by Don Vialoux, Timingthemarket.ca
Editor’s Note: Don Vialoux is scheduled to be BNN’s guest analyst on Berman’s Call today at 11:00 AM EDT
WALL STREET RAW RADIO WITH MARK LEIBOVIT
GUESTS: DON VIALOUX, MARK SKOUSEN, SINCLAIR NOE, KYLE DENNIS, JEFF BISHOP, AND KEITH FITZGERALD
The Bottom Line
Equity markets (except China) remain intermediate overbought and vulnerable to a correction, despite a move by the S&P 500 Index and the Dow Jones Industrial Average to all-time highs on Friday. The S&P 500 Index and TSX Composite Index on average during the past 20 years have reached their seasonal peak on July 17th followed by at least a shallow correction lasting until mid-October However, volatility measured by the VIX Index remains relatively mute implying that the seasonal peak this year could be delayed slightly. Political events (most notably in the U.S.) could change the timing quickly. Possibilities include a show down with North Korea, failure by the U.S. Congress to pass meaningful legislation on health care and tax reform, an unexpected increase in interest rates and impending trade wars. Be careful out there! A spike in volatility above levels reached two weeks ago will be the most likely sign that the summer correction has started. Meanwhile, holding a robust position in cash in your investment portfolio makes sense.
Economic News This Week
July Empire Manufacturing Index to be released at 8:30 AM EDT on Monday is expected to dip to 13.0 from 19.8 in June
June Housing Starts to be released at 8:30 AM EDT on Wednesday are expected to increase to 1.15 million units from 1.092 million units in May.
European Community Monetary Policy announcement is scheduled to be released at 7:45 AM EDT on Thursday.
Weekly Initial Jobless Claims to be released at 8:30 AM EDT on Thursday are expected to slip to 245,000 from 247,000
July Philly Fed Index to be released at 8:30 AM EDT on Thursday is expected to drop to 22.0 from 27.6 in June
June Leading Indicators to be released at 10:00 AM EDT on Thursday are expected to increase by 0.4% versus a gain of 0.3% in May.
Canadian June Consumer Price Index to be released at 8:30 AM EDT on Friday us expected to be unchanged versus a gain of 0.1% in May. On a year-over-year basis, CPI is expected to increase 1.0%.
Canadian May Retail Sales to be released at 8:30 AM EDT on Friday are expected to increase 0.3% versus a gain of 0.8% in April.
Earnings News This Week
Technical action by individual S&P 500 stocks was surprisingly mixed last week despite a move by the Index to an all-time high on Friday. Sectors showing strongest positive technical action were Industrials, Technology and Materials. Sectors showing weakest technical action were Consumer Discretionary and Financials. Number of S&P 500 stocks in an intermediate uptrend was unchanged at 282, number of stocks in a neutral trend increased to 52 from 46 and number of stock in a downtrend dropped to 166 from 172. The up/down ratio increased last week to (282/166=) 1.70 from 1.64