by Don Vialoux, EquityClock.com
U.S. equity futures were mixed this morning. S&P 500 futures were unchanged in pre-opening trade.
The Shanghai Composite added 0.8% after the Bank of China cut its benchmark interest rate by 25 basis points to 5.35%.
IBM (IBM $161.94) was unchanged after Atlantic Equities downgraded the stock to Underweight.
Axiom launched coverage on social network stocks with Buy ratings on Face Book and Twitter. Face Book gained $0.17 to $79.14. Twitter added $0.22 to $48.38
Cracker Barrel slipped $1.95 to $149.08 after Miller Tabak downgraded the stock to Hold from Buy.
EquityClock’s Daily Market Comment
Following is a link:
http://www.equityclock.com/2015/03/01/stock-market-outlook-for-march-2-2015/
Note seasonality chart for the S&P 500 Index during the past 64 years. Also note seasonality charts on the five sectors that show above average performance in the month of March: Energy, Financials, Materials, Industrials, Consumer Discretionary.
Economic News This Week
January Personal Income to be released at 8:30 AM EST on Monday is expected to increase 0.4% versus a gain of 0.3% in December. January Personal Spending is expected to slip 0.1% versus a decline of 0.3% in December
January Construction Spending to be released at 10:00 AM EST on Monday is expected to increase 0.2% versus a gain of 0.4% in December.
February ISM Manufacturing Index to be released at 10:00 AM EST on Monday is expected to slip to 53.0 from 53.5 in January
Canada’s Fourth Quarter real annualized GDP growth to be released at 8:30 AM EST on Tuesday is expected to slip to 2.5% from 2.8% in the third quarter.
The Bank of Canada’s interest rate announcement is released at 8:30 AM EST on Wednesday. Consensus is that the overnight lending rate will be unchanged.
February ADP Private Employment report to be released at 8:15 AM EST on Wednesday is expected to show an increase to 218,000 from 213,000 in January
The Fed Beige Book is released at 2:00 PM EST on Wednesday.
The February Non-manufacturing Index to be released at 10:00 AM EST on Wednesday is expected to slip to 56.5 from 56.7 in January
Weekly Initial Jobless Claims to be released at 8:30 AM EST on Thursday are expected to slip to 310,000 from 313,000 last week.
January Factory Orders to be released at 10:00 AM EST on Thursday are expected to increase 0.7% versus a 3.4% decline in December.
Canada’s January Trade Deficit to be released at 8:30 AM EST on Friday is expected to increase to $1.2 billion from $649,000 in December
U.S. January Trade Deficit to be released at 8:30 AM EST on Friday is expected to slip to $42 billion from $46.6 billion in December
February Non-farm Payrolls to be released at 8:30 AM EST on Friday is expected to slip to 240,000 from 257,000 in January. February Private Non-farm Payrolls are expected to slip to 230,000 from 267,000 in January. February Unemployment Rate is expected to slip to 5.6% from 5.7% in January. February Average Hourly Earnings are expected to increase 0.2% versus a gain of 0.5% in January.
Earnings News This Week
The Bottom Line
Equity prices continue to move slightly higher despite short and intermediate overbought levels thanks to a flow of funds from bonds and interest sensitive equities to economic sensitive equities and equities outside of North America. Weather is a negative that will increase short term volatility in North American equity markets. However, that too will pass by spring. The stage is set for a volatile, but positive move in economic sensitive North American and international equity prices into this summer. Preferred strategy is to accumulate seasonally attractive, economic sensitive North American and international equities on weakness in early March for a seasonal trade lasting until at least early May and possibly into July.
Equity Trends
Daily Seasonal/Technical Equity Trends for February 27th
Green: Increase from the previous day
Red: Decrease from the previous day
Includes changes from our last daily report on February 25th
The S&P 500 Index slipped 5.81 points (0.28%) last week. The Index remains above its 20 day moving average. Short term momentum indicators are overbought. Their trend changed from up to mixed.
Percent of S&P 500 stocks trading above their 50 day moving average fell last week to 70.80% from 77.40%. Percent is intermediate overbought and showing early signs of rolling over.
Percent of S&P 500 stocks trading above their 200 day moving average slipped last week to 76.40% from 78.00%. Percent is intermediate overbought.
Bullish Percent Index for S&P 500 stocks increased last week to 74.60% from 74.00% and remained above its 20 day moving average. Percent remains intermediate overbought.
Bullish Percent Index for TSX Composite stocks slipped last week to 61.75% from 62.55% and remained above its 20 day moving average. The Index remains intermediate overbought.
The TSX Composite Index added 62.10 points (0.41%) last week. Intermediate trend remains up (Score: 1.0). The Index remains above its 20 day moving average (Score: 1.0). Strength relative to the S&P 500 Index remains negative (Score: 0.0). Technical score remains at 2.0 out of 3.0. Short term momentum indicators are trending down.
Percent of TSX Composite stocks dropped last week to 68.80% from 73.60%. Percent remains intermediate overbought and is trending down.
Percent of TSX Composite stocks increased last week to 48.80% from 46.80%. Percent remains in an intermediate uptrend.
The Dow Jones Industrial Average slipped 8.08 points (0.04%) last week. Intermediate trend remains up. The Average remains above its 20 day moving average. Strength relative to the S&P 500 Index improved to Neutral from Negative. Technical score improved to 2.5 from 2.0 out of 3.0. Short term momentum indicators are trending up, but are showing early signs of peaking.
Bullish Percent Index for Dow Jones Industrial Average stocks increased last week to 80.00% from 73.33% and remained above its 20 day moving average. The Index remains intermediate overbought.
Bullish Percent Index for NASDAQ Composite Index increased last week to 60.04% from 58.61% and remained above its 20 day moving average. The Index remains intermediate overbought.
The NASDAQ Composite Index added 7.56 points (1.53%) last week. Intermediate trend remains up. The Index remains above its 20 day moving average. Strength relative to the S&P 500 Index remains positive. Technical score remains at 3.0 out of 3.0. Short term momentum indicators are trending up, but show early signs of peaking.
The Russell 2000 Index added 1.57 points (0.13%) last week. Intermediate trend remains up. The Index remains above its 20 day moving average. Strength relative to the S&P 500 Index changed to Positive from Neutral. Technical score improved to 3.0 from 2.5 out of 3.0. Short term momentum indicators are trending up, but are overbought and showing early signs of peaking.
The Dow Jones Transportation Average slipped 6.64 points (1.17%) last week. Intermediate trend remains Neutral. The Average remains above its 20 day moving average. Strength relative to the S&P 500 Index remains negative. Technical score remains at 1.5 out of 3.0. Short term momentum indicators are trending down.
The Australia All Ordinaries Composite Index added 52.85 points (0.90%) last week. Intermediate trend remains up. The Index remains above its 20 day moving average. Strength relative to the S&P 500 Index changed to Neutral from Positive. Technical score slipped to 2.5 from 3.0 out of 3.0. Short term momentum indicators are overbought, but show mixed trends.
The Nikkei Average added 465.44 points (2.54%) last week. Intermediate trend remains up. The Average remains above its 20 day moving average. Strength relative to the S&P 500 Index remains positive. Technical score remains at 3.0 out of 3.0. Short term momentum indicators are trending up, but are overbought.
Europe 350 iShares slipped $0.02 (0.04%) last week. Intermediate trend remains up. Units remain above their 20 day moving average. Strength relative to the S&P 500 Index remains Positive. Technical score remains at 3.0 out of 3.0. Short term momentum indicators are trending up, but are overbought and showing early signs of peaking.
The Shanghai Composite Index added 63.39 points (1.95%) when trading resumed in mid-week. Intermediate trend remains down. The Index remains above its 20 day moving average. Strength relative to the S&P 500 Index changed to Neutral from Negative. Technical score improved to 1.5 from 1.0 out of 3.0. Short term momentum indicators are trending up.
iShares Emerging Markets added $0.07 (1.72%) last week. Intermediate trend remains up. Units remain above their 20 day moving average. Strength relative to the S&P 500 Index changed to Neutral from Negative. Technical score improved to 2.5 from 2.0 out of 3.0. Short term momentum indicators are trending up.
Currencies
The U.S. Dollar Index gained 0.89 (0.94%) last week. Intermediate trend remains up. The Index moved above its 20 day moving average. Short term momentum indicators are mixed.
The Euro fell 1.74 91.53%) last week. Intermediate trend remains down. The Euro moved below its 20 day moving average. Short term momentum indicators are mixed.
The Canadian Dollar gained US 0.29 cents (0.36%) last week. Intermediate trend remains down. The Canuck Buck moved above its 20 day moving average. Short term momentum indicators are mixed.
The Japanese Yen fell 0.39 (0.46%) last week. Intermediate trend remains down. The Yen remains below its 20 day moving average. Short term momentum indicators are mixed.
Commodities
Daily Seasonal/Technical Commodities Trends for February 27th
The CRB Index slipped 0.68 (0.68%) last week. Intermediate trend remains down. The Index moved below its 20 day moving average. Strength relative to the S&P 500 Index remains negative. Technical score fell to 0.0 from 1.0 out of 3.0. Short term momentum indicators are trending down.
Gasoline added $0.13 per gallon (7.93%) last week. Intermediate trend remains up. Gas remains above its 20 day moving average. Strength relative to the S&P 500 Index remains positive. Technical score remains at 3.0 out of 3.0. Short term momentum indicators are trending up.
Crude Oil fell $1.05 per barrel (2.07%) last week. Intermediate trend remains neutral. Crude moved below its 20 day moving average. Strength relative to the S&P 500 Index remains neutral. Technical score dropped to 1.0 from 2.0 out of 3.0. Short term momentum indicators are trending down.
Natural Gas dropped $0.22 (7.46%) last week. Intermediate trend remains down. Natural gas fell below its 20 day moving average. Strength relative to the S&P 500 Index changed to Neutral from Positive. Technical score dropped to 0.5 from 2.0 out of 3.0. Short term momentum indicators are trending down.
The S&P Energy Index fell 11.56 points (1.96%) last week. Intermediate trend remains up. The Index fell below its 20 day moving average. Strength relative to the S&P 500 Index changed to Negative from Neutral. Technical score dropped to 1.0 from 2.5 out of 3.0. Short term momentum indicators are trending down.
The Philadelphia Oil Services Index dropped 4.50 points (2.21%) last week. Intermediate trend remains down. The Index fell below its 20 day moving average. Strength relative to the S&P 500 Index remains Neutral. Technical score fell to 0.5 from 1.5 out of 3.0. Short term momentum indicators are trending down.
Gold added $8.20 per ounce (0.68%) last week. Intermediate trend remains up. Gold remains below its 20 day moving average. Strength relative to the S&P 500 Index remains negative. Technical score remains at 1.0 out of 3.0. Short term momentum indicators turned up on Friday.
Silver added $0.24 per ounce (1.48%) last week. Intermediate trend remains up. Silver remains below its 20 day moving average. Strength relative to the S&P 500 Index remains negative. Technical score remains at 1.0 out of 3.0. Short term momentum indicators turned up on Friday. Strength relative to Gold improved to Neutral from Negative.
The AMEX Gold Bug Index added 7.79 points (4.23%) last week. Intermediate trend remains down. The Index moved above its 20 day moving average. Strength relative changed to Neutral from Negative. Technical score improved to 1.5 from 0.0 out of 3.0. Short term momentum indicators have just turned up. Strength relative to Gold has turned positive.
Platinum added $16.10 per ounce (1.38%) last week. Intermediate trend remains down. PLAT remains below its 20 day MA. Strength relative to S&P 500 Index remains negative. Score: 0.0
Palladium gained $39.25 points (5.04%) last week. Intermediate trend changed to up from down. PALL moved above its 20 day moving average. Strength relative to the S&P 500 Index changed to positive from negative. Technical score rose to 3.0 from 1.0. Momentum trends up.
Copper added $0.13 per lb. (5.02%) last week. Intermediate trend changed to Up from Neutral. Copper remains above its 20 day moving average. Strength relative to the S&P 500 Index changed to Positive from Neutral. Technical score improved to 3.0 from 2.0 out of 3.0. Short term momentum indicators are trending up. ‘Tis the season for strength.
The TSX Metals & Mining Index added another 33.84 points (4.86%) last week. Intermediate trend remains up. The Index remains above its 20 day moving average. Strength relative to the S&P 500 Index remains positive. Technical score remains at 3.0 out of 3.0. Short term momentum indicators are trending up, but are overbought.
Lumber dropped $8.70 (2.87%) last week. Trend remains down. Lumber remains below its 20 day MA. Strength relative to S&P 500 Index remains negative. Technical score remains at 0.0.
The Grain ETN added $0.28 (0.77%) last week. Intermediate trend remains Neutral. Units remain above their 20 day moving average. Strength relative to the S&P 500 Index changed to Neutral from Negative. Technical score improved to 2.0 from 1.5. Momentum : Up
The Agriculture ETF fell $0.51 (0.91%) last week. Intermediate trend remains up. Units remain above their 20 day moving average. Strength relative to the S&P 500 Index changed to Neutral from Positive. Technical score slipped to 2.5 from 3.0 out of 3.0. Short term momentum indicators are overbought and have started to trend down.
Interest Rates
The yield on 10 year Treasuries fell 13.1 basis points (6.14%) last week. Intermediate trend remains down. Yield remains above its 20 day moving average. Short term momentum indicators are trending down.
Conversely price of the long term Treasury ETF gained $2.99 (2.36%) last week. Price remains below its 20 day moving average.
Other Issues
The VIX Index fell 0.96 (6.14%) last week. Intermediate trend changed to down from up on a move below 14.01. The Index remains below its 20 day moving average.
Economic news this week is expected to show a slowing in U.S. economic growth
Earnings reports are not significant market movers this week. Focus in the U.S. is on Costco and the focus in Canada is on Bank of Nova Scotia.
Short and intermediate technical indicators for most equity markets and sectors are overbought and showing early signs of peaking/rolling over.
International uncertainties remain on the radar screen, most notably in Ukraine and Greece. Flash PMI reports from China and central bank interest rate announcements from the U.K and the Eurozone are possible market movers
Seasonal influences turn positive for economic sensitive sectors (Consumer Discretionary, Financials, Industrials, Materials, Energy) early in March and remain positive until early May, particularly during U.S. President Pre-election years. Best performing sub-sectors in March during the past 24 periods were Retail, Steel, Transportation and Chemicals.
Historically, the month of March is one of the better months for North American equity performance. During the past 20 periods, the S&P 500 Index gained an average of 1.7% per period and was profitable 75% of the time. The Dow Jones Industrial Average gained an average of 1.5% and was profitable 75% of the time. The NASDAQ Composite Index gained an average of 0.8% and was profitable 58% of the time.
Colder than average weather in eastern North America is slowing North American economic activity in the first quarter. It is temporary and sets the stage for a rebound in economic activity in spring.
Currency and interest rate fluctuation also could influence equity markets this week. Major currencies (U.S. Dollar Index, Euro, Canadian Dollar, Japanese Yen) show signs of trading sideways. Notably, the U.S. Dollar Index probably peaked at 95.85 six weeks ago. Also, U.S. Treasury prices continue to show signs of peaking six weeks ago.
Sectors
Daily Seasonal/Technical Sector Trends for February 27th
Special Free Services available through www.equityclock.com
Equityclock.com is offering free access to a data base showing seasonal studies on individual stocks and sectors. The data base holds seasonality studies on over 1000 big and moderate cap securities and indices. To login, simply go to http://www.equityclock.com/charts/
Below are examples:
FP Trading Desk Headline
FP Trading Desk headline reads, “Why David Rosenberg says to avoid government bonds”. Following is a link:
Disclaimer: Comments, charts and opinions offered in this report by www.timingthemarket.ca and 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. Don and Jon Vialoux are Research Analysts with Horizons ETFs Management (Canada) Inc. All of the views expressed herein are the personal views of the authors and are not necessarily the views of Horizons ETFs Management (Canada) Inc., although any of the recommendations found herein may be reflected in positions or transactions in the various client portfolios managed by Horizons ETFs Management (Canada) Inc.
Individual equities mentioned in StockTwits are not held personally or in HAC.
Horizons Seasonal Rotation ETF HAC February 27th 2015
by Don Vialoux, EquityClock.com
