Tech Talk for Tuesday February 19th 2019

U.S. equity index futures were lower this morning. S&P 500 futures were down 9 points in pre-opening trade.

Wal-Mart added $4.45 to $104.44 after reporting higher than consensus fourth quarter sales and earnings. The company also raised its dividend by 2%.

Cooper Tire gained $0.67 to $34.06 after reporting higher than consensus fourth quarter earnings.

Weight Watchers dropped $1.58 after JP Morgan downgraded the stock to Under Weight from Neutral. Target price was cut to $25 from $37.

McDonalds gained $1.38 to $181.35 after Stephens upgraded the stock to Overweight from Equal Weight.

Jon Vialoux's EquityClock's Daily Market Comment

Following is a link:

http://www.equityclock.com/2019/02/15/stock-market-outlook-for-february-19-2019/

Note seasonality charts on Industrial Production and the Empire State Manufacturing Survey.

WALL STREET RAW RADIO

SATURDAY, FEBRUARY 16, 2019 – WITH YOUR HOST, MARK LEIBOVIT

SPECIAL GUESTS: DON VIALOUX, RALPH CASE, HARRY BOXER AND HENRY WEINGARTEN

https://tinyurl.com/y233locx

Excerpts from Don Vialoux comments on Wall Street Raw

Equities and Exchange Traded Funds related to South East Asia showed early signs last week of moving into their period of seasonal strength from the beginning of February to the end of May. Traditionally, Chinese equity markets and related markets such as Vietnam, Taiwan and South Korea reach a seasonal low just before the Chinese New Year and move significantly higher thereafter. Chinese New Year this year was held on February 5th. Last week, the Shanghai Composite Index gained almost 4%, moved above resistance at 2704 and completed a classic double bottom pattern. The Vietnam ETF (VNM) advanced 5.6%. Investors are anticipating a trade agreement between the U.S. and China that will help both countries. Ways to play the trade include ETFs. Best traded U.S. based ETF is FXI. Best traded Canadian ETFs are ZCH and XCH.

'Tis the season for higher gasoline prices! On Thursday, gasoline entered its period of seasonal strength from mid-February to the Memorial Day holiday in May. The gasoline ETN (Symbol: UGA) completed a classic reverse Head & Shoulders pattern last week. In southern Ontario, where I live the price of gasoline jumped on Friday by 7% in one day. This is the time of year when demand exceeds supply: Refiners reduce supply by partially closing their facilities for annual maintenance prior to switching to more costly summer gasoline. History is repeating once again this year.

Gasoline prices also were bolstered by strength in crude oil prices. On Friday the Crude Oil ETN completed a reverse Head & Shoulders pattern on a move above $11.69. Energy ETFs including XEG.TO and ZEO.TO in Canada and XLE quickly responded by also completing reverse Head & Shoulders patterns. 'Tis the season for strength in the energy sector to the end of April!

Precious metals and related equities are showing technical signs of losing momentum. Their seasonal trade from December to February has been exceptionally profitable this year. However, their period of seasonal strength is completed at the end of February. Traders are looking for profit taking opportunities.

The Bottom Line

The bear market rally in U.S. and Canadian equity markets showed technical signs of extending last week. North American equity markets remain intermediate overbought.

Observations

Technical action by individual S&P 500 stocks was bullish last week. Number of stocks breaking intermediate resistance totaled 71 while number of stocks breaking support totaled 3. The Up/Down ratio rose to (195/216=) 0.90 from 0.56.

Fourth quarter earnings reports by major U.S. companies continue to pour in this week.

79% have reported to date. Earnings on a year-over-year basis increased 13.1% and revenues increased 7.0%.

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

Medium term technical indicators in Canada also continued trending higher 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) rolled back up last week and remain overbought.

Short term technical indicators for Canadian markets and sectors also rolled back up and remain overbought.

Short term political concerns remain elevated. Issues include heightened tariff wars between the U.S. and China, a declared State of Emergency by the President and expected release of the Mueller report.

Prospects for S&P 500 were reduced once again last week. According to FactSet, first quarter earnings are expected to decline 2.2% (down from a decline of 1.7%) but revenues are expected to increase 5.3% (down from 5.4%). For all of 2019, earnings are expected to increase 4.8% (down from 5.0%) and revenues are expected to increase 4.9% (down from 5.1%). For all of 2020, earnings are expected to increase 11.4% and revenues are expected to increase 5.6%

Major U.S. companies are seeking places to invest their new found cash flow following changes in U.S. tax laws. Look for additional news about share buybacks, increased dividends, take overs, employee bonuses and wage increases with release of fourth quarter results (e.g. Louisiana Pacific's $600 million share buyback announcement last week)

Seasonal influences in the first and second quarters of a U.S. Pre-Presidential Election Year are favourable. Gains this year already have exceeded average gains in the first and second quarters.

Economic News This Week

FOMC Minutes for the January 29-30th meeting are released at 2:00 PM EST

December Durable Goods Orders to be released at 8:30 AM EST on Thursday are expected to increase 0.8% versus a gain of 0.8% in November. Excluding Transportation, December Durable Goods Orders are expected to increase 0.2% versus a drop of 0.3% in November.

February Philly Fed Index to be released at 8:30 AM EST on Thursday is expected to slip to 14.0 from 17.0 in January.

January Existing Home Sales to be released at 10:00 AM EST on Thursday are expected to increase to 5.05 million from 4.99 million in December

Bank of Canada governor Poloz is scheduled to speak at 12:35 PM EST on Thursday.

Canadian December Retail Sales to be released at 8:30 AM EST on Wednesday are expected to slip 0.1% versus a drop of 0.9% in November

Selected Earnings News This Week

Trader's Corner.

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for February 15th 2019

Green: Increase from previous day

Red: Decrease from previous day

Commodities

Daily Seasonal/Technical Commodities Trends for February 15th 2019

Green: Increase from previous day

Red: Decrease from previous day

Sectors

Daily Seasonal/Technical Sector Trends for February 15th 2019

Green: Increase from previous day

Red: Decrease from previous day

http://www.equityclock.com/about/seasonal-advantage-portfolio/

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 11:00: Bullish. Nineteen stocks broke intermediate resistance. One broke support.

Walgreen Boots $WBA, a Dow Jones Industrial stock moved above $72.44 setting an intermediate uptrend.

Wal-Mart $WMT, a Dow Jones Industrial stock moved above $99.35 extending an intermediate uptrend

Merck $MRK, a Dow Jones Industrial stock moved above $79.63 to an all-time high extending an intermediate uptrend.

TSX Energy Index $SPTEN moved above $154.10 completing a reverse Head & Shoulders pattern. $XEG.CA $ZEO.CA

JP Morgan $JPM, a Dow Jones Industrial stock moved above $105.24 extending an intermediate uptrend.

Crude Oil ETN $USO moved above $11.69 completing a reverse Head & Shoulders pattern.

Editor's Notes: Ditto for WTIC crude oil on a move above $55.75!

Strength in crude oil is one of the reasons why the CRB Index is about to complete a reverse Head & Shoulders pattern on a move above 182.25

U.S. energy stocks/ETFs responding to break out by $USO. $XLE moved above $65.27 completing a reverse Head & Shoulders pattern

Lundin Mining $LUN.CA moved above $6.49 extending an intermediate uptrend.

Empire State #Manufacturing Survey at +12.8 (NSA) in February, marginally below the average level for this time of year of +14.3. $MACRO

US #IndustrialProduction unchanged (NSA) in January, better than 0.2% decline that is average for the month. $MACRO #Economy #Manufacturing

Sun Life Financial $SLF.CA, a TSX 60 stock moved above 48.95 completing a reverse Head & Shoulders pattern.

Biotech iShares $IBB moved above $111.60 completing a reverse Head & Shoulders pattern

Microsoft $MSFT, a Dow Jones Industrial stock moved above $107.90 extending an intermediate uptrend.

S&P 500 Momentum Barometers

Percent of S&P 500 stocks trading above their 50 day moving average increased last week to 89.40 from 80.80. It remains intermediate overbought.

Bullish Percent Index for S&P 500 stocks increased last week to 68.60 from 61.80. The Index remains intermediate overbought.

TSX Momentum Barometers

Percent of TSX stocks trading above their 50 day moving average increased last week to 86.92 from 81.28. Percent remains intermediate overbought.

Bullish Percent Index for TSX stocks increased last week to 53.14 from 51.88. The Index remains intermediate neutral.

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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