Tech Talk for Monday January 29th 2018

U.S. equity index futures are lower this morning. S&P 500 futures were down 7 points in pre-opening trade.

Index futures were virtually unchanged following release of economic news at 8:30 AM EST. Consensus for December Personal Income was a gain of 0.3% versus an increase of 0.3% in November. Actual was a gain of 0.4%. Consensus for December Personal Spending was an increase of 0.5% versus a gain of 0.8% in November. Actual was an increase of 0.4%.

Much of the early weakness in index futures is attributed to overnight weakness in Apple. The stock dropped $1.22 to $170.29 on reports of a production cut of its iPhone X.

Dr. Pepper Snapple jumped $37.35 to $133.00 on merger news with Keurig Green Mountain.

Transocean gained $0.01 to $11.17 after RBC Capital raised its target price to $13 from $11.

Starbucks eased $0.48 to $57.51 after Bernstein downgraded the stock to Market Perform from Outperform.

EquityClock's Daily Market Comment

Following is a link:

http://www.equityclock.com/2018/01/26/stock-market-outlook-for-january-29-2018/

Note seasonality charts on the Health Care sector, New Orders for Capital Goods, World Imports of Goods, World Imports of Goods, Canadian Consumer Prices, Mortgage Interest Costs and Oil and Gas Exploration & Production Index.

Wolf on Bay Street

Guest on Wolfgang Klein's show on Toronto 640 on Saturday

https://globalnews.ca/toronto/program/the-wolfgang-klein-show/

Wall Street Raw Radio

SATURDAY, JANUARY 27, 2018 – WITH HOST, MARK LEIBOVIT

GUESTS INCLUDE: DON VIALOUX (EQUITYCLOCK.COM), HARRY BOXER (THETECHTRADER.COM) AND SINCLAIR NOE (EATTHEBANKERS.COM).

https://tinyurl.com/y9dkerx4

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. In addition, seasonal influences change to Positive from Neutral in February. However, medium term technical indicators for the S&P 500 Index, NASDAQ Composite Index and Dow Jones Industrial Average remain overbought

Energy, Oil Services and Metals sectors continue to outperform U.S. equity indices. They have recovered strongly since mid-December when they entered into their period of seasonal strength lasting until at least the end of February. Continuing weakness by the U.S. Dollar Index last week to a three year low corresponding with a breakout by the CRB Index to a three year high 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 four weeks ago. Last week, the Index completed a short term double top pattern implying flat to lower prices into February. Weakness in the U.S. Dollar Index (and corresponding strength in Canadian Dollar) are 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 Personal Income to be released at 8:30 AM EST on Monday is expected to increase 0.3% versus a gain of 0.3% in November. December Personal Spending is expected to increase 0.5% versus a gain of 0.6% in November.

January Consumer Confidence Index to be released at 10:00 AM EST on Tuesday is expected to increase to 123.4 from 122.1 in December.

State of the Union Address by President Trump is made at 9:00 PM EST on Tuesday.

January ADP Employment Report to be released at 8:15 AM EST on Wednesday is expected to show a decline to 195,000 from 250,000 in December.

Canadian November Real GDP to be released at 8:30 AM EST on Wednesday is expected to increase 0.4% versus no change in October.

January Chicago PMI to be released at 9:45 AM EST on Wednesday is expected to drop to 64.0 from 67.6 in December.

FOMC Meeting Announcement to be released at 2:00 PM EST on Wednesday is expected to leave the Fed Fund rate unchanged.

Weekly Jobless Claims to be released at 8:30 AM EST on Thursday are expected to increase to 235,000 from 233,000 last week.

January ISM Index to be released at 10:00 AM EST on Thursday is expected to dip to 58.7 from 59.7 in December

December Construction Spending to be released at 10:00 AM EST on Thursday is expected to increase 0.5% versus a gain of 0.8% in November.

January Non-farm Payrolls to be released at 8:30 AM EST on Friday is expected to increase to 176,000 from 148,000 in December. January Private Non-farm Payrolls are expected to increase to 172,000 from 146,000 in November. January Unemployment Rate is expected to remain unchanged from December at 4.1%. January Average Hourly Earnings are expected to increase 0.3% versus a gain of 0.3% in December

January Consumer Sentiment Index to be released at 10:00 AM EST on Friday is expected to increase to 95.0 from 94.4 in December

Earnings News This Week

Observations

Technical action by individual S&P 500 stocks remained bullish last week. Number of stocks breaking resistance totaled 36 while number of stocks breaking support totaled 10. Number of stocks trading in an uptrend increased to 351 from 342, number of stocks trading in a neutral trend decreased to 41 from 45 and number of stocks in a downtrend decreased to 108 from 113 The Up/Down ratio increased last week to (351/108=) 3.25 from 3.03

U.S. economic news this week focuses on the January ISM report released on Thursday and the January employment report released on Friday.

Canadian economic news this week focuses on November GDP report released on Wednesday

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 in the U.S. (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. In contrast, medium term technical indicators in Canada have rolled over and are trending down.

Short term technical indicators for equity markets and most sectors in the U.S.(short term momentum, above/below 20 day moving average) generally are overbought. Short term technical indicators for equity markets and most sectors in Canada have rolled over and turned down.

Seasonal influences on a wide variety of U.S. equity indices and economic sensitive sectors tend to change at the end of January from Neutral to Positive. See chart below.

Seasonal influences by TSX also are positive at this time of year. See chart below

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

24% of S&P 500 stocks have reported to date. 76% reported higher than consensus earnings and 81% reported higher than consensus revenues. Another 125 S&P 500 stocks and 10 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 increase 12.0% including one time write downs related to the tax bill on a 7.0% increase in sales (up from 6.9% last week). Estimates beyond the fourth quarter of 2017 were revised higher again mainly due to changes in U.S. corporate tax laws. First quarter 2018 earnings are expected to increase 16.0% (up from 15.2% last week) on a 7.1% increase in sales. Second quarter 2018 earnings are expected to increase 16.0% (up from 15.0%) on a 7.2% increase in revenues (up from 7.1%). Third quarter earnings are expected to increase 17.3% (up from 16.3%) on a 5.9% increase in revenues. Fourth quarter 2018 earnings are expected to increase 28.2% on a 4.6% increase in revenues. For all of 2018, earnings are expected to increase 16.3% on a 6.0% increase in sales.

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 16% 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 7% from foreign currency translation alone following a 14% fall in the U.S. Dollar Index from its high at 103.82 in January 2017. 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 89 level likely will encourage analysts to raise their 2018 earnings and revenue estimates again.

Equity Indices and Related ETFs

Daily Seasonal/Technical Equity Trends for January 26th 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 gained another 62.57 points (2.23%) last week. 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 84.00 from 81.60. Percent remains intermediate overbought.

Percent of S&P 500 stocks trading above their 200 day moving average increased last week to 82.80 from 79.60. Percent remains intermediate overbought.

Bullish Percent Index for S&P 500 stocks increased last week to 82.80 from 81.60 and remained above its 20 day moving average. The Index remains intermediate overbought.

Bullish Percent Index for TSX stocks dropped last week to 68.80 from 70.00 and dropped below its 20 day moving average. The Index remains intermediate overbought and has started to roll over.

TSX Composite Index dropped 114.24 points (0.70%) last week. Intermediate trend changed to down on Thursday on a move below 16,229.26 (Score: -2). Strength relative to the S&P 500 Index remains Negative (Score: -2). The Index dropped below its 20 day moving average (Score:-1). Short term momentum indicators are trending down (Score: -1). Technical score dropped last week to -6 from 0.

Percent of TSX stocks trading above their 50 day moving average dropped last week to 56.20 from 59.50. Percent remains intermediate overbought and showing signs of rolling over.

Percent of TSX stocks trading above their 200 day moving average slipped last week to 62.40 from 63.64. Percent remains intermediate overbought and trending down.

Dow Jones Industrial Average gained 544.99 points (2.09%) 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 was unchanged last week at 90.00 and remains below its 20 day moving average. The Index remains intermediate overbought and rolling over.

Bullish Percent Index for NASDAQ Composite Index increased last week to 69.78 from 69.31 and remained above its 20 day moving average. The Index remains intermediate overbought.

NASDAQ Composite Index added 169.49 points (2.31%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index turned Positive. The Index remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 6 from 4.

Russell 2000 Index added 10.43 points (0.65%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Negative. The Index remains above its 20 day moving average. Short term momentum indicators are trending down. Technical score remained last week at 0.

Dow Jones Transportation Average dropped 179.66 points (1.59%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to Negative from Positive. The Average remains above its 20 day moving average. Short term momentum indicators are trending down. Technical score dropped last week to 0 from 6

Australia All Ordinaries Composite Index added 45.40 points (0.74%)\ last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Negative. The Index remains below its 20 day moving average. Short term momentum indicators have turned up. Technical score increased last week to 0 from -2.

Nikkei Average dropped 176.66 points (0.74%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to Negative from Neutral. The Average remains above its 20 day moving average. Short term momentum indicators are trending down. Technical score slipped last week to 0 from 2.

Europe iShares gained $0.85 (1.70%) 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 added 70.27 points (2.01%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index improved to Positive from Neutral. The Index remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 6 from 4.

Emerging Markets iShares gained $1.64 (3.25%) 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 remains last week at 6.

Currencies

The U.S. Dollar Index plunged 1.48 (1.64%) last week. Intermediate trend remains down. The Index remains below its 20 day moving average. Short term momentum indicators are trending down.

The Euro gained 2.01 (1.64%) last week. Intermediate trend remain up. The Euro remains above its 20 day moving average. Short term momentum indicators are trending up.

The Canadian Dollar gained U.S.1.16 cents (1.45%) last week. Intermediate trend remains Neutral. The Canuck Buck remains above its 20 day moving average. Short term momentum indicators are trending up.

Japanese Yen gained 1.76 (1.95%) last week. Intermediate trend remains up. The Yen remains above its 20 day moving average. Short term momentum indicators are trending up.

British Pound added 2.82 (2.03%) last week. Intermediate trend remains up. The Pound remains above its 20 day moving average. Short term momentum indicators are trending up.

Commodities

Daily Seasonal/Technical Commodities Trends for January 26th 2018

Green: Increase from previous day

Red: Decrease from previous day

* Excludes adjustment from rollover of futures contracts (as happened last week)

The CRB Index gained 5.02 points (2.57%) last week to a three year high. 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.

Gasoline added 6.5 cents per gallon (3.49%) 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. Technical score remained last week at 6.

Crude Oil gained $2.83 per barrel (4.47%) 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 are trending up. Technical score increased last week to 6 from 4.

Natural Gas slipped $0.01 (0.31%) after futures contracts were rolled over. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Positive. "Natty" remains above its 20 day moving average. Short term momentum indicators have turned down. Technical score slipped last week to 4 from 6.

S&P Energy Index gained 8.58 points (1.52%) 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 down. Technical score slipped last week to 2 from 4.

Philadelphia Oil Services Index added 2.44 points (1.52%) 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 down. Technical score dropped last week to 2 from 4.

Gold added $19.00 per ounce (1.43%) last week. Intermediate uptrend was confirmed on Thursday when Gold moved to an 18 month high. Strength relative to the S&P 500 Index remains Neutral. Gold remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 4 from 2.

Silver gained $0.40 per ounce (2.35%) last week. Intermediate trend changed to up from down. Strength relative to the S&P 500 Index remains Neutral. Silver remains above its 20 day moving average. Short term momentum indicators are trending up. Technical score increased to 4 form -2.

AMEX Gold Bug Index added 6.43 points (3.27%) last week. Intermediate trend changed to up from neutral on a move above 205.35. Strength relative to the S&P 500 Index remains 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 0.

Platinum slipped $1.70 (0.17%) last week. Intermediate trend changed to up from neutral. Relative strength remains Positive. Trades above its 20 day MA. Momentum: Up

Palladium dropped $13.35 per ounce (1.22%) last week. Trend remains up. Relative strength changed to Negative from Neutral. Dropped below its 20 day MA. Momentum: Down

Copper added $0.01 per lb (0.31%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remained Negative. Copper remained below its 20 day moving average. Short term momentum indicators are trending up. Technical score increased last week to 0 from -2.

BMO Base Metals ETF slipped $0.03 (0.23%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index changed to Negative from Positive. Units remained above their 20 day moving average. Short term momentum indicators are trending down. Technical score slipped last week to 0 from -2.

Lumber added 7.30 (1.52%) last week. Intermediate trend remains up. Relative strength remains Positive. Trades above its 20 day moving average. Momentum is up.

Grain ETN gained $0.58 (2.36%) last week. Trend changed to neutral from down. Relative strength changed to Neutral from Negative. Units moved above their 20 day moving average. Short term momentum indicators are trending up. Technical score increased to 2 from -2.

Agriculture ETF added $1.43 (2.22%) last week. Intermediate trend remains up. Strength relative to the S&P 500 Index remains Neutral. Units remain above their 20 day moving average. Short term momentum indicators have turned up. Technical score increased last week to 4 from 2.

Interest Rates

Yield on 10 year Treasuries increased 2.5 basis points (0.95%) last week. Intermediate trend remains up. Yield remains above its 20 day moving average. Short term momentum indicators are trending up.

Price of the long term Treasury ETF added $0.53 (0.43%) last week. Intermediate trend remains up. Units remain below their 20 day moving average.

Volatility

The VIX Index slipped 0.17 (1.51%) last week. Trend remains down. The Index remains above its 20 day moving average.

Sectors

Daily Seasonal/Technical Sector Trends for January 26th 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: $AJG $RHI $INTC $HIG. Breakdown: EXPD

Intel $INTC, a Dow Jones Industrial stock moved above $47.64 to an all-time high extending an intermediate uptrend.

Dollarama $DOL.CA moved above $166.50 to an all-time high extending an intermediate uptrend.

Pfizer $PFE, a Dow Jones Industrial stock moved above $35.35 to an all-time high extending an intermediate uptrend.

Fertilizer ETF $SOIL moved above $10.94 to a 3.5 year high extending an intermediate uptrend.

Bombardier $BBD.B.CA moved above $3.24 to a 3 year high on favourable trade panel ruling extending an intermediate uptrend.

Chart of Mortgage Interest Cost a big standout in today’s Canada CPI report — largest annual increase since 2008. #CDNecon #CAD $STUDY

US Durable Goods up 22.9% (NSA) in December, short of 26.7% average increase. #Manufacturing #Economy $MACRO

Canada CPI softens in December but still manages to close the year inline with historical average trend, up 1.9%

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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