ETFs

Tech Talk for Monday June 19th 2017

by Don Vialoux, Timingthemarket.ca

WALL STREET RAW RADIO – SATURDAY- JUNE 17, 2017 WITH HOST, MARK LEIBOVIT AND GUESTS DON VIALOUX,

HENRY WEINGARTEN, JEFF HIRSCH, SINCLAIR HOE, DAVID HOROWITZ AND CRAIG SMITH:

http://tinyurl.com/yc6uxvc4

The Bottom Line

Equity markets around the world remain intermediate overbought and vulnerable to a correction. Cracks appeared in several places last week including the Technology sector early last week, European equity market in mid-week and the retail sector at the end of the week. The usual period of summer weakness from Mid-June to Mid-October has arrived. However, volatility measured by the VIX Index remains relatively muted. Political events in a wide variety of countries (most notably in the U.S.) could change that quickly. Be careful out there! A spike in volatility will be the most likely sign that the summer correction has started. Meanwhile, holding a robust position in cash in your investment portfolio makes sense.

Economic News This Week

May Existing Homes Sales to be released at 10:00 AM EDT on Wednesday are expected to dip to 5.51 million units from 5.57 million units in April.

Weekly Jobless Claims are to be released at 8:30 AM EDT on Thursday.

April Cdn. Retail Sales to be released at 8:30 AM EDT on Thursday are expected to increase 0.3% versus a gain of 0.7% in May.

May Leading Economic Indicators are to be released at 10:00 AM EDT on Thursday.

May Cdn. Consumer Prices to be released at 8:30 AM EDT on Friday are expected to increase 0.2% versus a gain of 0.4% in April

May New Home Sales to be released at10:00 AM EDT on Friday are expected to increase to 599,000 from 569,000 in April

Observations

Technical action by S&P 500 stocks was modestly bullish last week. Forty seven stocks broke above intermediate resistance and 22 stocks broke below intermediate support. Notable on the list of stocks breaking resistance were Financials. Notable on the list of stocks breaking support were Consumer Staples (particularly stocks related to the Amazon/Whole Foods news on Friday). Number of stocks in an uptrend increased last week to 292 from 280, number of stocks in a neutral trend slipped last week to 45 from 47 and number of stocks in a downtrend dropped to 163 from 173. The Up/Down ratio increased last week to (292/163=) 1.79 from 1.62.

Economic news this week is relatively quiet. Focus is on May New Home Sales on Friday.

Short term technical indicators (momentum, above/below 20 day moving average) for S&P 500 stocks and sectors were relatively unchanged last week. They remain overbought.

Medium term technical indicators (Percent trading above 50 day moving average, Bullish Percent Index) remain intermediate overbought. Some have rolled over (e.g. Technology) and some have extended their downtrends (e.g. Retail sector)

The fundamental outlook for S&P 500 companies remains promising. Earnings and sales estimates were virtually unchanged last week. According to FactSet, second quarter earnings on a year-over-year basis are expected to increase 6.5% while sales are expected to increase 4.9%. Third quarter earnings are expected to increase 7.5% and sales are expected to 5.2%. Fourth quarter earnings are expected to increase 12.4% and sales are expected to 5.2%. For 2017, earnings are expected to increase 9.9% and sales are expected to increase 5.4%.

Seasonal Influences by North American equity markets tend to be mixed in the month of June. Long term returns since 1950 indicate an average return per period by the TSX Composite and S&P 500 Index near zero. On average during the past 20 periods, the TSX Composite Index has reached a seasonal peak on or about June 9th and a second peak in mid-July. Frequently, the S&P 500 Index has reached a peak near June 15th with a second peak in mid-July. Momentum spikes frequently occur in the June /mid-October period. Short term overbought conditions and unsettling political conditions continue to suggest watchful waiting. If an upside surprise occurs in North American equity indices, it likely will happen late in June/early July coinciding with the seasonal Independence Day trade.

U.S. equity markets have a history of moving lower from mid-June to mid-October in Presidential cycle years after a two term President has been replaced (as indicated this year). See red line in the chart below.

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Equity Indices and Related ETFs

Daily Seasonal/Technical Equity Trends for June 16th 2017

june 19th letter one

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 added 1.38 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.

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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 71.00 from 69.80. Percent remains intermediate overbought and showing early signs of rolling over.

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Percent of S&P 500 stocks trading above their 200 day moving average increased last week to 75.20 from 72.80. It remains intermediate overbought and showing early signs of rolling over.

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Bullish Percent Index for S&P 500 stocks increased last week to 70.20 from 69.60 and remained above its 20 day moving average. The Index remains intermediate overbought and trending down.

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Bullish Percent Index for TSX stocks dropped last week to 64.00 from 68.40 and remained below its 20 day moving average.

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The TSX Composite Index lost 280.67 points (1.81%) last week. Intermediate downtrend was affirmed when the Index dropped below 15,164.73 (Score: -2). Strength relative to the S&P 500 Index remained Negative (Score: -2). The Index moved below its 20 day moving average (Score: -1). Short term momentum indicators are trending down (Score: -1). Technical score dropped last week to -6 from –2

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Percent of TSX stocks trading above their 50 day moving average (Also known as the TSX Momentum Barometer)dropped last week to 33.20 from 45.71. Percent is slightly oversold, but has yet to show signs of bottoming.

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Percent of TSX stocks trading above their 200 day moving average dropped last week to 50.82 from 54.69. Percent remains intermediate overbought and trending down.

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The Dow Jones Industrial Average increased 112.31 points (0.53%) last week to close at an all-time high. 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.

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Bullish Percent Index for Dow Jones Industrial stocks slipped last week to 76.67 from 80.00 and moved back below its 20 day moving average. The Index remains intermediate overbought and trending down.

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Bullish Percent Index for NASDAQ Composite stocks slipped last week to 59.72 from 61.10 and pushed below its 20 day moving average. The Index remains intermediate overbought and trending down.

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The NASDAQ Composite Index dropped 56.16 points (0.90%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to Negative from Neutral. The Index remained below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to -2 from 2

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The Russell 2000 Index dropped 14.94 points (1.05%) 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 dropped last week to 4 from 6.

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The Dow Jones Transportation Average added 86.19 points (0.92%) last week. Intermediate trend remains Neutral. Strength relative to the S&P 500 Index remained Positive. The Average remained above its 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at 4.

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The Australia All Ordinaries Composite Index gained 92.50 points (1.62) last week. Intermediate trend remains down. 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 0 from -6.

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The Nikkei Average dropped 70.00 points (0.35%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Neutral. The Average remained above its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to 0 from 4.

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Europe iShares were unchanged last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Negative. Units remained below their 20 day moving average. Short term momentum indicators are trending down. Technical score remained last week at -2.

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The Shanghai Composite Index dropped 35.23 points (1.12%) last week. Intermediate trend remains down. 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 2.

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Emerging Markets iShares dropped $0.37 (0.89%) last week. Intermediate trend remained up. Strength relative to the S&P 500 Index turned Negative. Units dropped below their 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to -2 from 2.

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Currencies

The U.S. Dollar Index added 0.25 (0.26%) last week. Intermediate trend remains down. Short term momentum indicators have turned up. The Index moved above its 20 day moving average on Friday.

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The Euro added 0.04 (0.04%) last week. Intermediate trend remains up. The Euro dropped below its 20 day moving average. Short term momentum indicators are trending down.

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The Canadian Dollar gained US 1.42 cents (1.91%) last week. Intermediate trend remains down. The Canuck Buck remains above its 20 day moving average. Short term momentum indicators are trending up.

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The Japanese Yen lost 0.48 (0.53%) last week. Intermediate trend remains up. The Yen dropped below its 20 day moving average. Short term momentum indicators are trending down.

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The British Pound added 0.51 (0.40%) last week. Intermediate trend remains up. The Pound remains below its 20 day moving average. Short term momentum indicators are trending down.

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Commodities and Commodity Sensitive ETFs

Daily Seasonal/Technical Commodities Trends for June 16th 2017

june 19th letter two

Green: Increase from previous day

Red: Decrease from previous day

* Excludes adjustment from rollover of futures contracts

The CRB Index dropped 3.71 points (2.10%) 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.

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Gasoline dropped 5.2 cents per gallon (3.46%) last week. Intermediate downtrend was re-affirmed on a move below 1.45. Strength relative to the S&P 500 Index remains Negative. Gas remains below its 20 day moving average. Short term momentum indicators are trending down. Technical score remained last week at -6.

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Crude Oil dropped $0.86 per barrel (1.88%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index remains Negative. Crude remained below its 20 day moving average. Short term momentum indicators are trending down. Technical score remained last week at -6.

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Natural Gas was unchanged last week. Intermediate trend remained Neutral. Strength relative to the S&P 500 Index remained Negative. “Natty” remained below its 20 day moving average. Short term momentum indicators are trending down. Technical score remained last week at -4.

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The S&P Energy Index added 2.46 points (0.51%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed to Neutral from Negative. The Index moved above its 20 day moving average on Friday. Short term momentum indicators are trending up. Technical score increased last week to 0 from -4.

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The Philadelphia Oil Services Index lost 2.00 points (1.45%) 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 have turned up. Technical score remained last week at -4.

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Gold dropped $14.90 per ounce (1.12%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index has turned Negative. Gold dropped below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to -2 from 2.

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Silver dropped $0.56 per ounce (3.25%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index turned Negative. Silver dropped below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to -4 from 2

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The AMEX Gold Bug Index dropped 10.12 points (5.16%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index turned Negative. The Index moved below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to -6 from -2.

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Platinum dropped $13.50 per ounce (1.44%) last week. Trend remains down. Relative strength turned negative. PLAT remained below its 20 day MA. Momentum remains down.

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Palladium added $9.45 per ounce (1.10%) 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 have turned down. Technical score slipped to 4 from 6.

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Copper dropped 0.85 cents per lb. (3.21%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed to Neutral from Positive. Copper moved below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to -4 from 2

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BMO Base Metal ETF dropped $0.59 (6.06%) last week. Intermediate trend changed to Neutral from Up on a move below $9.19. Strength relative to the S&P 500 Index changed to Negative from Neutral. Units dropped below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to -4 from 4.

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Lumber dropped $1.00 (0.27%) last week. Trend remains down. Relative strength turned to Neutral. Trades above its 20 day MA. Momentum turned lower.

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The Grain ETN gained $0.26 (0.92%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index returned to Positive. Units remained above their 20 day moving average. Short term momentum indicators are trending up. Technical score remained at 2

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The Agriculture ETF added $0.21 (0.28%) 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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Interest Rates

Yield on 10 year Treasury bonds dropped 4.2 basis points last week. Intermediate trend remained down. Yield remains below its 20 day moving average. Short term momentum indicators are trending down.

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Price of the long term Treasury Bond ETF added $1.94 (1.57%) last week. Intermediate trend remains up. Price remains above its 20 day moving average.

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Volatility

The VIX Index slipped 0.27 (2.53%) last week. Intermediate trend remains down. The Index slipped back below its 20 day moving average.

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Sectors

Daily Seasonal/Technical Sector Trends for June 16th 2017

june 19th letter three

Green: Increase from previous day

Red: Decrease from previous day

StockTwits Released on Friday @EquityClock

Regional manufacturing surveys remain strong, but have yet to translate to actual results.

Technical action by S&P 500 stocks to 10:00: Mixed. Breakouts: $SPG $CTAS $IR $DTE $LNT $URI. Breakdowns: $DG $TGT $COST $WBA $CVS $SYY

Editor’s Note: After 10:00 AM EDT, breakouts included PH, WFM, AXP, XL, ADP and ROP. Breakdown: INTC

Breakdowns triggered by purchase of $WFM by $AMZN: $DG $TGT $COST $WBA $CVS $SYY $XRT

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Editor’s Note: Canadian food retailer stocks also responded.

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Canfor $CFP.CA moved below $18.59 setting an intermediate downtrend.

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Wheat ETN $WEAT moved above $7.21 starting an intermediate uptrend.

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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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