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Tech Talk for Monday December 19th 2016

 

Mr. Vialoux is scheduled to appear as the guest analyst on BNN’s Berman’s Call today at 11:00 AM EST

The Bottom Line

Seasonal influences are positive at this time of year, particularly in the second half of December. However, momentum has stalled: equity markets and most economic sensitive sectors are overbought. Stick with the seasonal trend in equity prices for now, but prepare to lock in significant profits before Inauguration Day on January 20th. Exceptions are China related equities and ETFs where profit taking at current or higher prices is preferred.

 

Economic News This Week

November Existing Home Sales to be released at 10:00 AM EST on Wednesday are expected to slip to 5.50 million units from 5.60 million units in October.

Third estimate of third quarter GDP to be released at 8:30 AM EST on Thursday is expected to increase to 3.3% from the second estimate at 3.2%.

Weekly Initial Jobless Claims to be released at 8:30 AM EST on Thursday are expected to increase to 256,000 from 254,000 last week.

November Durable Goods Orders to be released at 8:30 AM EST on Thursday are expected to drop 4.5% versus a gain of 4.8% in October. Excluding Transportation, November Durable Goods Orders are expected to increase 0.2% versus a gain of 1.0% in October.

Canadian November Consumer Prices to be released at 8:30 AM EST on Thursday are expected to slip 0.1% versus a gain of 0.2% in October

Canadian October Retail Sales to be released at 8:30 AM EST on Thursday are expected to increase 0.2% versus a gain of 0.6% in September

November Leading Economic Indicators to be released at 10:00 AM EST on Thursday are expected to increase 0.1% versus a gain of 0.1% in October.

November Personal Income to be released at 10:00 AM EST on Thursday is expected to increase 0.3% versus a gain of 0.6% in October. November Personal Spending is expected to increase 0.4% versus a gain of 0.3% in October

December Michigan Sentiment to be released at 10:00 AM EST on Friday is expected to increase to 98.2 from 98.0 in November

November New Home Sales to be released at 10:00 AM EST on Friday are expected to increase to 573,000 from 563,000 in October.

 

Earnings News This Week

Observations

Technical action last week by S&P 500 stocks last week were mixed. Sixty one stocks moved above intermediate resistance and 15 stocks broke intermediate support. Number of stocks in an uptrend increased last week to 312 from 294, number of stocks in a neutral trend increased to 71 from 57 and number of stocks in a downtrend dropped to 117 from 159. On the other hand, short term momentum indicators for most equity indices and economically sensitive sectors changed to down from up.

Historically, the period from now to the end of the month has been the strongest two week period of the year (Santa Claus rally).

North American equity markets continue to follow the U.S. Presidential cycle. Historically, equity markets after election of a new U.S. president move higher until Inauguration Day (January 20th).

The Canadian equity market recently entered the early December to early March period when it historically has outperformed the U.S. equity market.

Economic news this week is expected to be mixed. The negative and volatile Durable Goods Orders report will be offset by encouraging Personal Income, Personal Spending and New Home Sales.

Earnings focuses this week are on two stocks reporting on Tuesday that will give a sneak preview of December retail sales: FedEx and Nike. Thirteen S&P 500 companies and one Dow Jones Industrial company (Nike) are scheduled to release fourth quarter results.

Earnings and revenue prospects in the fourth quarter and beyond remain encouraging. Fourth quarter consensus for S&P 500 companies calls for year-over-year gains of 3.2% by earnings and 5.1% by revenues. Seventy seven companies have issued negative guidance and 34 companies have issued positive guidance. According to FactSet consensus calls for a first quarter earnings gain of 11.2% and an 8.5% revenue gain, a second quarter earnings gain of 10.6% and an 6.2% revenue gain and a 2017 earnings gain of 11.5% and a 5.9% revenue gain.

The Electoral College votes for election of the President today. Normally, the vote is a foregone conclusion. Not this time! Media discussion over the weekend suggest that some voting delegates may not vote as indicated by their pledge

Trading activity on world equity markets winds down as the week progresses. U.S. equity exchanges are open for regular hours on December 23rd and closed on December 26th

Equity Indices and Related ETFs

Daily Seasonal/Technical Equity Trends for December 16th 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 slipped 1.46 points (0.06%) last week. Intermediate trend remains up. The Index remains above its 20 day moving average. Short term momentum indicators are trending down.

Percent of S&P 500 stocks trading above their 50 day moving average (also known as the S&P 500 Momentum Barometer) slipped last week to 73.20 from 75.00. Percent remains intermediate overbought and showing early signs of rolling over.

Percent of S&P 500 stocks trading above their 200 day moving average slipped last week to 68.40 from 70.60. Percent remains intermediate overbought. Historically, a move above 80% and subsequently falling below 80% has been a signal that the Index is near an intermediate peak and is about to enter into an intermediate correction.

Bullish Percent Index for S&P 500 stocks increased last week to 71.20 from 68.80 and remained above its 20 day moving average. The Index remains intermediate overbought.

Bullish Percent Index for TSX stocks slipped last week to 72.65 from 73.88 and remained above its 20 day moving average. The Index remains intermediate overbought.

The TSX Composite Index dropped 60.00 points (0.39%) last week. Intermediate trend remains up (Score: 2). Strength relative to the S&P 500 Index changed to negative from neutral (Score: -2). The Index remained above its 20 day moving average (Score: 1). Short term momentum indicators are trending down (Score: -1). Technical score dropped last week to 0 from 4.

Percent of TSX stocks trading above their 50 day moving average (Also known as the TSX Momentum Barometer) slipped last week to 61.51 from 62.18. Percent remains intermediate overbought.

Percent of TSX stocks trading above their 200 day moving average slipped last week to 67.36 from 67.65. Percent remains intermediate overbought.

The Dow Jones Industrial Average added 86.56 points (0.44%) 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.

Bullish Percent Index for Dow Jones Industrial Average stocks increased last week to 70.00 from 66.67 and pushed above its 20 day moving average. The Index remains intermediate overbought.

Bullish Percent Index for NASDAQ Composite stocks slipped last week to 64.77 from 64.93 but remained above its 20 day moving average. The Index remains intermediate overbought.

The NASDAQ Composite Index dropped 7.34 points (0.13%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains negative. The Index remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at 2.

The Russell 2000 Index dropped 23.67 points (1.71%) 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 turned down. Technical score slipped last week to 2 from 6.

The Dow Jones Transportation Average dropped 239.70 points (2.55%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed last week 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 6.

The Australia All Ordinaries Composite Index dropped 26.10 points (0.46%) last week. Intermediate trend remains neutral. Strength relative to the S&P 500 Index remains neutral. The Index remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at 2.

The Nikkei Average gained 404.78 points (2.13%) 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.

Europe iShares slipped $0.07 (0.18%) last week. Intermediate trend remains neutral. Strength relative to the S&P 500 Index remains neutral. Units remain above their 20 day moving average. Short term momentum indicators are trending down. Technical score dipped last week to 0 from 2.

The Shanghai Composite Index dropped 9.90 points (3.40%) last week. Intermediate trend remains 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 -2 from 0.

Emerging Markets iShares dropped $1.04 (2.88%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed back to negative from neutral. Units dropped below their 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to -6 from 0.

 

Currencies

The U.S. Dollar Index gained another 1.35 (1.33%) last week to a 13 year high. Intermediate trend remains up. The Index remains above their 20 day moving average. Short term momentum indicators are trending up and are overbought.

The Euro dropped another 1.10 (1.05%) 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 dropped US 0.92 cents (1.21%) last week. Intermediate trend remains down. The Canuck Buck moved below its 20 day moving average. Short term momentum indicators are trending down.

The Japanese Yen dropped another 1.96 (2.25%) last week. Intermediate trend remains down. The Yen remains below its 20 day moving average. Short term momentum indicators are trending down and are oversold.

The British Pound dropped 0.96 (0.76%) last week. Intermediate trend remains up. The Pound dropped below its 20 day moving average. Short term momentum indicators are trending down.

 

Commodities

Daily Seasonal/Technical Commodities Trends for December 16th 2016

 

Green: Increase from previous day

Red: Decrease from previous day

 

The CRB Index slipped 0.55 points (0.29%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remained neutral. The Index remains above its 20 day moving average. Short term momentum indicators are trending down. Technical score remained last week at 2.

Gasoline gained $0.07 per gallon (4.64%) last week. Intermediate trend remains neutral. Strength relative to the S&P 500 Index remains positive. Gasoline remains above its 20 day moving average. Short term momentum indicators turned up. Technical score increased to 4 from 2.

Crude Oil gained $1.45 per barrel (2.82%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains positive. Crude remains above its 20 day moving average. Short term momentum indicators are trending down. Technical score slipped to 4 from 6.

Natural Gas dropped $0.34 per MBtu (9.07%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to neutral from positive. “Natty” remains above its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to 2 from 6.

The S&P Energy Index added 4.47 points (0.80%) 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 have turned down. Technical score slipped last week to 4 from 6.

The Philadelphia Oil Services Index added 2.62 points (1.38%) 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 have turned down. Technical score slipped last week to 4 from 6.

Gold dropped $24.50 per ounce (2.11%) last week in response to strength in the U.S. Dollar Index. Intermediate trend remains down. Strength relative to the S&P 500 Index remains negative. Gold remains below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to -6 from -4.

Silver dropped $0.75 per ounce (4.42%) last week. Intermediate downtrend was confirmed on a move below $16.15. Strength relative to the S&P 500 Index changed to negative from neutral. Silver moved below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped to -6 from -4.

The AMEX Gold Bug Index dropped 11.67 points (6.59%) last week. Intermediate downtrend resumed on a move below 171.76. Strength relative to the S&P 500 Index remains negative. The Index remained below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped to -6 from -4.

Platinum added $19.10 per ounce (2.09%) last week. Trend remains down. Relative strength remains negative. PLAT moved above its 20 day MA on Friday. Momentum turned up.

Palladium dropped $37.80 per ounce (5.14%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index turned negative. PALL moved below its 20 day moving average. Short term momentum indicators are trending down. Score dropped to -2 from 2.

Copper dropped $0.09 per lb.(3.40%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to negative. Copper dropped below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to -2 from 2.

Base Metals ETN dropped $0.30 (1.92%) last week. Intermediate trend changed on Friday from up to down on a move below $15.41. Strength relative to the S&P 500 Index remained negative. Units dropped below their 20 day moving average. Short term momentum indicators are trending down. Technical score dropped to -6 from 0.

Lumber dropped $8.00 (2.52%) last week. Trend remains neutral. Relative strength remains negative. Remains below its 20 day MA. Momentum remains down. Score remains at -4

The Grain ETN slipped $0.10 (0.34%) last week. Trend remains up. Relative strength remains neutral. Units recovered back above their 20 day moving average on Friday. Short term momentum indicators are trending up. Technical score remained last week at 4.

The Agriculture ETF dropped $1.14 (2.14%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains neutral. Units remain above their 20 day moving average. Short term momentum indicators have turned down. Technical score dropped to 2 from 6.

 

Interest Rates

The yield on 10 year Treasuries increased 13.3 basis points (5.40%) last week. Intermediate trend remains up. Short term momentum indicators are trending up and are overbought. Yield remains above its 20 day moving average.

Conversely, price of the long term bond ETF dropped $0.36 (0.31%) last week. Intermediate trend remains down. Units remain below their 20 day moving average.

 

Volatility

The VIX Index added 0.40 (3.74%) last week. The Index remains below its 20 day moving average.

 

Sectors

Daily Seasonal/Technical Sector Trends for December 16th 2016

Green: Increase from previous day

Red: Decrease from previous day

 

StockTwits Released on Friday @EquityClock

The outlook for manufacturing conditions just received a boost with the Philly Fed reporting the highest level in 2 years.

Technical action by S&P 500 stocks to 10:00: Mixed. Breakouts: $KMB $AVB $UDR. Breakdowns: $URBN $IFF

Editor’s Note: After 10:00 AM EST, four S&P 500 stocks broke support: COH, RL, GPS and KSS (All related to the Retail sector: Not a good sign for Christmas sales).

The coal ETF $KOL moved below $12.71 completing double top pattern.

More China warnings! China Large Cap iShares $FXI moved below $35.48 extending an intermediate downtrend.

 

Accountability Report

Equities and ETFs directly and indirectly influenced by China notably were weaker last week. Political events added to the uncertainty. Tech Talk previously supported indirectly related Chinese equities that had favourable seasonality parameters and positive technical scores through StockTwits followed up in the Tech Talk blog. Now these securities have started to show deteriorating technical parameters (i.e .neutral/negative relative strength, drops below their 20 day moving average, down trending short term momentum indicators). Accordingly, they no longer are favoured.

 

 

WALL STREET RAW WITH MARK LEIBOVIT

AND GUESTS PETER HUG, HENRY WEINGARTEN AND HARRY BOXER – DECEMBER 17, 2016" -   http://tinyurl.com/zhas9f6

 

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