Tech Talk Financial Network
0
All posts from Tech Talk Financial Network
Tech Talk Financial Network in Timing the market,

Tech Talk for Monday November 21st 2016

 

The Bottom Line

North American equity markets continue to trend higher despite their short term overbought levels. Economic sensitive sectors with strong seasonal characteristics at this time of year are the leaders. Seasonal influences on equity markets are particularly strong at this time of year (i.e. the day before and the day after U.S. Thanksgiving). Continue to hold/add to favoured seasonal investment opportunities.

 

Economic News This Week

September Canadian Retail Sales to be released at 8:30 AM EST on Tuesday are expected to increase 0.7% versus a decline of 0.1% in August.

October Existing Home Sales to be released at 10:00 AM EST on Tuesday are expected to slip to 5.40 million from 5.47 million in September

October Durable Goods Orders to be released at 8:30 AM EST on Wednesday are expected to increase 1.1% versus a decline of 0.1% in September. Excluding Transportation, October Durable Goods Orders are expected to increase 0.3% versus a gain of 0.2% in September

November Michigan Sentiment Index to be released at 10:00 AM EST on Wednesday is expected to remain unchanged from October at 91.6

October New Home Sales to be released at 10:00 AM EST on Wednesday are expected to slip to 586,000 from 593,000 in September

FOMC Meeting Minutes are to be released at 8:30 AM EST on Wednesday

 

Earnings News This Week

Observations

Technical action by S&P 500 stocks was exceptionally bullish again last week: 46 companies broke intermediate resistance levels and only 13 stocks broke support. Number of S&P 500 stocks in an intermediate uptrend increased last week to 235 from 220, number of stocks in a neutral trend increased to 75 from 68 and number of stocks in a downtrend dropped to 198 from 220.

Short term technical indicators (e.g. momentum, 20 day moving average) are trending up and are overbought, but have yet to show signs of peaking.

Intermediate technical indicators (e.g. Bullish Percent Index, Percent trading above 50 and 200 day moving averages) continue to trend higher from intermediate oversold levels.

Third quarter reports by S&P 500 companies have been a pleasant surprise to date: 95% have reported to date. 72% reported higher than consensus earnings, 55% reporting higher than consensus revenues. Blended earnings per share to date were up 3.0% on a year-over-year basis.

Another 13 S&P 500 companies are scheduled to release third quarter results this week in a holiday shortened session (U.S. Thanksgiving on Thursday).

Fourth quarter prospects are encouraging despite 68 S&P 500 companies issuing negative guidance (versus 32 companies issuing positive guidance. According to FactSet, consensus calls for a 3.4% in year-over-year earnings (versus 3.9% last week) and consensus revenues call for a 4.9% gain in revenues. Earnings estimates have been slipping partially due to strength in the U.S. Dollar Index.

Prospects in 2017 for S&P 500 stocks remain promising. According to FactSet, consensus calls for an earnings gain of 11.4% and a revenue gain of 5.9%.

Economic news this week is expected to be mixed.

History shows that this week is one of the best weeks for performance by S&P 500 and TSX Composite stocks. Specifically, the day before U.S. Thanksgiving and the day after U.S. Thanksgiving have proven to be the best two consecutive trading days in the year for the S&P 500 Index. Average gain for the two consecutive days since 1950 was approximately 0.70 %. Frequency of success was is approximately75%. Following is a link to EquityClock’s Daily Comment on Friday showing data: http://www.equityclock.com/2016/11/17/stock-market-outlook-for-november-18-2016/ Frequency and returns for the three consecutive days (before, during and after U.S. Thanksgiving) by the TSX Composite Index are slightly better than the S&P 500 Index.

North American equity markets are closely following the Presidential cycle. Historically, equity markets move higher from just after the election until Inauguration Day (January 20).

 

Equity Indices and Related ETFs

Daily Seasonal/Technical Equity Trends for November 18th 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 added 17.45 points (0.81%) last week. Intermediate trend remains neutral. The Index remained above its 20 day moving average. Short term momentum indicators are trending up and are overbought.

Percent of S&P 500 stocks trading above their 50 day moving average (Also known as the S&P 500 Momentum Barometer) increased last week to 59.20 from 53.80. Percent remains slightly intermediate overbought and trending up.

Percent of S&P 500 stocks trading above their 200 day moving average increased last week to 65.20 from 62.00. Percent remains slightly intermediate overbought and trending up.

Bullish Percent Index for S&P 500 stocks increased last week to 61.40 from 57.60 and moved above its 20 day moving average. The Index has reached an intermediate low and is trending up.

Bullish Percent Index for TSX stocks slipped last week to 67.89 from 69.51 and remained below its 20 day moving average. The Index remains in an intermediate downtrend and remains overbought.

The TSX Composite Index added 308.62 points (2.12%) last week. Intermediate trend remains up (Score: 2). Strength relative to the S&P 500 Index remains negative (Score -2). The Index moved back above its 20 day moving average (Score: 1). Short term momentum indicators are trending up (Score: 1. Technical score improved last week to 2 from -2.

Percent of TSX stocks trading above their 50 day moving average (Also known as the TSX Momentum Barometer) increased last week to 47.50 from 32.50. It has recovered to a neutral level and is trending up.

Percent of TSX stocks trading above their 200 day moving average increased last week to 61.67 from 55.83. Percent shows signs of bottoming and trending higher.

The Dow Jones Industrial Average gained 20.27 points (0.11%) 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 are trending up and are overbought. Technical score remained last week at 6.

Bullish Percent Index slipped last week to 66.67 from 70.00 and remained below its 20 day moving average. The Index remains intermediate overbought and trending down.

Bullish Percent Index for NASDAQ Composite stocks increased last week to 62.18 from 57.54 and moved above its 20 day moving average. The Index remains intermediate overbought and trending up.

The NASDAQ Composite Index gained 84.40 points (1.61%) last week. Intermediate trend changed to up from neutral on Friday when the Index briefly moved above 5,342.88. Strength relative to the S&P 500 Index changed to neutral from negative. The Index remained above its 20 day moving average. Short term momentum indicators are trending up and are overbought. Technical score improved last week to 4 from -2.

The Russell 2000 Index jumped 33.26 points (2.59%) 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 up and are overbought.

The Dow Jones Transportation Average advanced 277.82 points (3.24%) last week. The Average remains in an intermediate uptrend. 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 and are overbought. Technical score remained last week at 6.

The Australia All Ordinaries Composite Index slipped 19.10 points (0.35%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains negative. The Index remained above its 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at -2.

The Nikkei Average added 592.62 points (3.41%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index turned positive from neutral. The Average remained above its 20 day moving average. Short term momentum indicators are trending up and are overbought. Technical score improved last week to 6 from 4.

Europe iShares dropped $0.78 (2.07%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains negative. Units remained below their 20 day moving average. Short term momentum indicators are trending down. Technical score slipped last week to -6 from -4.

The Shanghai Composite Index slipped 3.18 points (0.10%) last week. Intermediate trend remains up. Strength relative to the S&P500 Index changed to positive from neutral. The Index remained above its 20 day moving average. Short term momentum indicators have just rolled over. Technical score remained last week at 4.

Emerging Markets iShares added $0.03 (0.09%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains negative. Units remained below their 20 day moving average. Short term momentum indicators are trending down. Technical score remained last week at -6.

 

Currencies

The U.S. Dollar Index gained 2.22 (2.24%) last week. Intermediate uptrend was extended on Thursday when the Index moved to a 13 year high. The Index remains above its 20 day moving average. Short term momentum indicators are trending up and are overbought.

The Euro dropped 2.67 (2.465%) 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.

The Canadian Dollar added US 0.18 cents (0.24%) last week. Intermediate trend remains down. The Canuck Buck remains below its 20 day moving average. Short term momentum indicators have turned up.

The Japanese Yen dropped another 3.35 (3.78%) last week. Intermediate trend remains down. The Yen remains below its 20 day moving average. Short term momentum indicators are trending down.

The British Pound dropped 2.47 (1.96%) last week. Intermediate trend remains neutral. The Pound returned to below its 20 day moving average on Friday. Short term momentum indicators are trending down.

 

Commodities

Daily Seasonal/Technical Commodities Trends for November 18th 2016

Green: Increase from previous day

Red: Decrease from previous day

 

The CRB Index gained 2.40 points (1.32%) 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 are trending up. Technical score improved last week to 0 from -2

Gasoline added $0.38 cents per gallon (2.91%) last week. Intermediate trend changed to neutral from up. Strength relative to the S&P 500 Index remains negative. Gas remains below its 20 day moving average. Short term momentum indicators are trending up. Technical score remained at -2 last week.

Crude Oil gained $2.95 per barrel (6.80%) last week. Intermediate trend remained up. Strength relative to the S&P 500 Index remains negative. Crude moved above its 20 day moving average on Friday. Short term momentum indicators are trending up. Technical score improved last week to 2 from -2.

Natural Gas gained $0.22 per MBtu (8.40%) last week triggered by a snow storm in the northern U.S. and southern Canada. Intermediate trend remains down. Strength relative to the S&P 500 Index changed to neutral from negative. “Natty” moved above its 20 day moving average on Friday. Short term momentum indicators are trending up. Technical score improved last week to 0 from -6.

The S&P Energy Index gained 9.81 points (1.92%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to neutral from negative. The Index moved above its 20 day moving average. Short term momentum indicators are trending up. Technical score improved last week to 4 from 0.

The Philadelphia Oil Services Index added 7.49 points (4.78%) last week. Intermediate trend remains neutral. Strength relative to the S&P 500 Index turned positive. The Index moved above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 4 from -2.

Gold dropped another $15.60 per ounce (1.27%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains negative. Gold remained below its 20 day moving average. Short term momentum indicators are trending down. Technical score remained last week at -6.

Silver dropped another $0.76 per ounce (4.37%) last week. Intermediate trend changed to down from neutral on a move below $17.11. Silver remained below its 20 day moving average. Short term momentum indicators continue to trend down. Technical score dropped last week to -6 from -4.

The AMEX Gold Bug Index added 1.91 points (1.06%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains negative. The Index remains below its 20 day moving average. Short term momentum indicators are trending down. Technical score remained last week at -6.

Platinum dropped $21.20 per ounce (2.25%) last week. Downtrend confirmed on a move below 927.20. Relative strength: negative. Trades below its 20 day MA. Momentum: down.

Palladium gained another $43.10 per ounce (6.29%) last week. Intermediate trend changed to neutral from down on a move above $728.00. Strength relative to the S&P 500 Index remained positive. Trades above its 20 day moving average. Momentum: up. Score improved to 4 from 2

Copper dropped $0.40 cents (1.59%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remained positive. Copper remained above its 20 day moving average. Short term momentum indicators are trending down. Technical score slipped to 4 from 6.

The Base Metals ETN slipped $0.05 (0.33%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains positive. Units remain above their 20 day moving average. Short term momentum indicators are trending down. Technical score slipped to 4 from 6.

Lumber added 0.90 (0.28%) last week. Trend remains neutral. Relative strength turned positive. Trades above its 20 day moving average. Momentum: positive. Score: 4, up from 2

The Grain ETN added $0.30 (1.06%) last week. Intermediate trend remains up. Relative strength turned negative. Units remained below their 20 day moving average. Short term momentum indicators just turned higher. Technical score remained last week at 0.

The Agriculture ETF added $0.39 (0.78%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index turned negative. Units remained above their 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at 2.

 

Interest Rates

Yield on 10 year Treasuries jumped another 21.8 basis points (10.30%) last week. Intermediate trend remains up. Yield remains above its 20 day moving average. Short term momentum indicators are trending up and are overbought.

Conversely, price of the long term Treasury ETF dropped $1.19 (1.00%) last week. Intermediate trend remains down. Units remain below their 20 day MA

 

Volatility

The VIX Index dropped another 1.65 (9.51%) last week. Units remain below their 20 day moving average.

 

Sectors

Daily Seasonal/Technical Sector Trends for November 18th 2016

Green: Increase from previous day

Red: Decrease from previous day

Interesting seasonal trading opportunity

Natural gas and “gassy” stocks came alive on Friday when the first snow storm of the year arrived in North America. Natural gas prices gained over 5 cents per MBtu. “Gassy” stocks have a history of moving higher late in the year when early snow storms first arrive. Examples of Canadian“gassy” stocks include Encana (ECA $15.78), Painted Pony (PPY $9.21), Canadian Natural Resources (CNQ $43.09), Vermillion (VET $39.70), Enerplus (ERF $10.07) and Bonavista (BNP $4.33). Among Canadian ETFs BMO Junior Gas ETF (ZJN $18.02) fits the profile. Top ETF pick in the U.S. is First Trust Revere Natural Gas ETF (FCG $25.02)

Nice breakout by Encana on Friday

 

Weather conditions for a play in “gassy” stocks this winter are lining up nicely. Long term weather forecast for this winter calls for impact of a La Nina. Winter temperatures during a La Nina are colder than average and snow fall is greater than average in the northern half of North America. Demand for natural gas for heating purposes is expected to increase significantly in high occupancy markets. See official weather sites at http://www.noaa.gov/news/hello-la-nina and http://www.noaa.gov/media-release/us-winter-outlook-predicts-warmer-drier-south-and-cooler-wetter-north

 

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:

Editor’s Note. Home building stocks and related ETFs such as XHB and IT recently started to outperform U.S. equity markets.

Home builders are expecting to benefit from new home purchases prior to an anticipated ramp up in mortgage rates in December and early next year.

 

StockTwits Released on Friday @EquityClock

Housing starts show largest October increase in history.

Technical action by S&P 500 stocks to 10:00: Quietly bullish. Breakouts: $ROST, $AMAT, $CRM. No breakdowns.

Strength in $AMAT triggered a breakout by $SMH above $70.21 to a 15 year high extending an intermediate uptrend.

NASDAQ Composite Index $COMPQ briefly moved above 5,342.88 to an all-time high extending an intermediate uptrend.

 

WALL STREET RAW RADIO

WITH MARK LEIBOVIT, DON VIALOUX, HENRY WEINGARTEN AND SINCLAIR NOE – NOVEMBER 19, 2016:

Following is a link: http://tinyurl.com/jy5gpvq

Mr. Vialoux’s interview is approximately ¾ into the tape.

 

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