Tech Talk for Monday January 22nd 2018

U.S. equity index futures were slightly lower this morning. S&P 500 futures were down 1 point in pre-opening trade. Futures are responding to shut-down of the U.S. government over the weekend.

Juno Therapeutic jumped $18.41 to $86.22 after Celgene offered to purchase the company for $87 per share. Value of the offer is estimated at $9 billion. Celgene dropped $1.30 to $101.35.

Intel (INTC $44.82) was unchanged after MKM Partners raised their target on the stock to $50 from $48..

Halliburton gained $1.11 to $54.12 after reporting higher than consensus fourth quarter earnings and revenues.

Apple slipped $0.93 to $177.53 after Atlantic Equities downgraded the stock to Neutral from Overweight.

Harley Davidson gained $1.10 to $54.10 after Wells Fargo upgraded the stock to Outperform from Market Perform.

EquityClock's Daily Market Comment

Following is a link:

http://www.equityclock.com/2018/01/19/stock-market-outlook-for-january-22-2018/

Note seasonality charts on the Retail Industry, Energy Sector and Railroad Industry.

WALL STREET RAW RADIO WITH HOST, MARK LEIBOVIT – SATURDAY, JANUARY 20, 2018;

https://tinyurl.com/y7zujfht

GUESTS: DON VIALOUX and SINCLAIR NOE

The Bottom Line

Once again, several broadly based U.S. equity indices reached all-time highs. Traditional seasonally strong sectors (e.g. Consumer Discretionary, Industrials, Technology and Materials) continued to lead the market higher. However, medium term technical indicators for the S&P 500 Index, NASDAQ Composite Index and Dow Jones Industrial Average remain overbought and seasonal influences turn neutral for most equity markets and sectors from the second week in January into February. Preferred strategy is to take at least partial trading profits on strength in seasonally attractive equities and Exchange Traded Funds. Significant intermediate upside moves for most equity markets and economically sensitive sectors (other than commodity sensitive sectors) is expected to resume by late February.

The exceptions are Energy, Oil Services and Metals sectors. They have recovered strongly since mid-December when they entered into their period of seasonal strength lasting until at least the end of February. A break down by the U.S. Dollar Index on Friday to a three year low adds to their prospects. Look for continuing outperformance by these sectors on both sides of the border. Buy on weakness.

The TSX Composite Index reached a short term peak three weeks. Weakness in the U.S. Dollar Index (Strength in Canadian Dollar) is the main reason for underperformance relative to the S&P 500 Index. Concern about NAFTA negotiations, changing real estate purchase laws and rising interest rates also are issues.

Economic News This Week

December Existing Home Sales to be released at 10:00 AM EST on Wednesday are expected to slip to 5.70 million units from 5.81 million units in November.

Weekly Jobless Claims to be released at 8:30 AM EST on Thursday are expected to increase to 240,000 from 220,000.

Canadian November Retail Sales to be released at 8:30 AM EST on Thursday are expected to increase 0.8% versus a gain of 1.5% in October. Excluding auto sales, Retail Sales are expected to increase 0.9% versus a gain of 0.8% in October.

December New Home Sales to be released at 10:00 AM EST on Thursday are expected to drop to 653,000 from 733,000 units in November.

December Leading Economic Indicators to be released at 10:00 AM EST on Thursday are expected to increase 0.5% versus a gain of 0.4% in November.

December Durable Goods Orders to be released at 8:30 AM EST on Friday are expected to increase 0.8% versus a gain of 1.3% in November. Excluding transportation, December Durable Goods Orders are expected to increase 0.6% versus a decline of 0.1% in November.

Fourth quarter real GDP to be released at 8:30 AM EST on Friday is expected to grow at a 2.9% rater versus a 3.2% rate in the third quarter.

Canadian December Consumer Price Index to be released at 8:30 AM EST on Friday are expected to increase 0.3% versus a gain of 0.3% in November

Earnings News This Week

Observations

Shut-down by the U.S. Government on Saturday likely will have a negative impact on equity markets on Monday (unless settled earlier). The shut-down is unlikely to last long.

Technical action by individual S&P 500 stocks remained bullish last week. Number of stocks breaking resistance totaled 29 while number of stocks breaking support totaled 10. Number of stocks trading in an uptrend increased to 342 from 339, number of stocks trading in a neutral trend decreased to 45 from 47 and number of stocks in a downtrend decreased to 113 from 114 The Up/Down ratio increased last week to (342/113=) 3.03

U.S. economic news this week focuses on December Leading Economic Indicators to be released on Thursday and the fourth quarter GDP report to be released on Friday.

Canadian economic news this week focuses on November Retail Sales to be released on Thursday and Consumer Price Index released on Friday.

Fourth quarter earnings reports starts to flow quickly this week. 5 percent of S&P 500 companies have reported quarterly results to date. Focus this week remains on reports by major U.S. banks. Twenty eight S&P 500 companies are scheduled to report (including four Dow Jones Industrial stocks)

Medium term technical indicators (Percent of stocks trading above their 50 day moving average, Bullish Percent Index) remain at intermediate overbought levels, but have yet to show technical signs of rolling over.

Short term technical indicators for equity markets and most sectors (short term momentum, above/below 20 day moving average) generally are overbought.

Seasonal influences on a wide variety of U.S. equity indices and sectors tend to reach a short term peak by mid-January. Beyond mid- January, U.S. equity indices have a history of entering into a flat period lasting into February. See chart below.

Seasonal influences by TSX stock tend to be more positive for TSX stocks than U.S. stocks at this time of year. See chart below

Fourth quarter results released by S&P 500 companies to date have been encouraging.

11% of S&P 500 stocks have reported to date. 68% reported higher than consensus earnings and 85% reported higher than consensus revenues. Another 79 S&P 500 stocks and 9 Dow Jones Industrial stocks are scheduled to release quarterly results this week.

The outlook for S&P earnings and sales remains positive: According to FactSet, fourth quarter earnings are expected to decrease 0.2% including one time write downs related to the tax bill (down from a gain of10.2% last week) on a 6.9% increase in sales (up from 6.8% last week). Estimates beyond the fourth quarter of 2017 have been revised higher mainly due to changes in U.S. corporate tax laws. First quarter 2018 earnings are expected to increase 15.2% (up from 14.1% last week) on a 7.1% increase in sales. Second quarter 2018 earnings are expected to increase 15.0% (up from 13.9%) on a 7.1% increase in revenues (up from 7.0%). Third quarter earnings are expected to increase 16.3% (up from 15.2%) on a 5.9% increase in revenues (up from 5.8%). Fourth quarter 2018 earnings are expected to increase 28.2% (up from 15.1%) on a 4.6% increase in revenues (up from 4.5%). For all of 2018, earnings are expected to increase 18.6% (up from 14.7%) on a 6.0% increase in sales (up from 5.9%).

Short term political uncertainties remain, including North Korean "sabre rattling", struggling NAFTA negotiations, possibly another shut-down of the U.S. government and increased scrutiny by special council on Russia's influence on the Presidential election

Earnings and revenue prospects beyond the fourth quarter report season are exceptional for U.S. based companies with international exposure. Consensus for S&P 500 earnings on a year-over-year are expected to exceed 18% in 2018. Earnings will benefit significantly from weakness in the U.S. Dollar on a year-over-year basis when revenues and earnings from international operations are translated into U.S. Dollars. For example, a U.S. based company with 50% of its earnings and revenues coming from international operations will see earnings and revenues increase by 9% from foreign currency translation alone following a 13% fall in the U.S. Dollar Index. The U.S. Dollar Index averaged 100 in the fourth quarter of 2016 and 101 in the first quarter of 2017. Weakness again last week to below the 91 level likely will encourage analysts to raise their 2018 earnings and revenue estimates.

Equity Indices and Related ETFs

Daily Seasonal/Technical Equity Trends for January 19th 2018

Green: Increase from previous day

Red: Decrease from previous day

Calculating Technical Scores

Technical scores are 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.

S&P 500 Index added 24.06 points (0.86%) last week. Intermediate trend remains up. The Index remains above its 20 day moving average. Short term momentum indicators are trending up.

Percent of S&P 500 stocks trading above their 50 day moving average increased last week to 81.60 from 81.00. Percent remains intermediate overbought.

Percent of S&P 500 stocks trading above their 200 day moving average slipped last week to 79.60 from 80.00. Percent remains intermediate overbought.

Bullish Percent Index for S&P 500 stocks slipped last week to 81.80 and remained above its 20 day moving average. The Index remains intermediate overbought.

Bullish Percent Index for TSX stocks was unchanged last week at 70.00. The Index remains intermediate overbought.

TSX Composite Index gained 45.28 points (0.28%) last week. Intermediate trend remains up (Score: 2). Strength relative to the S&P 500 Index remains Negative (Score: -2). The Index remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at 0.

Percent of TSX stocks trading above their 50 day moving average increased last week to 59.50 from 53.94. Percent remains intermediate overbought.

Percent of TSX stock trading above their 200 day moving average increased last week to 63.64 from 62.24. Percent remains intermediate overbought.

Dow Jones Industrial Average gained 268.53 points (1.04%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Positive. The Average remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at 6.

Bullish Percent Index for Dow Jones Industrial stocks dropped last week to 90.00 from 93.33 and dropped below its 20 day moving average. The Index remains intermediate overbought and showing early signs of rolling over.

Bullish Percent Index for NASDAQ Composite stocks increased last week to 68.31 from 67.57 and remained above its 20 day moving average. The Index remains intermediate overbought.

NASDAQ Composite Index gained 75.32 points (1.04%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Neutral. The Index remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at 4.

Russell 2000 Index gained 5.66 points (0.36%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Negative. The Index remained above its 20 day moving average. Short term momentum indicators are trending down. Technical score slipped last week to 0 from 2.

Dow Jones Transportation Average gained 67.97 points (0.60%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Positive. The Average remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at 6.

Australia All Ordinaries Composite Index dropped 57.50 points (0.93%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Negative. The Index dropped below its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to -2 from 0.

Nikkei Average gained 154.24 points (0.65%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Neutral. The Average remains above its 20 day moving average. Short term momentum indicators are trending down. Technical score remained last week at 2.

Europe iShares gained $0.47 (0.95%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Positive. Units remain above their 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at 6.

Shanghai Composite Index gained 58.92 points (1.71%) last week. Intermediate trend changed to up from neutral. Strength relative to the S&P 500 Index remained Neutral. The Index remained above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 4 from 2.

Emerging Markets iShares increased $0.93 (1.885) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Positive. Units remain above their 20 day moving average. Short term momentum indicators are trending up. Technical score remained last week at 6.

Currencies

The U.S. Dollar Index fell 0.37 (0.41%) last week. Intermediate downtrend was confirmed on a move below 90.99. The Dollar remains below its 20 day moving average. Short term momentum indicators are trending down.

The Euro gained another 0.22 (0.18%) last week. Intermediate trend remains up. The Euro remains above its 20 day moving average. Short term momentum indicators are trending up.

Canadian Dollar dropped US 0.26 cents (0.32%) last week. Intermediate trend remains Neutral. The Canuck Buck remains above its 20 day moving average. Short term momentum indicators have rolled over.

The Yen added 0.21 (0.23%) last week. Intermediate trend remains up. The Yen remains above its 20 day moving average. Short term momentum indicators are trending up.

British Pound gained 1.38 (1.01%) last week. Intermediate trend remains up. The Pound remains above its 20 day moving average. Short term momentum remains upward.

Commodities and Related ETFs

Daily Seasonal/Technical Commodities Trends for January 19th 2018

Green: Increase from previous day

Red: Decrease from previous day

* Excludes adjustment from rollover of futures contracts

CRB Index slipped 0.56 (0.29%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to Neutral from Positive. The Index remains above its 20 day moving average. Short term momentum indicators are trending up.

Gasoline gained 1.6 cents per gallon (0.87%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Positive. Gas remains above its 20 day moving average. Short term momentum indicators are trending up.

Crude Oil slipped $0.99 per barrel (1.54%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Positive. Crude remains above its 20 day moving average. Short term momentum indicators have just turned down. Technical score slipped last week to 4 from 6.

Natural Gas slipped $0.02 per MBtu (0.62%) last week. Intermediate trend changed to up from neutral on a move above $3.21. Strength relative to the S&P 500 Index remains Positive. "Natty" remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 6 from 4.

S&P Energy Index dropped 7.36 points (1.29%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Positive. The Index remains above its 20 day moving average. Short term momentum indicators have just turned down. Technical score slipped last week to 4 from 6.

Philadelphia Oil Services Index dropped 3.77 points (2.30%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Positive. The Index remains above its 20 day moving average. Short term momentum indicators have turned down. Technical score dropped last week to 4 from 6.

Gold slipped $1.80 per ounce (0.13%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to Neutral from Positive. Gold remains above its 20 day moving average. Short term momentum indicators have turned down. Technical score dropped last week to 2 from 6.

Silver slipped $0.10 per ounce (0.58%) last week. Intermediate trend remains down. Strength relative to the S&P 500 Index changed to Neutral from Positive. Silver remains above its 20 day moving average. Short term momentum indicators are trending down. Technical score remained last week at -2.

AMEX Gold Bug Index dropped 4.41 points (2.19%) last week. Intermediate trend remains Neutral. Strength relative to the S&P 500 Index changed to Neutral from Positive. The Index remains above its 20 day moving average. Short term momentum indicators have turned down. Technical score dropped last week to 0 from 4.

Platinum gained $23.90 per ounce (2.40%) last week. Intermediate trend remains Neutral. Relative strength remains Positive. Trades above its 20 day MA. Momentum remains up.

Palladium slipped $6.95 per ounce (0.63%) last week. Intermediate trend remains up. Relative strength changed to Neutral. PALL remains above its 20 day MA. Momentum: down.

Copper dropped $0.03 per lb. (0.94%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Negative. Copper moved below its 20 day moving average. Short term momentum indicators are trending down. Technical score slipped to -2 from -1.

BMO Base Metals ETF slipped $0.07 (0.53%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Positive. Units remain above their 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to 4 from 6.

Lumber gained another $13.90 (2.98%) last week. Trend remains up. Relative strength remains Positive. Trades above its 20 day moving average. Short term momentum is trending up.

Grain ETN added $0.26 (1.07%) last week. Trend remains down. Relative strength remains Negative. Units moved above their 20 day moving Momentum turned higher.

Agriculture ETF gained $0.22 (0.34%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to Neutral from Positive. Units remain above their 20 day moving average. Short term momentum indicators have rolled over. Technical score dropped last week to 2 from 6.

Interest Rates

Yield on 10 year Treasuries increased 8.5 basis points (3.33%) last week to a three year high. Intermediate trend remains up. Yield remains above its 20 day moving average. Short term momentum indicators are trending up.

Long term Treasury iShares dropped $1.46 (1.17%) last week. Intermediate trend remains up. Units remain below their 20 day moving average. Momentum is down.

Volatility

The VIX Index gained 1.11 (10.93%) last week. Intermediate trend remains down. The Index moved above its 20 day moving average.

Sectors

Daily Seasonal/Technical Sector Trends for January 19th 2018

Green: Increase from previous day

Red: Decrease from previous day

StockTwits Released on Friday @EquityClock

Technical action by S&P 500 stocks to 10:00: Bullish. Breakouts: $NKE $FL $HCA $DGX. Breakdown: $HOLX.

Editor's Note: After 10:00 AM EST, breakouts included C, MCD, KO, SBAC, WY, ALLE and CTAS. Breakdown: MKC

Nike, a Dow Jones Industrial Average stock moved above $65.18 extending an intermediate uptrend.

Celestica $CLS.CA moved above $14.09 completing a double bottom pattern.

Gildan Activewear $GIL.CA moved above $41.76 extending an intermediate uptrend.

McDonalds $MCD, a Dow Jones Industrial stock moved above $175.78 to an all-time high extending an intermediate uptrend.

Coca Cola $KO, a Dow Jones Industrial stock moved above $47.09 to an all-time high extending an intermediate uptrend.

Canada Manufacturing Sales higher by 4.4% (NSA) in November, a significant divergence from the 2.6% average decline. #CDNecon #CAD $MACRO

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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