Tech Talk for Monday February 27th 2017

The Bottom Line

The “Trump Bump” continued last week following comments by Trump that U.S. tax reform proposals could arrive this week. Broadly based North American equity indices reached all-time highs. However, strength last week came from a narrowing number of unexpected sectors (e.g. Utilities, Consumer Staples). North American equity indices and economic sensitive sectors currently are overbought and showing early signs of rolling over. History shows that upside potential between now and mid-April after election of a new President is limited. Stick with seasonal trades that are working (e.g. Industrials, Financials, Precious Metals), but be aware that technical indicators are likely to trigger profit taking between now and early March

Economic News This Week

January Durable Goods Orders to be released at 8:30 AM EST on Monday are expected to drop 1.8% versus a drop of 0.4% in December. Excluding Transportation, January Durable Goods Orders are expected to increase 0.7% versus a gain of 0.5% in December.

Second estimate of Fourth Quarter GDP to be released at 8:30 AM EST on Tuesday is expected to increase to 2.1% from the previous estimate at 1.9%.

February Chicago PMI to be released at 9:45 AM EST on Tuesday is expected to slip to 50.3 from 53.0 in January.

February Consumer Confidence to be released at 10:00 AM EST on Tuesday is expected to increase to 111.8 from 111.5 in January.

January Personal Spending to be released at 8:30 AM EST on Wednesday is expected to increase 0.3% versus a gain of 0.5% in December. January Personal Income is expected to increase 0.4% versus a gain of 0.3% in December

February ISM to be released at 10:00 AM EST on Wednesday is expected to increase to 56.1 from 56.0 in January.

Bank of Canada rate decision to be released at 10:00 AM EST on Wednesday is expected to maintain the overnight lending rate at 0.5%.

January Construction Spending to be released at 10:00 AM EST on Wednesday is expected to slip 0.2% versus a gain of 0.6% in December.

The Beige Book is scheduled to be released at 2:00 PM EST on Wednesday

Weekly Initial Jobless Claims to be released at 8:30 AM EST on Thursday are expected to remain unchanged at 244,000.

Canadian Fourth Quarter Real GDP to be released at 8:30 AM EST on Thursday is expected to increase 2.0% versus a gain of 3.5% in the third quarter (December up 0.3% versus a gain of 0.4% in November)

February Non-Manufacturing ISM to be released at 10:00 AM EST on Friday is expected to remain unchanged from January at 56.5

Federal Reserve Chairperson, Janet Yellen speaks at Noon on Friday.

Observations

Technical action by S&P 500 stocks was bullish last week. Another 39 stocks broke above intermediate resistance levels and 16 stocks broke intermediate support levels (mostly energy stocks).

Short term technical indicators (e.g. 20 day moving averages, short term momentum indicators) for a wide variety of equity indices, sectors and commodities rolled over from overbought levels late last week.

Intermediate term technical indicators (e.g. Percent of stocks trading above their 50 day moving average, Bullish Percent Index) remain intermediate overbought and, in some cases, (e.g. TSX Composite) clearly have rolled over.

Fourth quarter reports by S&P 500 companies are beginning to wind down: 92% have reported to date. Focus this week is on retail merchandiser company reports. According to FactSet, 66% of reporting companies beat consensus earnings and 52% beat consensus revenues. Blended earnings per share to date are up 4.9% on a year-over-year basis.

Beyond the fourth quarter, earnings by S&P 500 companies remain encouraging. According to FactSet, consensus for first quarter earnings on a year-over-year basis is for a gain of 10.2%, consensus for second quarter earnings is for a gain of 9.2% and consensus for 2017 is for a gain of 10.3%. To date, 67 companies have issued negative first quarter guidance and 31 companies have issued positive first quarter guidance.

Earnings reports by TSX companies pour in this week. Focuses are on the remainder of Canada’s major banks and a wide variety of energy companies.

Economic news this week is expected to be mixed. Focus is on Trump’s presentation to Congress on Tuesday and Yellen’s speech on Friday.

Surprises last week included exceptional strength in Treasury bond and defensive equity/ETF sectors as well as weakness in commodity prices (other than precious metals). Surprises were out of character to historic seasonal trends at this time of year.

Earnings News This Week

Equity Indices and Related ETFs

Daily Seasonal/Technical Equity Trends for February 24^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.

The S&P 500 Index added 16.88 points (0.71%) last week. Intermediate trend remains up. The Index remains above its 20 day moving average. Short term momentum indicators continue to trend up

Percent of S&P 500 stocks trading above their 50 day moving average increased last week to 78.00% from 76.00%. Percent remains intermediate overbought and showing early signs of rolling over.

Percent of S&P 500 stocks trading above their 200 day moving average increased last week to 82.40% from 78.80%. Percent remains intermediate overbought.

Bullish Percent Index for S&P 500 stocks increased last week to 77.20% from 76.60% and remained above its 20 day moving average. The Index remains intermediate overbought.

Bullish Percent Index for TSX stocks slipped last week to 76.73% from 77.55% and dropped below its 20 day moving average. The Index remains intermediate overbought and showing signs of rolling over.

The TSX Composite Index dropped 35.16 points (1.93%) last week effectively closing lower for the year to date. Intermediate trend remains up (Score: 2). Strength relative to the S&P 500 Index changed to Negative from Neutral (Score:-2). The Index dropped below is 20 day moving average on Friday (Score: -1). Short term momentum indicators are trending down (Score: -1). Technical score plunged last week to -2 from 4.

Percent of TSX stocks trading above their 50 day moving average plunged last week to 53.33% from 67.92%. Percent remains intermediate overbought and trending down.

Percent of TSX stocks trading above their 200 day moving average dropped last week to 67.50% from 72.50%. Percent remains intermediate overbought and trending down.

The Dow Jones Industrial Average gained 197.71 points (0.96%) 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 stocks increased last week to 83.33% from 76.67% and remained above its 20 day moving average. The Index remains intermediate overbought, but has yet to show signs of peaking.

Bullish Percent Index for NASDAQ Composite stocks increased last week to 66.36% from 66.09% and remained above is 20 day moving average. The Index remains intermediate overbought.

The NASDAQ Composite Index gained 6.73 points (0.12%) 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 have turned down. Technical score dropped last week to 2 from 6.

The Russell 2000 Index slipped 5.34 points (0.38%) last week. Intermediate trend remains up. Strength relative to the S&P 500 changed last week to Negative from Neutral. The Index remains above its 20 day moving average. Short term momentum indicators have turned down. Technical score dropped last week to 0 from 4.

The Dow Jones Transportation Average dropped 73.52 points (0.77%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to Negative from Neutral. The Average remains above its 20 day moving average. Short term momentum indicators are trending down. Technical Score dropped last week to 0 from 4.

The Australia All Ordinaries Composite Index dropped 64.10 points (1.10%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to Negative from Neutral. The Index remains above its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to 0 from 4.

The Nikkei Average added 48.92 points (0.03%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed to Negative from Neutral. The Average remained above its 20 day moving average. Short term momentum indicators have turned down. Technical score dropped last week to -4 from 0.

Europe iShares dropped 0.20 (0.50%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Negative. Units remained above their 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to 0 from 2.

The Shanghai Composite Index added 50.35 points (1.57%) last week. Intermediate trend remained Neutral. 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 up. Technical score increased last week to 2 from 0.

Emerging Markets iShares added 0.10 (0.26%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to Neutral from Positive. Units remain above their 20 day moving average. Short term momentum indicators are trending down. Technical score slipped last week to 2 from 4.

Currencies

The U.S. Dollar Index added 0.21 (0.20%) last week. Intermediate trend remains up. The Index remains above its 20 day moving average. Short term momentum indicators are mixed.

The Euro slipped 0.52 (0.49%) last week. Intermediate trend remains down. The Euro remains below its 20 day moving average. Short term momentum indicators are trending down.

The Canadian Dollar slipped US0.04 cents (0.05%) last week. Intermediate trend remains Neutral. The Canuck Buck dropped below its 20 day moving average. Short term momentum indicators are trending down.

The Japanese Yen added 0.63 (0.71%) last week. Intermediate trend remains down. The Yen remains above its 20 day moving average. Short term momentum indicators are trending up.

The British Pound added 0.43 (0.35%) last week. Intermediate trend remains down. The Pound moved above its 20 day moving average. Short term momentum indicators are mixed.

Commodities

Daily Seasonal/Technical Commodities Trends for February 24^th 2017

Green: Increase from previous day

Red: Decrease from previous day

The CRB Index dropped 1.19 points (0.62%) last week. Intermediate trend changed on Friday to Down from Up on a move below 190.86. 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 dropped last week to -6 from -2.

Gasoline was unchanged last week. The chart below has yet to be adjusted to reflect the change in futures contracts.

Crude Oil added $0.21 per barrel (0.25%) 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 remained last week at 4.

Natural Gas dropped $0.04 per MBtu (1.41%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Negative. “Natty” remains below its 20 day moving average. Short term momentum indicators have just turned up. Technical score improved last week to -4 from -6.

The S&P Energy Index dropped 6.77 points (1.29%) last week. Intermediate downtrend was confirmed on Friday on a move below 517.16. 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.

The Philadelphia Oil Services Index dropped 0.47 points (0.27%) 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.

Gold gained $19.20 per ounce (1.55%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remained Neutral. Gold remained above its 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at 4.

Silver gained $0.38 per ounce (2.11%) last week. Intermediate trend remains up. 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 remained last week at 6.

The AMEX Gold Bug Index lost 8.19 points (3.82%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index turned 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 -4 from 2.

Platinum gained $22.60 per ounce (2.25%) last week. Intermediate trend remains up. Relative strength remained Neutral. Trades above its 20 day MA. Momentum: up. Score: 4

Palladium slipped $8.15 per ounce last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Neutral. PALL trades above its 20 day moving average. Short term momentum indicators are trending down. Score eased last week to 2 from 4.

Copper slipped $0.01 per lb. (0.37%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to Negative from Neutral. Copper slipped to its 20 day moving average. Short term momentum indicators are trending down. Technical score slipped last week to -1 from 2.

BMO Base Metal ETF plunged $0.51 per share (4.73%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remained Negative. Units remained below their 20 day moving average. Short term momentum indicators are trending down. Technical score remained last week at -2.

Lumber added $4.20 (1.16%) last week. Trend remains up. Relative Strength remains Positive. Trades above its 20 day MA. Momentum remains down. Technical score remains 2.

The Grain ETN dropped $0.54 (1.81%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Negative. Units dropped below their 20 day moving average. Short term momentum indicators are trending down. Technical score dropped to -2

The Agriculture ETF dropped $0.72 (1.33%) last week. Intermediate trend remains up. 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 last week to -2 from 0.

Interest Rates

Yield on 10 year Treasuries dropped 10.8 basis points (4.45%) last week. Intermediate trend remains up. Yield fell below its 20 day moving average. Strength relative to the S&P500 Index turned negative. Short term momentum indicators are trending down.

Price of the long term Treasury ETF gained $1.64 (1.36%) last week. Intermediate trend remains down. Units moved above their 20 day moving average. Short term momentum indicators have turned up.

Volatility

The VIX Index added 0.08 (0.79%) last week. Intermediate trend remains down. Units moved above their 20 day moving average.

Sectors

Daily Seasonal/Technical Sector Trends for February 24^th 2017

Green: Increase from previous day

Red: Decrease from previous day

WALL STREET RAW RADIO  – SATURDAY, FEBRUARY 25, 2017 WITH MARK LEIBOVIT

GUESTS HENRY WEINGARTEN, HARRY BOXER, SINCLAIR NOE, ALLEN WILSON AND DAN NICHOLLS:  http://tinyurl.com/haxqlol

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