Tech Talk for Monday January 23rd 2017

Mr. Vialoux on BNN’s Market Call Tonight Taped Friday, January 20th

Following are links:

http://www.bnn.ca/market-call Full program

http://www.bnn.ca/video/don-vialoux-s-top-picks~1040281 Top Picks

http://www.bnn.ca/video/don-vialoux-discusses-precision-drilling~1040270 Precision Drilling

http://www.bnn.ca/video/don-vialoux-s-past-picks~1040255 Past Picks

http://www.bnn.ca/video/don-vialoux-discusses-detour-gold~1040244 Detour Gold

Editor’s Note: Encouraging breakout by XGD (one of the top picks) on Friday on a brief move above $13.33

The Bottom Line

Momentum continues to sink in U.S. equity markets just as Inauguration Day passes. Uncertainty related to a new Trump Presidency likely will continue into April, implying that better opportunities exist in equity markets outside of the U.S. (including the TSX). Commodity sensitive equity markets and sectors continue to show positive relative strength. Stick with them for now.

Economic News This Week

December Existing Home Sales to be released at 10:00 AM EST on Tuesday are expected to slip to 555,000 from 561,000 in November.

Weekly Initial Jobless Claims to be released at 8:30 AM EST on Thursday are expected to increase to 246,000 from 234,000 last week.

December Leading Economic Indicators to be released at 10:00 AM EST on Thursday are expected to increase 0.5% versus no change in November.

December New Home Sales to be released at 10:00 AM EST on Thursday are expected to slip to 589,000 from 592,000 in November.

Fourth Quarter Advanced GDP to be released at 8:30 AM EST on Friday is expected to grow at a 2.2% annual rate versus growth at a 3.5% annual rate in the third quarter.

December Durable Goods Orders to be released at 8:30 AM EST on Friday are expected to increase 3.0% versus a decline of 4.6% in November. Excluding Transportation, December Durable Goods Orders are expected to increase 0.5% versus a gain of 0.5% in November

January Michigan Sentiment to be released at 10:00 AM EST on Friday is expected to slip to 98.0 from 98.1 in December.

Earnings News This Week

Observations

Technical action by S&P 500 stocks was mixed once again last week. Number of stocks breaking intermediate resistance was 36 while number of stocks breaking support was 27. However, because most stocks breaking resistance already were in an uptrends, number of stocks in an uptrend slipped to 326 from 336, number of stocks in a neutral trend increased to 70 from 67 and number of stocks in a downtrend increased to 104 from 97. The Up/Down ratio slipped last week to (326/104=) 3.14 from 3.46.

Short term technical indicators (i.e. short term momentum indicators, trades above 20 day moving average) for U.S. and Canadian equity markets deteriorated last week.

Intermediate technical indicators (Bullish Percent Index, Percent of stocks trading above their 50 day moving average) remain overbought and have rolled over.

Fourth quarter reports by S&P 500 companies are off to a good start. 12% of companies have reported to date. 61% beat consensus earnings estimates, but only 47% beat revenue estimates. To date, earnings on a year-over-year basis were up 3.4%. Another 70 S&P 500 companies are scheduled to release results this week (including 12 Dow Jones Industrial Average companies).

Prospects into 2017 remain positive, but appear inflated. Six S&P 500 companies announced positive first quarter earnings while three companies announced negative guidance. According to FactSet, consensus for first quarter earnings on a year-over-year basis is a gain of 10.9% (slightly lower than 11.0% last week) and first quarter revenues are expected to increase 7.7%. Second quarter earnings are expected to increase 10.6% and revenues are expected to increase 5.7%. Consensus for 2017 is for an earnings increase of 11.4% and a revenue increase of 6.0%.

Fourth quarter earnings prospects for TSX 60 companies are much more positive. Consensus calls for an average year-over-year gain of 8.3%. Gains are expected to be most notable by commodity sensitive stocks that have benefitted from higher commodity prices (Crude oil, natural gas, base metals, precious metals). Reports start trickling in this week.

History shows that the TSX Composite Index normally outperforms the S&P 500 Index between now and the end of February. Indices are tracking closely their historic trend.

Weather in North American can have a short term impact on equity markets. Winter in the first quarter of 2016 was warmer than average (El Nino effect), prompting stronger than average economic growth during the period. This year, weather is influenced by a “La Nina” event, the opposite to an El Nino effect. Weather in February, March and April forecast by NOAA last Thursday is scheduled to be colder than average and wetter than average in Northern U. S. states and southern Canada, implying lower economic activity than the same period last year.

Economic focus this week is on the first estimate of fourth quarter real GDP to be released on Friday.

On average during the past 20 years, the S&P 500 Index has tended to move slightly lower to late February. In contrast, the TSX Composite has a history of moving higher into February.

Equity Indices and Related ETFs

Daily Seasonal/Technical Equity Trends for January 20^th 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.

S&P 500 Index slipped 3.33 points (0.15%) last week. Intermediate trend remains up. The Index recovered back above its 20 day moving average on Friday. 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) dropped last week to 71.20% from 75.80%. Percent remains intermediate overbought and has rolled over.

Percent of S&P 500 stocks trading above their 200 day moving average slipped last week to 69.20% from 69.40%. Percent remains intermediate overbought and showing signs of rolling over.

Bullish Percent Index for S&P 500 stocks was unchanged last week at 73.60% and remained above its 20 day moving average. The Index remains intermediate overbought.

Bullish Percent Index for TSX stocks increased last week to 76.73% from 75.51% and remained above its 20 day moving average. The Index remains intermediate overbought.

The TSX Composite Index added 50.60 points (0.33%) last week. Intermediate trend remains up (Score: 2). Strength relative to the S&P 500 Index returned to Positive from Neutral on Friday (Score: 2). The Index moved back above its 20 day moving average on Friday (Score: 1). Short term momentum indicators are trending down. Technical score remained last week at 4.

Percent of TSX stocks trading above their 50 day moving average (Also known as the TSX Momentum Barometer) dropped to 69.92% from 75.53% last week. Percent remains intermediate overbought and has rolled over.

Percent of TSX stocks trading above their 200 day moving average increased last week to 69.49% from 68.35%. Percent remains intermediate overbought and continues to show early signs of rolling over.

Dow Jones Industrial Average dropped 58.48 points (0.29%) last week. Intermediate trend changed last week to Down from Up on a move below 19,718.67. Strength relative to the S&P 500 Index remained negative. The Average remains below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to -6 from -2.

Bullish Percent Index for Dow Jones Industrial Average stocks increased last week to 73.33% from 70.00% and remained above its 20 day moving average. The Index remains intermediate overbought.

Bullish Percent Index for NASDAQ Composite Index stocks slipped last week to 64.74% from 65.90% and dropped below its 20 day moving average. The Index remains intermediate overbought and showing early signs of rolling over.

The NASDAQ Composite Index slipped 18.79 points (0.34%) 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 slipped last week to 4 from 6.

The Russell 2000 Index dropped 20.20 points (1.47%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains negative. The Index dropped back below its 20 day moving average last week. Short term momentum indicators are trending down. Technical score slipped last week to -4 from -6.

Dow Jones Transportation Average added 22.23 points (0.24%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remained Neutral. The Average remained above its 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at 4.

The Australia All Ordinaries Composite Index dropped 67.10 points (1.17%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to Negative from Positive. The Index dropped below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to -2 from 4.

The Nikkei Average dropped 149.37 points (0.77%) last week. Intermediate trend changed to down from up on a move below 18,991.59. Strength relative to the S&P 500 Index changed last week to Negative from Neutral. The Average remains below its 20 day moving average. Short term momentum indicators have just turned up. Technical score dropped last week to -4 from 0.

Europe iShares slipped $0.07 (0.18%) last week. Intermediate trend remains Neutral. 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 last week slipped last week to 2 from 4.

The Shanghai Composite Index added 10.38 points (0.33%) last week. Intermediate trend changed to Down from Up on a move below 3,068.42. Strength relative to the S&P 500 Index remains neutral. Short term momentum indicators have just turned up. Technical score slipped last week to -2 from 0.

Emerging Markets iShares dropped $0.26 (0.71%) 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.

Currencies

The U.S. Dollar Index dropped another 0.53 (0.52%) last week. Intermediate trend remains up. The Index remains below its 20 day moving average. Short term momentum indicators are trending down.

The Euro added 0.64 (0.60%) last week. Intermediate trend remains down. The Euro remains above its 20 day moving averages. Short term momentum indicators are trending up.

The Canadian Dollar dropped US 1.10 (1.50%) last week. Intermediate trend remains Neutral. The Canuck Buck remained above its 20 day moving average. Short term momentum indicators are trending down.

The Japanese Yen slipped 0.10 (0.11%) last week. Intermediate trend remains down. Short term momentum indicators have just rolled over.

The British Pound added 1.86 (1.53%) last week. Intermediate trend remains down. The Pound moved above its 20 day moving average. Short term momentum indicators have turned up.

Commodities

Daily Seasonal/Technical Commodities Trends for January 20^th 2017

Green: Increase from previous day

Red: Decrease from previous day

The CRB Index slipped 0.52 points (0.27%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index turned to Positive from Neutral. The Index remains above its 20 day moving average. Short term momentum indicators have turned down. Technical score remained last week at 4.

Gasoline dropped 5.0 cents per gallon (3.05%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Neutral. Gas dropped below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to 0 from 4

Crude Oil added $0.85 per barrel (1.62%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to Neutral from Negative. Crude moved above its 20 day moving average on Friday. Short term momentum indicators remains down. Technical score increased last week to 2 from -2.

Natural Gas dropped $0.22 per MBtu (6.43%) last week. Intermediate trend remains Neutral. Strength relative to the S&P 500 Index remains Negative. “Natty” remains below its 20 day moving average. Short term momentum indicators have turned down. Technical score slipped last week to -2 from 0.

The S&P Energy Index added $0.45 (0.08%) last week. Intermediate trend remains down. 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 remained last week with -6.

The Philadelphia Oil Services Index added 2.96 points (1.60%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Neutral. The Index moved above its 20 day moving average on Friday. Short term momentum indicators are trending down. Technical score increased last week to 2 from 0.

Gold added another $8.70 per ounce (0.73%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Positive. Gold remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at 2.

Silver added another $0.27 (1.61%) last week. Intermediate trend changed to Neutral from Down on a move above $17.30. Strength relative to the S&P 500 Index remained Positive. Silver remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score improved last week to 4 from 2.

The AMEX Gold Bug Index added 3.34 points (1.68%) last week. Intermediate trend remains Neutral. 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. Technical score remained last week at 4.

Platinum slipped $10.40 per ounce (1.05%) last week. Intermediate trend remains up. Relative strength remains Positive. Trades above its 20 day MA. Momentum has turned down.

Palladium gained $39.25 per ounce (5.24%) last week. Intermediate uptrend was affirmed on a move above $776.00. Strength relative to the S&P 500 Index remains Positive. PALL remains above is 20 day MA. Momentum indicators are trending up. Technical score remained at 6.

Copper slipped $0.07 per lb. (2.60%) 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 are trending down. Technical score slipped last week to 4 from 6.

Global Base Metals ETF slipped $0.03 (0.29%) 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 up. Technical score remained last week at 6.

Lumber dropped 7.80 (2.34%) last week. Trend remains Neutral. Relative strength remains Positive. Trades above its 20 day MA. Momentum has turned down. Score dropped to 2 from 4

The Grain ETN added $0.68 (2.32%) last week. Trend changed to up from down on a move above $29.65. Strength relative to the S&P 500 Index remains Positive. Units remained above their 20 day moving average. Technical score increased last week to 6 from 2.

The Agriculture ETF gained another $0.65 (2.32%) 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 up. Technical score remained last week at 6.

Interest Rates

The yield on 10 year Treasuries added 8.7 basis points (3.66%) last week. Intermediate trend remains up. Yield moved above its 20 day moving average. Short term momentum indicators are trending up.

Conversely, price of the long term Treasury ETF dropped $1.87 (1.62%) last week. Intermediate trend remains down. Price dropped below its 20 day moving average.

Volatility

The VIX Index added 0.31 (2.76%) last week. Intermediate trend remains down. The Index moved below its 20 day moving average.

Sectors

Daily Seasonal/Technical Sector Trends for January 20^th 2017

Green: Increase from previous day

Red: Decrease from previous day

StockTwits Released on Friday @EquityClock

Technical action by S&P 500 stocks to 10:00: Mixed. Breakouts: $PG $BA $FMC. Breakdowns: $BMY $DGX $TDG

Editor’s Note: Breakouts after 10:00 AM EST included ALL, IBM, LVLT, MCK, CHD, VMC and IRM. Breakdowns included TJX, DG and PKI.

Palladium ETN $PALL moved above $74.35 extending an intermediate uptrend.

‘Tis the season for Palladium $PALL to move higher on a real and relative basis to March!

Thomson Reuters $TRI.CA, a TSX 60 stock moved above $59.99 extending an intermediate uptrend.

More fallout by Canadian forest product stocks! $OSB.CA moved below support at $33.15

WALL STREET RAW RADIO WITH FORMER WALL STREET WEEK WITH LOUIS RUKEYSER ‘ELF’, MARK LEIBOVIT – SATURDAY, JANUARY 21, 2017

– WITH GUEST SINCLAIR NOE, HENRY WEINGARTEN AND HARRY BOXER:  http://tinyurl.com/jrpt379

Accountability Report

UnitedHealth Group (UNH $158.66) was favoured in an EquityClock Stocktwits and Tech Talk comment on October 18^th at $141.84 for a seasonal trade. Technicals recently have turned negative (new intermediate downtrend, negative relative strength, a drop below its 20 day moving average and a downtrend in short term momentum indicators. Accordingly, the stock no longer is favoured.

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