Tech Talk for Monday November 26th 2018

U.S. equity index futures were higher this morning. S&P 500 futures were up 30 points in pre-opening trade.

Dollar Tree (DLTR $83.01) is expected to open lower after JP Morgan lowered its target price to $84 from $190.

Alphabet (GOOGL $1030.10) is expected to open lower after MKM Partners lowered its target price to $1365 from $1465.

Facebook (FB $131.73) is expected to open lower after MKM Partners lowered its target price to $190 from $230.

Altria (MO $53.72) is expected to open lower after Wells Fargo lowered its target price to $55 from 75.

EquityClock's Daily Market Comment

Following is a link:

http://www.equityclock.com/2018/11/23/stock-market-outlook-for-november-26-2018/

Note seasonality charts on Canadian CPI and Canadian Retail Trade.

Jon Vialoux on BNN Bloomberg's Market Call Tonight

Taped on Friday evening. Following are links:

Top Picks

https://www.bnnbloomberg.ca/video/jon-vialoux-s-top-picks~1548065

Past Picks

https://www.bnnbloomberg.ca/video/jon-vialoux-s-past-picks~1548022

Market Outlook

https://www.bnnbloomberg.ca/video/jon-vialoux-s-market-outlook~1547987

WALL STREET RAW RADIO

SATURDAY, NOVEMBER 24, 2018 –

WITH YOUR HOST, MARK LEIBOVIT.

GUESTS INCLUDE: DON VIALOUX, BILL KOENIG (WHITE HOUSE CORRESPONDENT),

HARRY BOXER AND HENRY WEINGARTEN:

https://tinyurl.com/yaryjf6d

Excerpts from Wall Street Raw by Don Vialoux

U.S. equity indices continued to move lower last week. Most of the technical damage was done in the Technology stocks. Notably weaker were the FAANG stocks: Facebook, Apple, Amazon, Netflix and Google. Technically, they have yet to show signs of bottoming.

Notably stronger last week were copper, zinc, silver and gold prices thanks partially to weakness in the U.S. Dollar Index. Higher gold and silver prices prompted strength in gold and silver stock prices.

U.S economic focuses this week are on two encouraging reports to be released on Wednesday: Third quarter GDP and October New Home Sales. Third quarter GDP is expected to hold up well at a 3.6% annual growth rate versus 3.5% in the second quarter. October New Home Sales are expected recover to 578,000 units from 553,000 units in September, a nice 8.4% gain. Home builder stocks moved nicely higher last week in anticipation of the report. 'Tis the season for strength in the industry to at least year end! Ways to play the New Home Building sector with ETFs include ITB and XHB

Canada's focus this week is on fiscal fourth quarter reports to be released by several of Canada's major banks. Consensus is calling for a year-over-year earnings gain of 11% by the sector. Bank CEOs love to include lots of good news when they release fourth quarter results including positive earnings guidance, dividend hikes, share buyback plans and possibly stock splits.

The Bottom Line

Favourable seasonal influences from October to the first week in January for major U.S. equity indices were challenged last week. This year North American equity indices including the S&P 500 Index, Dow Jones Industrial Average and TSX Composite Index bottomed on October 29th. The 8.1% gain by the S&P 500 Index after October 29th has dissipated to a 1.1% gain. The 9.1% gain by the Dow Jones Industrial Average after October 29th has dissipated to a 0.8% gain. Seasonality charts for the S&P 500 Index and Dow Jones Industrial Average are offered below.

Seasonal influences normally are most notable during U.S. Mid-term election years (although start of the favourable period was delayed this year to the end of October). Investors were concerned about a possible change in political control in Congress. Their concerns were partially valid. Democrats regained control of the House, but failed to gain control of the Senate. Historically, split control of Congress has been positive for U.S. markets because Congress is less likely to interfere in economic growth

Favourable seasonal influences for Canadian equities also were tested last week. The TSX Composite Index has closely followed its seasonal pattern this year. Performance of the TSX Composite Index normally is negative from the third week in July to mid-October followed by start of period of seasonal strength. This year, the seasonal upturn began on October 29th Thereafter,the Index gained 5% but subsequently lost 3% by the end of last week.

Preferred strategy is to add to seasonally favoured equity securities for a seasonal trade expected to last to the first week in January.

Observations

Third quarter reports by S&P 500 companies are winding down: 96% of companies have reported to date. Most companies beat consensus earnings per share (78%) and sales (61%) estimates. Another six S&P 500 companies are scheduled to release results this week.

Technical action by individual S&P 500 stocks was negative last week. Number of stocks breaking intermediate resistance totaled 10 while number of stocks breaking support totaled 44 (notably technology stocks). The Up/Down ratio decreased last week to (117/345 =) 0.34 from 0.37.

U.S. economic focuses this week are October Home Sales and Third Quarter GDP to be reported on Wednesday.

Medium term technical indicators for U.S. equity markets (e.g. Percent of stocks trading above their 50 day moving average, Bullish Percent Index) moved lower last week. See charts near the end of this report

Medium term technical indicators in Canada moved lower last week. See charts near the end of this report.

Short term technical indicators for U.S. markets and sectors (20 day moving averages, short term momentum) moved lower early last week.

Short term technical indicators for Canadian markets and sectors moved lower early last week.

Short term political concerns remain elevated. Issues include heightened tariff wars with China and the Mueller investigation. News on the China trade issue could come this week when U.S. and China negotiators meet late this week at the G20 meeting.

Longer term outlook for earnings and sales by S&P 500 companies remains positive and improving. According to FactSet, consensus calls for a 25.9% increase in earnings on a year-over-year basis (up from 25.7% last week) and a 9.3% increase in sales in the third quarter. Consensus calls for a 13.6% increase in earnings and 6.7% increase in sales in the fourth quarter. Consensus calls for a 20.4% increase in earnings and an 8.9% increase in sales for 2018. Consensus calls for a 4.9% increase in earnings and 6.6% increase in sales in the first quarter 2019. Consensus calls for a 5.4% increase in earnings and 5.3% increase in sales in the second quarter 2019. Consensus for 2019 calls for an 8.8% increase in earnings and a 5.2% increase in sales.

Major U.S. companies are seeking places to invest their new found cash flow following changes in U.S. tax laws. Look for anticipation of news about share buybacks, increased dividends, take overs, employee bonuses and wage increases prior to release of fourth quarter results. "Santa Claus is coming to town".

Economic News This Week

Third quarter U.S. real GDP to be released at 8:30 AM EST on Wednesday is expected to grow at a 3.6% annual rate versus a 3.5% rate in the second quarter.

October Wholesale Inventories to be released at 8:30 AM EST on Wednesday are expected to increase 0.3% versus a gain of 0.4% in September.

October New Home Sales to be released at 10:00 AM EST on Wednesday are expected to increase to 578,000 from 553,000 in September.

Weekly Jobless Claims to be released at 8:30 AM EST on Thursday are expected to slip to 220,000 from 224,000 last week.

October Personal Income to be released at 8:30 AM EST on Thursday is expected to increase 0.4% versus a gain of 0.2% in September. October Personal Spending is expected to increase 0.4% versus a gain of 0.4% in September.

Canadian third quarter real GDP to be released at 8:30 AM EST on Friday is expected to grow at a 3.0% versus growth at a 2.9% rate in the second quarter.

November Chicago Purchasing Managers Index to be released at 9:45 AM EST on Friday are expected to increase to 59.0 from 58.4 in October.

Earnings News This Week

Trader's Corner

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for November 23rd 2018

Green: Increase from previous day

Red: Decrease from previous day

Commodities

Daily Seasonal/Technical Commodities Trends for November 23rd 2018

Green: Increase from previous day

Red: Decrease from previous day

Sectors

Daily Seasonal/Technical Sector Trends for November 23rd 2018

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

StockTwits released on Friday @EquityClock

Technical action by S&P 500 stocks to 10:00: Quiet. Intermediate breakout: $COL. Breakdowns: $CMA $GILD

Editor's Note: After 10:00 AM EST, CF Industries broke support. No additional breakouts.

Energy SPDRs $XLE moved below $64.37 and $64.05 extending an intermediate downtrend.

Coal ETF $KOL moved below $14.32 extending an intermediate downtrend.

Steel ETF $SLX moved below $40.63 extending an intermediate downtrend.

Canada Retail Sales down 5.7% (NSA) in September, weaker than the 3.5% decline that is average for the month. $MACRO #CDNecon #CAD

Canada CPI up 0.3% in October, stronger than the unchanged result that is average for the month. $MACRO #CDNecon #CAD

S&P 500 Momentum Barometers

Percent of S&P 500 stocks trading above their 50 day moving average dropped last week to 30.00 from 41.60. Percent dropped back to Intermediate Oversold from Intermediate Neutral, but continues to show a bottom on October 29th

Bullish Percent Index dropped last week to 40.00 from 45.60. The Index remains intermediate Neutral and continues to show a bottom on October 29th

TSX Momentum Barometers

Percent of TSX stocks trading above their 50 day moving average dropped last week to 29.63 from 35.53. Percent remains intermediate oversold despite bottoming on October 29th

Bullish Percent Index increased last week to 40.65 from 39.34. The Index changed from intermediate Oversold to intermediate Neutral. It shows early signs of bottoming.

Disclaimer: Seasonality 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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