Tech Talk for Monday July 31st 2023
U.S. equity index futures were higher this morning. S&P 500 futures were up 7 points at 8:30 AM EDT.
Salesforce.com dropped $3.84 to $221.76 after Morgan Stanley downgraded the stock from Overweight to Equal Weight.
Ford slipped $0.13 to $13.13 after Jefferies downgraded the stock from Buy to Hold.
![clip_image002[5]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2023/07/clip_image0025-4.png "clip_image002[5]")
United Parcel Services dropped $1.96 to $185.93 after Credit Suisse downgraded the stock from Outperform to Neutral.
Visa added $0.53 to $236.28 after Mizuho raised its target price from $240 to $255.
![clip_image004[5]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2023/07/clip_image0045-3.png "clip_image004[5]")
EquityClock's Daily Comment
Headline reads "The economy continues to have a service side tilt as goods producing industries struggle, something that is apparent in both the US and Canada".
http://www.equityclock.com/2023/07/29/stock-market-outlook-for-july-31-2023/
The Bottom Line
North American equity markets continued to respond to better than expected negative corporate news. Second quarter results released to date by major U.S and Canadian companies have been better than expected: Last week, 80 % of reporting companies reported higher than consensus earnings and 64% reported higher than consensus revenues. Better than consensus results released to date prompted analysts to increase their earnings estimates from large year-over-year losses to moderate year-over-year losses. Revenue estimates were increased from a small decline to break even.
North American equity markets are about to enter into the August/September period of greater volatility and diminished returns. According to www.EquityClock.com "The technicals and seasonals are aligning to suggest caution in the near-term until a more appropriate risk-reward point to be aggressive in stocks materializes".
Several technical indicators suggest short term caution: The CNN Fear and Greed Index available at https://www.cnn.com/markets/fear-and-greed slipped to 78 and likely peaked last week at 82: It remains at the "Extreme Greed" level. Intermediate and long term momentum Barometers available for equities in the S&P 500 Index and TSX Composite Index likely peaked last Wednesday. See Barometer charts at the end of this report.
Consensus for Earnings and Revenues for S&P 500 Companies
Source: www.Factset.com
Earnings estimates improved slightly last week after 51% of S&P 500 companies reported second quarter results. Consensus for the second quarter earnings currently calls for a year-over-year drop of 7.3% (versus a drop of 9.0% last week). Second quarter revenues are expected to increase 0.1% (versus a drop 0.3% last week). Consensus for the third quarter calls for an earnings increase of 0.2% (versus a gain of 0.1% last week). Third quarter revenues are expected to increase 1.1% (versus a gain of 1.2% last week). Consensus for the fourth quarter calls for a 7.5% increase in earnings. Fourth quarter revenues are expected to increase 3.2% (versus a gain of 3.3% last week). For all of 2023, consensus calls for an earnings increase of 0.4% (versus a gain of 0.1% last week). Revenues are expected to increase 2.4% (versus a gain of 2.3% last week).
The recovery in earnings continues into 2024. Consensus for 2024 calls for a 12.6% increase in earnings (versus previous estimate at 12.9%). Consensus for revenue growth remains at 5.0%.
Economic News This Week
Source: www.Investing.com
July Chicago PMI is released at 9:45 AM EDT on Monday.
June Construction Spending released at 10:00 AM EDT on Tuesday is expected to be unchanged versus a gain of 0.9% in May.
July ISM Manufacturing PMI released at 10:00 AM EDT on Tuesday is expected to increase to 46.5 from 46.0 in June.
July ADP Non-farm Employment released at 8:15 AM EDT on Wednesday versus 497,000 in June.
Second quarter Non-farm Productivity released at 8:30 AM EDT on Thursday is expected to increase 1.1% versus a drop of 2.1% in the first quarter.
June Factory Orders are released at 10:00 AM EDT on Thursday
July ISM Non-manufacturing PMI is released at 10:00 AM on Thursday.
July Non-farm Payrolls released at 8:30 AM EDT on Friday are expected to drop to an increase of 184,000 versus an increase of 209,000 in June. July Unemployment Rate is expected to remain unchanged at 3.6% in June. July Average Hourly Earnings are expected to increase 0.3% versus a gain of 0.4% in June.
July Canadian Employment is released at 8:30 AM EDT on Friday
Selected Earnings News This Week
Source: www.Investing.com
Another 170 S&P 500 companies (including 4 Dow Jones Industrial Average companies) are scheduled to release quarterly results this week
Another nine TSX 60 companies are scheduled to release quarterly results this week.
Trader's Corner
Equity Indices and Related ETFs
Daily Seasonal/Technical Equity Trends for July 28th 2023
Green: Increase from previous day
Red: Decrease from previous day
Source for all positive seasonality ratings: www.EquityClock.com
Commodities
Daily Seasonal/Technical Commodities Trends for July 28th 2023
Green: Increase from previous day
Red: Decrease from previous day
Sectors
Daily Seasonal/Technical Sector Trends for July 28th 2023
Green: Increase from previous day
Red: Decrease from previous day
Technical Scores
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
Changes Last Week
Links offered by valued providers
Michael Campbell's Money Talks for July 29th
Includes a comment by Mark Leibovit
Michael Campbell's MoneyTalks - Complete Show (mikesmoneytalks.ca)
What if the BRICS Bring In a Gold Backed Currency? Mark Leibovit July 27, 2023
What if the BRICS Bring In a Gold Backed Currency? - HoweStreet
Greg Schnell says "Investors continue to believe".
Investors Continue To Believe | The Canadian Technician | StockCharts.com
Wyckoff Re-Accumulation Workshop: Detecting Rotation, Part 1 | Power Charting (07.28.23)
Editor's Note: Includes an interesting seasonality chart.
Wyckoff Re-Accumulation Workshop: Detecting Rotation, Part 1 | Power Charting (07.28.23) - YouTube
First Episode of "Focus On Stocks" (updated links!) | Larry Williams (07.27.23)
First Episode of "Focus On Stocks" (updated links!) | Larry Williams (07.27.23) - YouTube
Is This A Federal Open Market Committee Shake and Bake? | Moxie Indicator Minutes (07.28.23)
Top Ten Charts To Watch In August 2023 | The Final Bar (07.28.23)
Top Ten Charts To Watch In August 2023 | The Final Bar (07.28.23) - YouTube
Strong Upside Potential In These 2 Mega-Caps | Mary Ellen McGonagle | The MEM Edge (07.28.23)
July 28, 2023 | Can Bitcoin's "Whales" Take Over Financial Markets? Bob Hoye
Can Bitcoin's "Whales" Take Over Financial Markets? - HoweStreet
Victor Adair's Trading Desk Notes.
Trading Desk Notes For July 29, 2023 - HoweStreet
Manager who called new bull market still bullish: Uncommon Sense Investor
Manager Who Called New Bull Market Still Bullish – Uncommon Sense Investor
Technical Scoop from David Chapman and www.EnrichedInvesting.com
Technical Notes for Friday
China Large Cap iShares $FXI moved above $29.25 and $29.84 resuming an intermediate uptrend. Triggered partially by strength in China Internet/Technology ETF KWEB
Canadian material equities and related ETFs are responding to higher commodity prices.
BMO Base Metals ETF $ZMT.TO moved above $60.00 extending an intermediate uptrend.
TSX Energy iShares $XEG.TO moved above $15.60 extending an intermediate uptrend.
Suncor $SU.TO a TSX 60 stock moved above Cdn$40.74 completing a double bottom pattern on a move above Cdn$40.74.
Lam Research $LRCX a NASDAQ 100 stock moved above $716.98 to an all-time high extending an intermediate uptrend.
Qualcomm $QCOM an S&P 100 stock moved above $127.31 extending an intermediate uptrend.
National Bank $NA.TO a TSX 60 stock moved above Cdn$102.65 to an all-time high extending an intermediate uptrend.
Seasonality Chart of the Day
Seasonal Chart Analysis
Analysis of the National Bank of Canada (TSE:NA.TO) seasonal charts above shows that a Buy Date of August 20 and a Sell Date of November 23 has resulted in a geometric average return of 3.56% above the benchmark rate of the S&P 500 Total Return Index over the past 20 years. This seasonal timeframe has shown positive results compared to the benchmark in 17 of those periods.
Technical Score: 6 out a possible 6
Trend: 2
Relative Strength: 2
Above 20 day MA: 1
Daily momentum indicators: 1
S&P 500 Momentum Barometers
The intermediate term Barometer added 0.50 to 81.20 on Friday, but dropped 6.80 last week to 81.20. It remains Overbought and showing early signs of a peak.
The long term Barometer slipped 0.20 to 73.00 on Friday and dropped 2.00 last week to 73.00. It remains Overbought and showing early signs of a peak.
TSX Momentum Barometers
The intermediate term Barometer added 4.39 on Friday, but dropped 6.14 last week to 65.35. It remains Overbought and showing early signs of a peak.
The long term Barometer added 3.95 on Friday and was unchanged last week to 62.72. It remains Overbought and showing early signs of a peak.
Disclaimer: Seasonality ratings and technical ratings offered in this report and at
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
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