ETFs

Tech Talk for Monday January 30th 2017

by Don Vialoux, Timingthemarket.ca

 

Don Vialoux presenting at the 2017 World Outlook Financial Conference

Please join us for the conference in Vancouver. Mr. Vialoux is presenting at 9:10 AM on February 4th. Topic is “Seasonal Investing at the beginning of the Trump Presidency”

Following is background information and links:

We are less than one week away from the 2017 World Outlook Financial Conference, Feb 3rd & 4th in Vancouver – our 28th annual event driven by a single goal – to help you improve your investment returns, by helping you make more money and avoid significant losses.

Join us. Tickets are still available – CLICK HERE to order today.

Can’t attend in person? Get the online video subscription – unlimited HD viewing of all our keynote speakers within 48 hours of the Conference. Streaming video available anytime, anywhere and on any device – CLICK HERE to order

The Bottom Line

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 Personal Income to be released at 8:30 AM EST on Monday is expected to be unchanged versus a gain of 0.4% in November. December Personal Spending is expected to increase 0.2% versus a gain of 0.4% in November

Canadian November Real GDP to be released at 8:30 AM EST on Tuesday is expected to increase 0.3% versus a decline of 0.3% in October.

November Case/Shiller Home Price Index to be released at 9:00 AM EST on Tuesday is expected to show a year-over-year gain of 5.0% versus a gain of 5.1% in October

January Chicago PMI to be released at 9:45 AM EST on Tuesday is expected to increase to 55.0 from 54.6 in December.

January Consumer Confidence Index to be released at 10:00 AM EST on Tuesday is expected to slip to 112.5 from 113.7 in December.

January ADP Private Employment to be released at 8:15 AM EST on Wednesday is expected to increase to 165,000 from 153,000 in December

January ISM Index to be released at 10:00 AM EST on Wednesday is expected to increase to 55.0 from 54.7 in December.

December Construction Spending to be released at 10:00 AM EST on Wednesday is expected to increase 0.2% versus a gain of 0.9% in November

FOMC Decision to be released at 2:00 PM EST on Wednesday is expected to maintain the Fed Fund rate at 0.50%-0.75%.

Weekly Initial Jobless Claims to be released at 8:30 AM EST on Thursday is expected to slip to 250,000 from 259,000 last week.

Preliminary Fourth Quarter Productivity to be released at 8:30 AM EST on Thursday is expected to grow at an annual rate of 1.0% versus growth at a 3.1% rate in the third quarter.

January Non-farm Payrolls to be released at 8:30 AM EST on Friday are expected to increase to 170,000 from 156,000 in December. January Private Non-Farm Payrolls are expected to increase to 175,000 from 144,000 in December. January Unemployment Rate is expected to remain unchanged from December at 4.7%. January Hourly Earnings are expected to increase 0.3% versus a gain of 0.4% in December.

December Factory Orders to be released at 10:00 AM EST on Friday are expected to increase 1.4% versus a decline of 2.4% in November.

January ISM Services to be released at 10:00 AM EST on Friday are expected to slip to 57.0 from 57.2 in December.

 

Earnings News This Week

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Observations

Technical action by S&P 500 stocks was bullish last week. Number of stocks breaking intermediate resistance was 72 and number of stocks breaking intermediate support was 28. Most of the stocks breaking resistance were stocks already in an intermediate uptrend. Number of stocks in an intermediate uptrend increased to 335 from 326, number of stocks in a neutral trend dropped to 59 from 70 and number of stocks in a downtrend increased to 106 from 104.

Short term indicators (momentum, 20 day moving average) for U.S. and Canadian equity markets and economic sensitive sectors) moved higher last week.

Intermediate indicators (Percent trading above 50 day moving average, Bullish Percent Index) remain intermediate overbought with many showing signs of rolling over (despite new highs by the Dow Jones Industrial Average, S&P 500 Index and TSX Composite Index).

Fourth quarter reports by S&P 500 companies continue to impress: 34% have reported fourth quarter results to date, 65% have reported higher than consensus earnings and 52% have reported higher than consensus revenues. Overall, earnings on a year-over-year basis are up 4.2% and revenues are up 4.7%. 17 companies have issued positive guidance and 16 companies have issued negative guidance.

This week is the big week for U.S. reports: Another 103 S&P 500 companies as well as 5 Dow Jones Industrial Average companies are scheduled to report.

Canadian companies start to ramp up reports this week. Consensus for TSX 60 companies is a year-over-year gain in earnings of 8.3%.

The outlook for S&P 500 companies beyond fourth quarter results remains positive. According to FactSet, first quarter earnings on a year-over-year basis are expected to increase 12.0% (up from 10.9% last week) and revenues are expected to increase 7.8% (up from 7.7% last week), second quarter earnings are expected to increase 10.3% (down from 10.6% last week) and revenues are expected to increase 5.8% (up 5.7% last week) and 2017 earnings are expected to increase 11.6% (up from 11.4% last week) and revenues are expected to increase 5.8% (down from 6.0% last week).

History shows that the TSX Composite Index normally outperforms the S&P 500 Index between now and the end of February.

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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 into the second quarter of 2016 in the U.S. (Not so in Canada due to the Fort McMurray fires). 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 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.

On average during the past 20 years, the S&P 500 Index has tended to move slightly lower to late February. Indeed, the month of February has proven to be the second weakest month of the year for the S&P 500 Index (September is the weakest month). In contrast, the TSX Composite has a history of moving higher into February.

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Economic news this week focuses on the FOMC decision on Wednesday, January ISM on Wednesday and the January employment report on Friday.

U.S. equity markets have a history of moving flat to slightly lower in Post U.S. Presidential Election years. So far this year, the Dow Jones Industrial Average, S&P 500 Index and NASDAQ Composite Index have moved slightly higher to all-time highs. However, breakouts last Wednesday lacked follow through on Thursday and Friday

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Equity markets outside of North America continue to outperform.

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Equity Indices and Related ETFs

Daily Seasonal/Technical Equity Trends for January 27th 2017

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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 gained 23.38 points (1.03%) last week. Intermediate trend remains up with the Index at an all-time high. The Index remains above its 20 day moving average. Short term momentum indicators are trending up.

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Percent of S&P 500 stocks trading above their 50 day moving average (Also known as the S&P 500 Momentum Indicator) dipped last week to 69.00 from 71.20. Percent remains intermediate overbought and continues to show signs of rolling over.

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Percent of S&P 500 stock trading above their 200 day moving average slipped last week to 68.40 from 69.20. Percent remains intermediate overbought and continues to show early signs of rolling over.

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Bullish Percent Index slipped last week to 73.20 from 73.60, but remained above its 20 day moving average. The Index remains intermediate overbought

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Bullish Percent Index for TSX stocks increased last week to 77.14 from 76.73 and remained above its 20 day moving average. The Index remains intermediate overbought.

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The TSX Composite Index added 27.93 points (0.18%) last week. Intermediate uptrend was confirmed on a move above 15,621.40 (Score: 2). Strength relative to the S&P 500 Index changed last week to Neutral from Positive (Score:0). The Index remains above its 20 day moving average (Score: 1). Short term momentum indicators are trending up (Score: 1). Technical score remained last week at 4.

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Percent of TSX stocks trading above their 50 day moving average (Also known as the TSX Momentum Barometer slipped last week to 68.64 from 69.92. The Index remains intermediate overbought and showing signs of rolling over.

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Percent of TSX stocks trading above their 200 day moving average dropped last week to 68.22 from 69.49. Percent remains intermediate overbought and continues to show early signs of rolling over.

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The Dow Jones Industrial Average gained 266.53 points (1.34%) last week. Intermediate uptrend was confirmed on a move above 19,999.63 to an all-time high. 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 increased last week to 4 from -6

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Bullish Percent Index for Dow Jones Industrial Average stocks was unchanged last week at 73.33 and remained above its 20 day moving average. The Index remains intermediate overbought.

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Bullish Percent Index for NASDAQ Composite stocks slipped to 64.25 from 64.74 and remained below its 20 day moving average. The Index remains intermediate overbought and shows early signs of rolling over.

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The NASDAQ Composite Index gained 105.45 points (1.90%) last week. Intermediate trend remains up as the Index reaches all-time highs. 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 increased last week to 6 from 2.

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The Russell 2000 Index gained 18.85 points (1.39%) 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. Short term momentum indicators are trending up. Technical score increased last week to -2 from -4.

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The Dow Jones Transportation Average increased 219.71 points (2.38%) last week. Intermediate uptrend was confirmed on a move above 9,490.29. 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. Technical score increased last week to 6 from 4.

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The Australia All Ordinaries Composite Index added 55.90 points (0.98%) 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 increased last week to 0 from -2.

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The Nikkei Average gained 329.49 points (1.72%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index improved to Neutral from Negative. The Average moved back above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 0 from -4.

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Europe iShares gained $0.42 (1.06%) last week. Intermediate trend changed to up from neutral. 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 2.

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The Shanghai Composite Index added 36.03 points (1.15%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Neutral. The Index moved above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 0 from -2. Reminder: Chinese equity markets are closed this week for the Chinese New Year.

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Emerging Markets iShares gained $1.05 (2.88%) 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 increased last week to 6 from 4.

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Currencies

The U.S. Dollar Index slipped 0.15 (0.15%) last week. Intermediate trend remains up. The Index remains below its 20 day moving average. Short term momentum indicators are trending down and are oversold.

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The Euro slipped 0.03 (0.15%) last week. Intermediate trend remains down. The Euro remains above its 20 day moving average. Short term momentum indicators are trending up, but are overbought and showing early signs of rolling over.

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The Canadian Dollar gained US 0.95 cents (1.27%) last week. Intermediate trend remains Neutral. The Canuck Buck remained above its 20 day moving average. Short term momentum indicators are trending up.

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The Japanese Yen slipped 0.36 (0.41%) last week. Intermediate trend remains up. The Yen slipped below its 20 day moving average. Short term momentum indicators are overbought and have started to roll over.

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The British Pound gained 1.68 (1.36%) last week. Intermediate trend remains down. The Pound moved above its 20 day moving average. Short term momentum indicators are trending up.

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Commodities

Daily Seasonal/Technical Commodities Trends for January 27th 2017

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Green: Increase from previous day

Red: Decrease from previous day

The CRB Index slipped 0.59 points (0.30%) last week. Intermediate trend remains up. 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 down. Technical score slipped last week to 2 from 4

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Gasoline dropped $0.04 per gallon (2.52%) last week. Intermediate trend remains up (Note that short term trend changed to down from up). Strength relative to the S&P 500 Index changed to Negative from Neutral. Gas remained below its 20 day moving average. Short term momentum indicators are trending down. Technical score slipped to -2 from 0.

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Crude Oil slipped $0.05 per barrel (0.10%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Neutral. Crude remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 4 from 2.

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Natural Gas gained $0.06 per MBtu (1.80%) last week. Intermediate trend remained Neutral. Strength relative to the S&P 500 Index changed to Neutral from Negative. “Natty” moved above its 20 day moving average. Short term momentum indicators are trending up. Technical score improved last week to 2 from -4.

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The S&P Energy Index dropped 2.99 points (0.55%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains down. Short term momentum indicators have turned up. Technical score improved last week to -4 from -6.

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The Philadelphia Oil Services Index dropped 5.31 points (2.82%) last week. Intermediate trend changed to down from up on a move below 183.18. Strength relative to the S&P 500 Index changed to Negative from Neutral. The Index dropped below its 20 day moving average. Short term momentum indicators have turned down. Technical score dropped to -6 from -2.

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Gold dropped $16.50 per ounce (1.37%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed to Neutral from Positive. Gold remains above its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to 0 from 2.

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Silver gained $0.11 per ounce (0.65%) last week. Intermediate trend remains neutral. Strength relative to the S&P 500 Index remains Positive. Silver remains above its 20 day moving average. Short term momentum indicators are trending down. Technical score remained last week at 2.

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The AMEX Gold Bug Index added 0.21 (0.10%) last week. Intermediate trend remains neutral. Strength relative to the S&P 500 Index remains positive. Short term momentum indicators are trending down. Technical score slipped last week to 2 from 4.

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Platinum added $7.30 per ounce (0.75%) last week. Intermediate trend remains up. Relative strength: Positive. Trades above its 20 day MA. Momentum remains down. Score remains at 4.

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Copper gained 0.07 cents per lb (2.67%) 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 up. Technical score increased last week to 6 from 4.

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The Base Metals ETF gained $0.55 (5.39%) 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 are trending up. Technical score remained last week at 6.

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Lumber added 3.90 (0.89%) last week. Intermediate trend remains neutral. Strength relative changed to Neutral. Trades above its 20 day MA. Momentum: positive. Score remains 2

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Grain ETN slipped $0.66 (2.20%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to Neutral from Positive. Units remain above its 20 day moving average. Short term momentum indicators are trending down. Technical score: 2 from 6.

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The Agriculture ETF added $0.43 (0.81%) 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 just rolled over. Technical score slipped last week to 4 from 6.

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Interest Rates

The yield on 10 year Treasuries gained 4.3 basis points (0.57%) last week. Intermediate trend remains up. Yield moved above its 20 day moving average. Short term momentum indicators have turned higher.

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Price of the long term Treasury Bond ETF slipped $0.31 (0.26%) last week. Intermediate trend remains down. Units dropped below their 20 day moving average.

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Volatility

The VIX Index dropped 0.96 (8.32%) last week. Intermediate trend remains down. The Index remains below its 20 day moving average

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Sectors

Daily Seasonal/Technical Sector Trends for January 27th 2017

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Green: Increase from previous day

Red: Decrease from previous day

 

CSTA Events

KWGC Chapter Meeting

Thursday February 2nd 7:30 PM

Hampton Inn: 4355 King St.

Kitchener

 

Oakville Chapter Meeting

Wednesday February 8th 7:00 PM

Queen Elizabeth Community Center 2302 Bridge Road

Oakville

Speaker: Don Vialoux

Register for events at www.csta.org . Everyone is welcome

 

StockTwits Released on Friday

Exports improve in December despite strength in the U.S. Dollar

Technical action by S&P 500 stocks to 10:00: Mixed. Breakouts: $GD $EA $INTC. Breakdowns: $CL $APD $EMN $FSLR

Editor’s Note: After 10:00 AM EST, Breakouts included ZTS, PCLN and CHRW. Breakdowns included MCK, ESRX and HCN

Russia ETF $RSX moved above $21.93 extending an intermediate uptrend.

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WALL STREET RAW RADIO WITH FORMER WALL STREET WEEK WITH LOUIS RUKEYSER ‘ELF’, MARK LEIBOVIT – JANUARY 28, 2017:

http://tinyurl.com/hepfn4l

SPECIAL GUESTS: HENRY WEINGARTEN, SINCLAIR NOE AND HARRY BOXER

 

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


Copyright © DV Tech Talk, Timingthemarket.ca

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