ETFs

Tech Talk for Monday April 3rd 2017

by Don Vialoux, Timingthemarket.ca

Another Milestone

Number of EquityClock’s StockTwits followers exceeded 36,000 on Friday. Previous milestone at 35,000 followers was reached on March 9th

The Bottom Line

Levels set by U.S. equity markets on March 1st (2,400.98 for the S&P 500 Index and 21,169.11 for the Dow Jones Industrial Average) continue to be intermediate highs that likely will last well into April and possibly longer. International equity markets (particularly emerging markets) continue to offer better opportunities for equity investors during their current period of seasonal strength lasting into at least early May. Precious metals and precious metal equities and related ETFs finally are showing technical signs of rolling over from overbought levels. The energy sector was the best performing sector last week and has just entered into its seasonally strongest period.

Economic News This Week

February Construction Spending to be released at 10:00 AM EDT on Monday is expected to increase 1.0% versus a decline of 1.0% in January.

March ISM Index to be released at 10:00 AM EDT on Monday is expected to decline to 57.0 from 57.7 in February.

February Trade Deficit to be released at 8:30 AM EDT on Tuesday is expected to drop to $44.7 billion from $48.5 billion in January

February Factory Orders to be released at 10:00 AM EDT on Tuesday are expected to increase 0.9% versus a gain of 1.2% in January.

February Canadian Merchandise Trade Balance to be released at 8:30 AM EDT on Tuesday is expected to be a surplus of $670 million versus $807 billion in January.

March ADP Employment to be released at 8:15 AM EDT on Wednesday is expected to drop to 175,000 from 298,000 in February.

March ISM Services to be released at 10:00 AM EDT on Wednesday is expected to slip to 57.0 from 57.6 in February

FOMC meeting minutes are to be released at 2:00 PM EDT on Wednesday

Weekly Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to be unchanged at 258,000.

March Non-farm Payrolls to be released at 8:30 AM EDT on Friday are expected to drop to 179,000 from 235,000 in February. March Unemployment Rate is expected to remain unchanged from February at 4.7%. March Hourly Earnings are expected to increase 0.2% versus a 0.2% gain in February.

Canadian March Employment to be released at 8:30 AM EDT on Friday is expected to increase 3,200 versus a gain of 15,300 in February. The March Unemployment Rate is expected to increase to 6.7% from 6.6% in February

Earnings News This Week

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Observations

Technical action by S&P 500 stocks was mixed at best last week: 29 stocks broke resistance and 38 broke support. Notable on the list of upside breakouts were Consumer Discretionary stocks. Notable on the list of breakdowns were Financial stocks. Number of stocks in an intermediate uptrend dipped last week to 301 from 315, number of stocks in a neutral trend slipped to 44 from 45 and number of stocks in a downtrend increased to 165 from 150. The Up/Down ratio dropped from 3.01 two weeks ago to 2.10 last week to (301/165=) 1.82.

Short term technical indicators (20 day moving average, short term momentum) turned higher for most equity markets, economic sectors, energy commodities.

Intermediate technical indicators (Percent above 50 day moving average, Bullish Percent Index) moved back to intermediate overbought levels, but maintain downtrends.

Most of the gains by U.S. equities last week were triggered by a small number of big cap technology stocks (e.g. Facebook, Netflix, Google, Microsoft, Amazon.com).

Economic news ramps up this week. Focuses are on the ISM reports, FOMC meeting minutes and the employment reports.

Earnings news this week is minimal. Focus is on Constellation Brands on Thursday. Most companies are in “the quiet zone” prior to release of first quarter results. Exceptions are companies that clearly have missed consensus results and confess their new guidance prior to their actual release.

Technical action by the energy sector (particularly “gassy” stocks and oil services stocks on both sides of the border) turned positive just as the sector enters its strongest month of seasonal strength.

Political turmoil in Washington continues, typical of launch of a new administration. Equity markets do not like uncertainty. Look for choppy markets in April despite their traditional seasonal strength in most equity markets in the world.

According to FactSet, first quarter consensus calls for a year-over-year earnings gain by S&P 500 companies of 9.1% with a revenue gain of 7.2%, a 2017 earnings gain of 9.8% with a revenue gain of 5.3% and a 2018 earnings gain of 12.0% with a revenue gain of 4.7%. First quarter gains are expected to come from two sectors, energy and technology.

Trader’s Corner

Equity Indices and Related ETFs

Daily Seasonal/Technical Equity Trends for March 31st 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.

The S&P 500 Index gained 18.74 points last week (0.80%). Intermediate trend remains up. The Index dropped back below its 20 day moving average on Friday. 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 Barometer) increased last week to 61.40 from 55.80, but maintains a downtrend

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Percent of S&P 500 stocks trading above their 200 day moving average increased last week to 79.20 from 76.40. It remains intermediate overbought.

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Bullish Percent Index slipped last week to 73.00 from 74.00 and remained below its 20 day moving average. The Index remains intermediate overbought and trending down.

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Bullish Percent Index for TSX stocks slipped last week to 72.98 from 73.49 and matched its 20 day moving average. The Index remains intermediate overbought and trending down.

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The TSX Composite Index gained 105.08 points (0.68%) last week. Intermediate trend turned to Neutral from Down on a move above 15,645.64 (Score: 0). Strength relative to the S&P 500 Index remains Positive (Score: 2). The Index moved back above its 20 day moving average (Score: 1). Short term momentum indicators are trending up (Score: 1). Technical score increased last week to 4 from 0.

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Percent of TSX stocks trading above their 50 day moving average (also known as the TSX Momentum Barometer) increased last week to 58.44 from 47.92. Percent has returned to an intermediate overbought level.

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Percent of TSX stocks trading above their 200 day moving average increased last week to 67.90 from 63.33. Percent became more intermediate overbought.

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The Dow Jones Industrial Average added 66.50 points (0.32%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to Negative from Neutral. The Average remains below its 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at 0.

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Bullish Percent Index for Dow Jones Industrial Average stocks slipped last week to 83.33 from 86.67 and dropped below its 20 day moving average. The Index remains intermediate overbought and showing signs of rolling over.

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Bullish Percent Index for NASDAQ Composite Index increased last week to 60.92 from 60.69 and remained below its 20 day moving average. The Index remains intermediate overbought and trending down.

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The NASDAQ Composite Index added 83.00 points (1.42%) last week. Intermediate trend remains Neutral. Strength relative to the S&P 500 Index remains Positive. 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 0.

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The Russell 2000 Index added 31.28 points (2.31%) last week. Intermediate trend remains Neutral. 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 are trending up. Technical score increased last week to 4 from -4.

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The Dow Jones Transportation Average gained 187.73 points (2.10%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remained Negative. The Average remained below its 20 day moving average. Short term momentum indicators are trending up. Technical score improved last week to -4 from -6.

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The Australia All Ordinaries Composite Index gained 107.70 points (1.86%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to Positive from Neutral. The Index remained 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 Nikkei Average dropped 353.27 points (1.83%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to Negative from Neutral. The Average remained below its 20 day moving average. Short term momentum indicators are trending down. Technical score dipped last week to -2 from 0.

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Europe iShares added $0.13 (0.31%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Positive. Units remained above their 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at 6.

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The Shanghai Composite Index dropped 46.94 points (1.44%) last week. Intermediate trend remains Neutral. Strength relative to the S&P 500 Index remained Neutral. The Index remains below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to -2 from 4.

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Emerging Market iShares dropped $0.51 (1.28%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index turned Neutral from Positive. Units remain above their 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to 2 from 6.

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Currencies

The U.S. Dollar Index added 0.95 (0.96%) last week. Intermediate trend remains down. The Index remained below its 20 day moving average. Short term momentum indicators are trending up.

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The Euro dropped 1.43 (1.32%) last week. Intermediate trend remains up. The Euro dropped below its 20 day moving average on Friday. Short term momentum indicators are trending up.

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The Canadian Dollar added US0.38 cents (0.51%) last week. Intermediate trend remains Neutral. The Canuck Buck moved above its 20 day moving average. Short term momentum indicators are trending up.

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The Japanese Yen added 0.05 (0.06%) last week. Intermediate trend remains up. The Yen remains above its 20 day moving average. Short term momentum indicators have just rolled over.

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The British Pound added 0.58 (0.47%) last week. Intermediate trend remains down. The Pound remained above its 20 day moving average. Short term momentum indicators have just rolled over.

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Commodities and related ETFs

Daily Seasonal/Technical Commodities Trends for March 31st 2017

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Green: Increase from previous day

Red: Decrease from previous day

* Excludes adjustment from rollover of futures contracts

The CRB Index gained 2.41 points (1.31%) last week. Intermediate trend remains Down. Strength relative to the S&P 500 Index remained Neutral. The Index moved above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased to 0 from -4.

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Gasoline gained $0.08 per gallon (4.94%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index turned Positive. Gas moved 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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Crude Oil gained $2.38 per barrel (4.96%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index turned Positive. Crude moved above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 2 from -6.

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Natural Gas gained $0.04 per MBtu (1.27%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Positive. “Natty” remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at 2.

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The S&P Energy added 11.09 points (2.21%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index turned Positive. The Index moved above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 2 from -6.

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The Philadelphia Oil Services Index gained 6.84 points (4.20%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index turned Positive. The Index moved above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 2 from -6.

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Gold gained $2.70 per ounce (0.21%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remained Positive. Gold remains above its 20 day moving average. Short term momentum indicators have just turned down. Technical score slipped last week to 4 from 6.

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Silver gained $0.46 per ounce (2.59%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Positive. Silver remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at 6.

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The AMEX Gold Bug Index slipped 2.03 points (1.02%) last week. Intermediate trend remains Neutral. Strength relative to the S&P 500 Index turned 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 0 from 4.

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Platinum dropped $15.50 per ounce (1.60%) last week. Intermediate trend remains up. Relative strength remains Neutral. Remains below its 20 day MA. Momentum has turned down.

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Palladium dropped $15.20 per ounce (1.87%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Positive. PALL remains above its 20 day moving average. Short term momentum indicators turned down. Technical score slipped to 4 from 6.

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Copper added $0.02 per lb. (0.76%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Neutral. Copper moved 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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The BMO Base Metals ETF gained $0.17 (1.75%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remained Negative. Units moved above their 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at 2.

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Lumber gained 4.80 (1.27%) last week. Intermediate trend changed to up on a move above 381.70. Relative strength: Positive. Trades above its 20 day MA. Momentum: Up

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The Grain ETN slipped $0.02 (0.07%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Positive. Units remain below their 20 day moving average. Short term momentum remains down. Technical score dropped to -6 from -4.

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The Agriculture ETF added $0.05 (0.09%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed to Neutral from Up. Units remained below their 20 day moving average. Short term momentum indicators are trending down. Technical score slipped last week to -2 from 0.

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Interest Rates

Yield on 10 year Treasuries slipped 0.4 basis points (0.17%) last week. Intermediate trend remains up. Yield remained below its 20 day moving average. Short term momentum indicators are mixed.

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Price of the long term Treasuries ETF slipped $0.17 (0.14%) last week. Units remain above their 20 day moving average.

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Volatility

The VIX Index slipped 0.59 (4.55%) last week. Intermediate trend remains up. The Index remains above its 20 day moving average

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Sectors

Daily Seasonal/Technical Sector Trends for March 31st 2017

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Green: Increase from previous day

Red: Decrease from previous day

StockTwits Released on Friday @EquityClock

Financials jumping as the debate over yields continues.

Technical action by S&P 500 stocks to 10:00: Quiet. Breakouts: $FMC $MCD. Breakdown: $MNST

Editor’s Note: After 10:00 AM EDT, breakouts included IPG OMC BBY WMT ECL VTR Breakdown: HSIC

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McDonalds $MCD, a Dow Jones Industrial stock moved above $130.00 to an all-time high extending an intermediate uptrend

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BlackBerry $BB.CA $BBRY moved above $9.66 and $9.87 establishing an intermediate uptrend.

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Cott $BCB.CA moved above $16.63 extending an intermediate uptrend.

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‘Tis the season for Cott $BCB.CA to move higher to mid-July.

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Extendicare $EXE.CA moved below $10.07 and $10.09 establishing an intermediate downtrend.

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Wal-Mart $WMT, a Dow Jones Industrial stocks moved above $70.27 extending an intermediate uptrend.

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CSTA Event

KWGC chapter meeting

7:30 PM EDT Thursday April 6th

Hampton Inn & Suites, 4355 King St. E, Kitchener

Register: www.csta.org Everyone is welcome.

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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