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

Tech Talk for Monday July 17th 2017

 

Editor’s Note: Don Vialoux is scheduled to be BNN’s guest analyst on Berman’s Call today at 11:00 AM EDT

WALL STREET RAW RADIO WITH MARK LEIBOVIT

GUESTS: DON VIALOUX, MARK SKOUSEN, SINCLAIR NOE, KYLE DENNIS, JEFF BISHOP, AND KEITH FITZGERALD

http://tinyurl.com/y7tbrx3z

 

The Bottom Line

Equity markets (except China) remain intermediate overbought and vulnerable to a correction, despite a move by the S&P 500 Index and the Dow Jones Industrial Average to all-time highs on Friday. The S&P 500 Index and TSX Composite Index on average during the past 20 years have reached their seasonal peak on July 17th followed by at least a shallow correction lasting until mid-October However, volatility measured by the VIX Index remains relatively mute implying that the seasonal peak this year could be delayed slightly. Political events (most notably in the U.S.) could change the timing quickly. Possibilities include a show down with North Korea, failure by the U.S. Congress to pass meaningful legislation on health care and tax reform, an unexpected increase in interest rates and impending trade wars. Be careful out there! A spike in volatility above levels reached two weeks ago will be the most likely sign that the summer correction has started. Meanwhile, holding a robust position in cash in your investment portfolio makes sense.

 

Economic News This Week

July Empire Manufacturing Index to be released at 8:30 AM EDT on Monday is expected to dip to 13.0 from 19.8 in June

June Housing Starts to be released at 8:30 AM EDT on Wednesday are expected to increase to 1.15 million units from 1.092 million units in May.

European Community Monetary Policy announcement is scheduled to be released at 7:45 AM EDT on Thursday.

Weekly Initial Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to slip to 245,000 from 247,000

July Philly Fed Index to be released at 8:30 AM EDT on Thursday is expected to drop to 22.0 from 27.6 in June

June Leading Indicators to be released at 10:00 AM EDT on Thursday are expected to increase by 0.4% versus a gain of 0.3% in May.

Canadian June Consumer Price Index to be released at 8:30 AM EDT on Friday us expected to be unchanged versus a gain of 0.1% in May. On a year-over-year basis, CPI is expected to increase 1.0%.

Canadian May Retail Sales to be released at 8:30 AM EDT on Friday are expected to increase 0.3% versus a gain of 0.8% in April.

 

Earnings News This Week

 

Observations

Technical action by individual S&P 500 stocks was surprisingly mixed last week despite a move by the Index to an all-time high on Friday. Sectors showing strongest positive technical action were Industrials, Technology and Materials. Sectors showing weakest technical action were Consumer Discretionary and Financials. Number of S&P 500 stocks in an intermediate uptrend was unchanged at 282, number of stocks in a neutral trend increased to 52 from 46 and number of stock in a downtrend dropped to 166 from 172. The up/down ratio increased last week to (282/166=) 1.70 from 1.64

The earnings and sales outlook for S&P 500 stocks remain promising (albeit at a slightly lower level than previous): According to FactSet, 6% of companies have reported to date. 80% reported higher than consensus earnings and 83% reported higher than consensus revenues. Accordingly, consensus for blended second quarter earnings on a year-over-basis for all companies increased to 6.8% from 6.5%. Consensus for blended second quarter revenues remained the same at a 4.8% rate. This week another 68 S&P 500 companies are scheduled to report (including 9 Dow Jones Industrial companies. Beyond the second quarter, consensus by FactSet shows a 7.2% increase in third quarter earnings (down from 7.3% last week) and a 5.0% increase in revenues (down from 5.1%). Consensus for fourth quarter shows a 12.2% increase in earnings (down from 12.4%) and a 5.0% increase in revenues (down from 5.1%. For 2017, earnings are expected to increase 9.6% (down from 9.8%) and revenues are expected to increase 5.3%.

Response to second quarter reports was “off to a rough start” late last week. High profile companies (JP Morgan, Citigroup, Wells Fargo) reported higher than consensus second quarter profits, but traders took profits on news.

A word of caution on U.S. second quarter earnings reports! On one hand, consensus estimates are notorious for under-estimating actual earnings. On the other hand, consensus estimates for Dow Jones Industrial Average companies are significantly lower than consensus estimates for S&P 500 companies (3.0% increase for Dow companies versus a 6.8% increase for S&P 500 companies). The discrepancy implies that a small number of S&P 500 companies (think FANG companies) will report oversized sales and earnings gains while other companies will report less than consensus results. Rotation within sectors could be significant during the next few weeks.

Second quarter earnings reports for TSX 60 companies are expected to be impressive. On a year-over-year basis, earnings per share on average (median) are expected to increase 11.3%. Canadian equity prices have yet to respond.

Economic news this week is expected to show a slight slowdown in U.S. economic growth.

Short term technical indicators (momentum, above/below 20 day moving average) for most equity markets, commodities and sectors turned higher last week. In most cases they are overbought, but have yet to show signs of peaking.

Medium term technical indicators (Percent of stocks trading above their 50 day moving average, Bullish Percent Index) generally moved higher last week, but became more overbought.

Note the downgrade in seasonal ratings indicated below for a wide variety of equity indices and sectors effective July 17th. The S&P 500 Index and TSX Composite Index on average during the past 20 years have reached a seasonal peak on July 17th

 

Equity Indices and Related ETFs

Daily Seasonal/Technical Equity Trends for July 14th 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 gained 34.09 points (1.41%) last week. Intermediate uptrend was confirmed on Friday when the Index moved above 2453.82 to an all-time high. The Index moved back above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 4 from 2.

Percent of S&P 500 stocks trading above their 50 day moving average increased last week to 70.80 from 60.40. Percent became more intermediate overbought.

Percent of S&P 500 stocks trading above their 200 day moving average increased last week to 73.80 from 71.60. Percent remains intermediate overbought

Bullish Percent Index for S&P 500 stocks increased last week to 73.20 from 72.80 and remained above its 20 day moving average. The Index remains intermediate overbought.

Bullish Percent Index for TSX stocks increased last week to 62.65 from 62.25 and remained below its 20 day moving average. The Index remains intermediate overbought.

TSX Composite Index gained 147.65 points (0.98%) last week. Intermediate trend remains down (Score: -2). Strength relative to the S&P 500 Index remains negative (Score: -2). The Index remains below its 20 day moving average (Score: -1). Short term momentum indicators are trending up (Score: 1). Technical score remained last week at -4.

Percent of TSX stocks trading above their 50 day moving average increased last week to 38.43 from 28.10. Percent remains intermediate oversold and showing early signs of bottoming.

Percent of TSX stocks trading above their 200 day moving average increased last week to 50.00 from 49.17. Percent remains intermediate Neutral and trending down.

The Dow Jones Industrial Average gained 223.40 points (0.98%) last week to an all-time high. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to Neutral from Positive. The Average moved above its 20 day moving average. Short term momentum indicators are trending up. Technical score last week remained at 4.

Bullish Percent Index for Dow Jones Industrial Average remained unchanged last week at 83.33 and remained above its 20 day moving average. The Index remains intermediate overbought.

Bullish Percent Index for NASDAQ Composite Index stocks increased last week to 62.45 from 61.34. The Index remains intermediate overbought.

The NASDAQ Composite Index gained 159.39 points (2.59%) last week. Intermediate trend changed to Neutral from Down on Friday on a move above 6300. Strength relative to the S&P 500 Index changed to Positive from Negative. The Index moved above its 20 day moving average. Short term momentum indicators turned up. Technical score increased last week to 4 from -6.

Russell 2000 Index gained 12.98 points (0.92%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to Neutral from Positive. The Index remained above its 20 day moving average. Short term momentum indicators are trending up. Technical score slipped last week to 4 from 6.

Dow Jones Transportation Average gained 47.82 points (0.49%) 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 last week at 6.

Australia All Ordinaries Composite Index added 64.80 points (1.13%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed last week to Negative. The Index moved back above its 20 day moving average. Short term momentum indicators have turned back up. Technical score increased last week to 0 from -2.

The Nikkei Average added 189.77 points (0.95%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Neutral. The Average moved above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 4 from 0.

Europe iShares gained $1.01 (2.28%) last week. Intermediate uptrend was confirmed on Friday on a move above $45.16 to an all-time high. Strength relative to the S&P 500 Index remains Neutral. Units moved above their 20 day moving average. Short term momentum indicators turned higher. Technical score increased last week to 4 from 0.

Shanghai Composite Index added 4.47 points (0.14%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Positive. The Index remains above its 20 day moving average. Short term momentum indicators have turned down. Technical score slipped last week to 0 from 2.

Emerging Markets iShares gained $2.29 (5.57%) last week. Intermediate uptrend was confirmed on a move above $42.01to an all-time high. Strength relative to the S&P 500 Index changed to Positive from Neutral. Units moved back above their 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 6 from 0.

 

Currencies

The U.S. Dollar Index slipped last week to 95.51 from 95.79. Intermediate trend remains down. The Index remains below its 20 day moving average. Short term momentum indicators have turned back down.

The Euro moved higher to 114.68 from 114.01 last week. Intermediate trend remains up. The Euro remains above its 20 day moving average. Short term momentum indicators are trending up.

The Canadian Dollar advanced to 79.06 from 77.54 last week. Intermediate trend remains up. The Canuck Buck remains above its 20 day moving average. Short term momentum indicators are trending up.

The Japanese Yen moved higher to 88.88 from 87.80 last week. Intermediate trend remains up. The Yen remains below its 20 day moving average. Short term momentum indicators have turned up.

The British Pound moved up to 131.04 from 128.95 last week. Intermediate trend remains up. The Pound remains above its 20 day moving average. Short term momentum indicators have turned back up.

 

Daily Seasonal/Technical Commodities Trends for July 14th 2017

Green: Increase from previous day

Red: Decrease from previous day

* Excludes adjustment from rollover of futures contracts

The CRB Index added 3.72 points (2.16%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Neutral. The Index remains above its 20 day moving average. Short term momentum indicators have turned up. Technical score increased last week to 0 from -2

Gasoline added 3.3 cents per gallon (2.20%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Positive. Gas remained above its 20 day moving average. Short term momentum indicators have turned up. Score increased to 2 from -2.

Crude Oil gained $2.31 per barrel (5.22%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index turned positive from neutral. Crude moved above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 2 from -4.

Natural Gas added 11.2 per MBtu (3.91%) last week. Intermediate trend remains neutral. Strength relative to the S&P 500 Index remains Neutral. “Natty” moved back above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 2 from -2.

S&P Energy Index gained 9.83 points (2.08%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index improved to Neutral from Negative. The Index moved above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 0 from -6.

Philadelphia Oil Services Index increased 7.72 points (6.09%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index improved to Neutral from Negative. The Index moved above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 0 from -6.

Gold gained $17.80 per ounce (1.47%) last week. Intermediate trend remains neutral. Strength relative to the S&P 500 Index remains Negative. Gold remains below its 20 day moving average. Short term momentum indicators have turned up. Technical score increased last week to -2 from -4.

Silver gained $0.50 per ounce (3.24%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Negative. Silver remains below its 20 day moving average. Short term momentum indicators have turned up. Technical score improved last week to -4 from -6.

The AMEX Gold Bug Index gained 7.02 points (3.92%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Negative. The Index moved above its 20 day moving average on Friday. Short term momentum indicators have turned up. Technical score improved last week to -2 from-6.

Platinum gained $19.40 per ounce (2.15%) last week. Trend remains down. Relative strength remains Negative. Traded above its 20 day MA. Momentum: up. Score: -2 from -6.

Palladium gained $25.50 per ounce (3.07%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains negative. PALL moved above its 20 day moving average. Momentum indicators turned up. Technical score improved last week to -2 from -6

Copper added 4.1 cents per lb. (1.55%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Positive. Copper remains above its 20 day moving average. Short term momentum indicators have turned up. Technical score improved last week to 6 from 4.

BMO Base Metal ETF gained $0.66 (6.78%) last week. Intermediate trend changed to up from neutral on a move above $10.20. Strength relative to the S&P 500 Index remains Positive. Units remain above their 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 6 from 4.

Lumber gained $24.50 (6.94%) last week. Trend changed to up from down. Relative strength turned positive. Moved above its 20 day MA. Momentum turned positive. Score: 6

Grain ETN dropped $1.02 (3.39%) 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 have turned down. Technical score slipped last week to 4 from 6.

The Agriculture ETF gained $1.33 (2.42%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index improved to Neutral from Negative. Units moved above their 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 4 from -2.

 

Interest Rates

Yield on 10 year Treasuries dropped 7.4 basis points (3.09%) last week. Intermediate trend remains down. Yield remains above its 20 day moving average. Short term momentum indicators are trending down.

Conversely, price of the long term Treasury Bond ETF added $0.62 (0.51%) last week. Intermediate trend remains up. Price remains below its 20 day moving average. Short term momentum indicators are trending up.

 

Volatility

The VIX Index dropped 1.61 (14.39%) last week. Intermediate trend remains down. The Index remains below its 20 day moving average.

 

Daily Seasonal/Technical Sector Trends for July 14th 2017

Green: Increase from previous day

Red: Decrease from previous day

 

StockTwits Released on Friday @EquityClock

KBW Bank Index testing the neckline of Head & Shoulders bottoming pattern ahead of earnings results.

Global X Uranium ETF $URA moved above $13.72 completing a double bottom pattern.

Both $SPY and equally weighted S&P 500 ETF $RSP moved to an all-time high extending intermediate uptrends.

Technical action by S&P 500 stocks to 10:00: Mixed. Breakouts: $GPS $HON $ FMC $VAR. Breakdowns: $WYNN $AFL $FFIV

Editor’s Note: After 10:00 AM EDT, breakouts included TAP, VNO, SYK, XRX, EQIX, OKE and MSFT

$GDX moved above its 20 day moving average as approaching a period of seasonal strength.

Seasonal move for gold equities from late July to late September is approaching

Microsoft $MSFT, a Dow Jones Industrial stock moved above $72.89 to all-time high extending an intermediate uptrend.

Cineplex $CGX.CA moved below $$50.58 setting new intermediate downtrend.

Nickel ETN $JJN moved above $11.25 completing a reverse Head & Shoulders pattern.

Europe iShares $IEV moved above $45.16 extending an intermediate uptrend.

 

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