Tech Talk for Tuesday October 10th 2023
U.S. equity index futures were higher this morning. S&P 500 futures were up 2 points at 8:30 AM EDT
Palantir added $0.39 to $18.00 after the company won a new Army contract valued at $250 million.
Juniper Networks dropped $0.87 to $25.95 after JP Morgan reduced its rating from Overweight to Neutral. Target was lowered from $32 to $29.
![clip_image002[1]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2023/10/clip_image0021-4.png "clip_image002[1]")
Cambium Network dropped $0.05 to 5.39 after JP Morgan lowered its target price from $12 to $6.
Corning slipped $0.80 to$ 28.64 after JP Morgan downgraded the stock from Overweight to Neutral
![clip_image004[1]](http://www.timingthemarket.ca/techtalk/wp-content/uploads/2023/10/clip_image0041-4.png "clip_image004[1]")
EquityClock's Daily Comment
Headline reads "The labor market continues to show an impressive level of resilience, but the trends of some of the categories within are more characteristic of periods of economic weakness".
https://equityclock.com/2023/10/07/stock-market-outlook-for-october-10-2023/
The Bottom Line
Don Vialoux was a guest on "Wolf on Bay Street" to be released at 7:00 PM EDT on Saturday on Corus Radio 640. The show was taped at noon on Thursday. Following are notes developed prior to the interview:
Equity markets continued to respond to financial "noise" during the past three weeks
- The VIX Index, better known as the "Fear Index" soared to over 19 from below 13 three weeks ago. The CNN Fear and Greed Index dropped down during the past three weeks from 58 to 19 indicating Extreme Fear.
- North American equity markets are responding to increasing bearish sentiment. Broadly based equity indices have plunged during the past three weeks: S&P 500 Index and Dow Jones Industrial Average are down 6% and the TSX Composite Index is down more than 8%.
- Interest rates in the U.S. and Canada have spiked during the past three week Yield on 10 year U.S. Treasuries have jumped from 4.2% to 4.8%.
- Political chaos in the U.S. expanded last week when the House of Representative Speaker effectively was voted out of office.
- Credit rating of the United States is in jeopardy unless Congress is able to increase the U.S. government debt ceiling on a timely basis. Time runs out on November 17th
- The Federal Reserve and the Bank of Canada have vowed to maintain (and possibly increase) administered interest rates until economic signs of a drop in inflation become evident.
- On the charts, percent of stocks trading above their 50 day moving average for S&P 500 stocks has dropped during the past three weeks from over 40% to less than 9%. Ditto for TSX stocks that have dropped to less than 16%. The TSX Composite Index and Dow Jones Industrial Average currently are trading at a loss for 2023.
On the other hand,
- Seasonal influences for U.S. and Canadian equity markets have a history of moving lower from September to the middle of October. On average during the past 20 years, the S&P 500 Index and TSX Index have reached their seasonal low on October 9th followed by start of an upside move lasting to the first week in January.
- Earnings prospects for major U.S. and Canadian companies are expected to improve. Consensus calls for S&P 500 companies to report flat year-over-year earnings in the third quarter followed by an 8% gain in the fourth quarter and a 12% increase in the first quarter of 2024.
- Sectors that are outperforming the S&P 500 and TSX during recent weakness in North American equity markets are top candidates for a recovery in the fourth quarter. They include the following ETFs: Cyber Security (HACK), Industrials that benefit from infrastructure spending (PAVE and SLX), Metals and Mining (XME), Transportation (IYT) and Canadian Technology XLK.TO
Based on the extremely oversold levels for S&P 500 and TSX 60 stocks, North American equity markets are poised for a recovery to the end of the year.
Consensus for Earnings and Revenues for S&P 500 Companies
Source: www.FactSet.com
Consensus earnings estimates for remainder of 2023 decreased slightly last week. Consensus for the third quarter is an earnings decrease on a year-over-year basis of 0.3% (versus previous decrease of 0.1%). Third quarter revenues are expected to increase 1.7% (versus previous increase of 1.6%). Fourth quarter earnings are expected to increase 7.8% (versus previous increase of 8.3%) Fourth quarter revenues are expected to increase 3.9%. For all of 2023, consensus calls for an earnings increase of 0.9% (versus an increase of 1.1% last week) Revenues are expected to increase 2.4%.
The recovery continues into 2024, but at a slightly slower rate. Consensus for the first quarter on a year-over-year basis calls for an earnings increase of 8.2 % (versus previous increase of 8.6%. and a revenue increase of 4.6% (versus previous increase of 4.7%). Consensus for the second quarter calls for a 11.8% earnings increase (versus a previous increase of 12.1%) and a 5.5% revenue increase. Consensus for all of 2024 is an increase in earnings of 12.2% and a 5.5% increase in revenues (versus a previous increase of 5.6% last week).
Economic News This Week
Source: www.Investing.com
September Producer Price Index released at 8:30 AM EDT on Wednesday is expected to increase 0.4% versus a gain of 0.7% in August. September Core PPI is expected to increase 0.2% versus a gain of 0.2% in August.
September Consumer Price Index released at 8:30 AM EDT on Thursday is expected to increase 0.3% versus a gain of 0.6% in August. September core CPI is expected to increase 0.3% versus a gain of 0.3% in August.
October Michigan Consumer Sentiment released at 10:00 AM EDT on Friday is expected to slip to 68.0 from 68.1 in September.
Selected Earnings News This Week
Source: www.Investing.com
Twelve S&P 500 companies are scheduled to release quarterly results this week (including three Dow Jones Industrial Average companies). Focus is on reports by major banks on Friday.
Trader's Corner
Equity Indices and Related ETFs
Daily Seasonal/Technical Equity Trends for Oct.6th 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 October 5th 2023
Green: Increase from previous day
Red: Decrease from previous day
Sectors
Daily Seasonal/Technical Sector Trends for October 6th 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
Technical Notes
Wal-Mart $WMT an S&P 100 stock moved below intermediate supports at $155.02 and $152.60.
Verizon $VZ a Dow Jones Industrial Average stock moved below $31.51 extending an intermediate downtrend.
Lululemon $LULU a NASDAQ 100 stock moved below intermediate support at $359.81
Synopsys $SNPS a NASDAQ 100 stock moved above $471.15 to an all-time high extending an intermediate uptrend.
Links offered by valued providers
Michael Campbell's Money Talks for October 7th
Michael Campbell's MoneyTalks - Complete Show (mikesmoneytalks.ca)
10 Crucial Charts Shaping The Markets in October 2023 | The Final Bar (10.06.23)
10 Crucial Charts Shaping The Markets in October 2023 | The Final Bar (10.06.23) - YouTube
The stage is set for a short-term equity rally, says Morgan Stanley’s Lacamp
The stage is set for a short-term equity rally, says Morgan Stanley’s Lacamp - YouTube
Stocks will end the year higher, say Wharton’s Jeremy Siegel
Stocks will end the year higher, say Wharton’s Jeremy Siegel - YouTube
There’s a good likelihood we could have a Q4 rally :Gradient Investment’s Jeremy Bryan
Stock Market Ends Week on Positive Note; Market Internals May Be Turning Bullish
Yields Soar on Strong Jobs Report OCTOBER 06, 2023 Tom Bowley
Yields Soar on Strong Jobs Report | Trading Places with Tom Bowley | StockCharts.com
Sector Rotation Makes Technology Line Up With Strong Seasonality Pattern
Bullish Bias Taking Shape In The Markets! Here’s What To Do | The MEM Edge
https://www.youtube.com/watch?v=coYzZrfuf3M&t=56s
Market comments by Ross Clark, Danielle Park and Mark Leibovit.
This Week in Money - HoweStreet
Are We Shifting to a Celebrity Based Economy? Bob Hoye
Are We Shifting to a Celebrity Based Economy? - HoweStreet
Trading Desk Notes: Victor Adair
Trading Desk Notes For October 7, 2023 - HoweStreet
Technical Scoop from David Chapman and www.EnrichedInvesting.com
S&P 500 Momentum Barometers
The intermediate term Barometer advanced 5.00 on Friday and added 2.00 last week to 17.40. It remains Oversold. First technical sign of an intermediate low has appeared.
The long term Barometer added 1.80 on Friday, but slipped 2.20 last week to 38.40. It changed last week from Neutral to Oversold.
TSX Momentum Barometers
The intermediate term Barometer added 4.42 on Friday, but dropped 3.45 last week to 18.14. It remains Oversold. First sign of an intermediate low has appeared.
The long term Barometer added 3.10 on Friday, but dropped 2.49 last week to 33.63. It remains Oversold and showing an early sign of bottoming.
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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