U.S. equity index futures were lower this morning. S&P 500 futures were down 20 points in pre-opening trade.
Emerson Electric added $0.57 to $87.97 after the company reported higher than consensus fiscal fourth quarter results. The company also announced sale of a division for $9.5 billion.
Keurig Dr. Pepper slipped $0.72 to $38.83 after Truist downgraded the stock from Hold to Sell.
DoorDash slipped $0.78 to $46.28 after JP Morgan lowered its target price from $105 to $70
Wayfair eased $0.26 to $35.95 after Truist dropped its target price from $96 to $60.
EquityClock's Daily Comment
Headline reads "While everyone starts to discount the long-term potential of the Technology sector, the technicals are still pointing to an ongoing positive trend".
The Bottom Line
Technical evidence last week of an intermediate peak by the U.S. Dollar Index prompted higher North American equity and commodity prices. Focus this week is on news from the FOMC meeting released at 2:00 PM EDT on Wednesday.
Consensus for Earnings and Revenues for S&P 500 Companies
Despite encouraging third quarter results released last week, analysts once again lowered earnings estimates beyond the third quarter. According to www.factset.com third quarter earnings on a year-over-year basis are expected to increase 2.2% (versus previous estimate at 1.5%) and revenues are expected to increase 9.3%. (versus 8.5% last week). Fourth quarter earnings are expected to increase 0.5% (versus previous 2.7%) and revenues are expected to increase 4.9% (versus previous estimate at 5.4%). For 2022 earnings are expected to increase 6.1% (versus previous 6.7%) and revenues are expected to increase 10.4% (versus previous 10.6%).
Preliminary estimates for 2023 also moved lower. According to www.factset.com first quarter 2023 earnings are expected to increase 3.2% (versus previous estimate at 5.1%) and revenues are expected to increase 4.3% (versus previous estimate at 4.7%). Second quarter 2023 earnings are expected to increase 2.0% (versus previous estimate at 3.5%) and revenues are expected to increase 1,6% (versus previous estimate at 1.9%). For all of 2023, earnings are expected to increase 6.4% (versus previous estimate at 7.3%)) and revenues are expected to increase 3.7% (versus previous estimate at 4.0%).
Economic News This Week
October Chicago PMI released at 9:45 AM EDT on Monday is expected to increase to 47.0 from 45.7 in September.
September U.S. Construction Spending released at 10:00 AM EDT on Tuesday is expected to drop 0.5% versus a decline of 0.7% in August.
October ISM Manufacturing Purchase Manager Index released at 10:000 AM EDT on Tuesday is expected to slip to 49.9 from 50.9 in September.
FOMC Decision on interest rates and quantitative tightening is released at 2:00 PM EDT on Wednesday. Consensus calls for a 0.75% increase in the Fed Fund Rate to 3.75%-4.00% rate. Consensus for asset purchases is continued purchases at a $95 billion monthly. Conference call is offered at 3:00 PM EDT.
Bank of England's interest rate for large banks released at 8:00 AM EDT on Thursday is expected to increase from 2.25% to 3.00%.
Third quarter Non-farm Productivity released at 8:30 AM EDT on Thursday is expected to increase 0.5% versus a drop of 4.1% in the second quarter.
U.S. September Trade Deficit released at 8:30 AM EDT on Thursday is expected to increase to $71.10 billion from $67.40 billion in August.
Canadian September Merchandise Trade released at 8.30 AM EDT on Thursday is expected to increase to $3.45 billion from $1.52 billion in August.
October ISM Non-Manufacturing Purchase Managers Index released at 10:00 AM EDT on Thursday is expected to slip to 55.4 from 56.7 in September.
October U.S. Non-farm Payrolls released at 8:30 AM EDT on Friday is expected to drop to 200,000 from 263,000 in September. October Unemployment Rate is expected to increase to 3.6% from 3.5% in September. October Average Hourly Earnings are expected to increase 0.3% versus a gain of 0.3% in September. On a year-over-year basis, October Average Hourly Earnings are expected to increase 4.7% versus a gain of 5.0% in September.
Canadian October Employment released at 8:30 AM EDT on Friday is expected to increase 5,000 versus a gain of 21,100 in September. October Unemployment Rate is expected to increase to 5.3% from 5.2% in September.
Selected Earnings News This Week
Over half of S&P 500 companies have reported third quarter results to date. Another 167 S&P 500 companies (and two Dow Jones Industrial Average company) are scheduled to report this week. Fifteen S&P 60 companies are scheduled to report this week.
Equity Indices and Related ETFs
Daily Seasonal/Technical Equity Trends for October 28th 2022
Green: Green: Increase from previous day
Red: Decrease from previous day
Daily Seasonal/Technical Commodities Trends for October 28th 2022
Green: Increase from previous day
Red: Decrease from previous day
Daily Seasonal/Technical Sector Trends for October 28th 2021
Green: Increase from previous day
Red: Decrease from previous day
Links offered by valued providers
Greg Schnell videos ..
5 Charts To Be Aware Of Now | Greg Schnell, CMT | Your Daily Five (10.28.22) – YouTube
Smooth-Running Engine or Friction Ahead? | The Canadian Technician | StockCharts.com
How the stock market will react after the U.S. mid-term election
Michael Campbell's Money Talks for October 29th
Michael Campbell's MoneyTalks - Complete Show (mikesmoneytalks.ca)
Bruce Fraser and David Keller offer "The perfect chart for navigating 2022".
The Perfect Chart for Navigating 2022 | The Mindful Investor | StockCharts.com
Links offered by Mark Bunting and www.uncommonsenseinvestor.com
"Roaring ’20s" Still Possible After "Mother of All Melt-ups" & Meltdown – Uncommon Sense Investor
10 Best Stocks You’ve Never Heard Of | Kiplinger
Canada's housing bubble has burst: David Rosenberg | Financial Post
Technical Scoop for October 31st
John Hopkins says "There's More Room to the Upside"
The VIX Shows There’s More Room to the Upside | Top Advisors Corner | StockCharts.com
Mary Ellen McGonagle says "Breadth in the markets is expanding".
Breadth in the Markets Is Expanding: Can the Markets Withstand the Drop In Big Tech Names? | The MEM Edge | StockCharts.com
Tom Bowley says "Today marks the beginning of an overwhelming bullish period".
Today Marks The Beginning Of An Overwhelmingly Bullish Period | Trading Places with Tom Bowley | StockCharts.com
Mish Schneider asks "Can investors trust this rally"?
Weekend Daily: Can Investors Trust This Rally? | Mish’s Market Minute | StockCharts.com
David Keller notes that "Tech drives SPX above 3,900".
Tech Drives SPX Above 3900 | David Keller, CMT | The Final Bar (10.28.22) - YouTube
Mark Leibovit comment for October 26th
Will the Fed Hike Rates? - HoweStreet
Bob Hoye comment for October 28th
Choppy Markets But Precarious - HoweStreet
Rick Mills on the outlook for copper
Copper: the most important metal we're running short of | Kitco News
Don Vialoux appeared as a guest investment analyst on "Wolf on Bay Street" on Corus Radio 640 AM at 7:00 PM EDT on Saturday. The interview was taped last Thursday. Prior to the appearance, notes for the interview were developed. Some, but not all of the notes were discussed during the interview. Following are the notes:
U.S and Canadian equity markets have just entered their strongest period of seasonal strength in the year. During the past 102 years, the Dow Jones Industrial Average has advanced 83% of the time from October 28th to January 11th. Equities respond favourably to increasing economic activity during the Christmas buying season.
U.S. equity indices closely are following their mid-term U.S. Presidential election year cycle this year: During the past 25 mid-term U.S. Presidential election years, the Dow Jones Industrial Average has gained an average of 5.6% per period from September 28th to January 1st. Intermediate and long term momentum data for the S&P 500 Index and TSX Composite Index bottomed on schedule this year on September 27th.
Short term events are expected to have a significant impact on North American equity prices.
Currency trends are starting to have an impact on share prices of selected sectors. The U.S. Dollar Index has a history of reaching a seasonal peak in the second week in November. This year, the peak likely was reached in mid-October. The move by the U.S. Dollar Index below 110 last Wednesday completed a double top pattern with a technical target of 105. Weakness was triggered by expectations that the FOMC will delay or slow its monetary tightening policies beyond November 2nd.
Canadian investors can take advantage in the short term by:
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 for Friday
Insurance iShares $IAK moved above $88.43 resuming an intermediate uptrend.
Amazon.com $AMZN moved below $105.35 after reporting lower than consensus quarterly revenues.
S&P 100 stock breakouts! Colgate Palmolive $CL moved above $74.41 and Bristol-Myers $BMY moved above $75.42 extending their intermediate uptrend.
NASDAQ 100 stocks moving above resistance and extending intermediate uptrends included: DexCom $DXCM , T Mobile $TMUS, Gilead $GILD and Biogen $BIIB.
Canadian forest product stocks: Interfor $IFP.TO, West Fraser Forest $WFG.TO, Canfor $CFP.TO moved strongly higher on Friday, completing short term base building patterns.
Seasonal influences for lumber and lumber stocks are exceptionally strong on a real and relative basis between now and early February.
S&P 500 Momentum Barometers
The intermediate term Barometer gained 13.93 on Friday and added 35.53 last week. It moved from Oversold to Overbought on a move above 60.00. Trend remains up.
The long term Barometer added 6.68 on Friday and 16.28 last week to 38.88. It remains Oversold. Trend remains up.
TSX Momentum Barometers
Note: Data for Friday offered on these charts is believed to be inaccurate and is subject to an update.
The intermediate term Barometer dropped 22.46 on Friday and 5.09 last week to 30.08. It changed from Oversold to Neutral on Thursday on a move above 40.00, but returned to Oversold on Friday on a drop below 40,00.
The long term Barometer dropped 12.29 on Friday and 7.21 last week to 21.61. It remained Oversold.
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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