper dropped another $0.03 per lb. (1.28%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains negative. Copper remained below its 20 day moving average. Short term momentum indicators are trending down. Technical score remains at -6.

The TSX Metals & Mining Index plunged 44.77 points (9.51%) last week. Intermediate trend remained at neutral. Strength relative to the S&P 500 Index changed to negative from neutral. The Index fell below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to -4 from 1.

Lumber dropped 8.90 (3.41%) last week. Intermediate trend remains neutral. Strength relative to the S&P 500 changed to neural from positive. Lumber remains above its 20 day MA.

The Grain ETN added $0.49 (1.51%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains negative. Units moved above their 20 day MA. Short term momentum indicators are trending up. Technical score improved to 2 from -2.

The Agriculture ETF dropped $1.23 (2.47%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to negative from neutral. Units dropped below their 20 day moving average. Short term momentum indicators are trending down. Technical score dropped to -2 from 4.

 

Interest Rates

The yield on 10 year Treasuries increased 6.8 basis points (3.26%) last week. Intermediate trend changed to up from down on a move above 2.138%. Yield moved above its 20 day moving average. Short term momentum indicators are trending up.

Conversely, price of the long term Treasury ETF slipped $0.42 (0.34%) last week. Intermediate trend remains up. Units fell below their 20 day moving average.

 

Other Issues

The VIX added 0.61 (4.22%) last week. Intermediate trend remains down. The Index remains below its 20 day moving average.

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

Technical action by individual S&P 500 stocks was exceptionally bullish last week. 59 stocks broke resistance and 19 stocks broke support.

Economic data this week focuses on the October employment report on Friday. Consensus is that the report will improve significantly from the exceptionally disappointing in September. Other economic data is expected to be mixed.

Seasonal influences for most equity markets in the world as well as economically sensitive primary sectors have just turned positive for the seasonally strong Christmas season.

The Dow Jones Industrial Average and S&P 500 Index remain above their 200 day moving averages, but face formidable resistance just above current levels. The implication is that broadly based U.S. equity indices can move higher between now and the end of the year, but gains will be smaller and harder to record than the past five weeks.

Tax loss selling pressures become a focus between now and mid-December (particularly in Canadian energy, precious metal and base metal sectors).

PMI reports from China and Europe are expected to show a slight improvement over previous reports.

Earnings reports continue to influence individual stock performance. To date, according to FactSet, 340 S&P 500 companies have reported third quarter results: 76% reported higher than consensus earnings and 47% reported higher than consensus revenues. On a blended basis, third quarter results on a year over year basis show a 2.2% decline in earnings and a 2.9% decline in revenues. 39 companies have issued negative fourth quarter guidance and 17 companies have issued positive guidance. Consensus for fourth quarter earnings is a decline of 2.4% on a year-over-year basis. This week another 105 S&P 500 companies and 2 Dow Jones Industrial companies will report third quarter results.

 

Sectors

Daily Seasonal/Technical Sector Trends for October 30th 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:

 

StockTwits Released on Friday @equityclock

Short term rising wedge pattern for the S&P 500 Index threatens a retracement of recent gains.

Technical action by S&P 500 stocks to 10:15 AM: Quietly bullish. Breakouts: $SNI, $VLO, $ABBV, $FSLR, $SHW. Breakdown: $KEY

Editor’s Note: After 10:15 AM, another five S&P 500 stocks broke resistance despite weakness by the S&P 500 Index: Tiffany, Apache, Dun & Bradstreet, Eaton and Fluor. Nice reverse head and shoulders pattern by Tiffany!

 

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.