by Don Vialoux, EquityClock.com
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The Bottom Line
North American equity indices were higher last week. The S&P 500 Index and TSX Composite reached all-time highs on Friday. Greatest influences on North American equity markets remain evidence of a possible third wave of the coronavirus (negative) and continued expansion of distribution of a vaccine (positive).
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Observations
The S&P 500 Index continues to recover during its strongest eight week period of seasonal strength for the year from mid-March to the first week in May.
The third distribution of COVID 19 relief cheques by the U.S. government continues. The third distribution started in mid-March and is expected to trigger additional purchases of equities, Exchange Traded Funds and mutual funds.
Short term short term indicators for U.S. equity indices, commodities and sectors (20 day moving averages, short term momentum indicators) moved higher again late last week (notably on Thursday).
Intermediate term technical indicator for U.S. equity markets (e.g. Percent of S&P 500 stocks trading above their 50 day moving average) moved higher again last week. It remained Extremely Overbought. See Barometer chart at the end of this report.
Long term technical indicator for U.S. equity markets (e.g. Percent of S&P 500 stocks trading above their 200 day moving average) also moved higher again last week. It remained Extremely Overbought. See chart at the end of this report.
Short term momentum indicators for Canadian indices and sectors moved higher last week
Medium term technical indicator for Canadian equity markets moved higher last week. It remained Overbought. See Barometer chart at the end of this report.
Long term technical indicator for Canadian equity markets (i.e. Percent of TSX stocks trading above their 200 day moving average) also moved higher last week. It remained Overbought. See Barometer chart at the end of this report.
Consensus estimates for earnings by S&P 500 companies continued to increase last week. According to www.FactSet.com earnings in the first quarter of 2021 on a year-over-year basis are expected to increase 23.6% (versus previous estimate of 23.3% last week) and revenues are expected to increase 6.3%. Earnings in the second quarter are expected to increase 52.5% (versus previous estimate at 51.9%) and revenues are expected to increase 16.7%. Earnings in the third quarter are expected to increase 18.8% (versus previous estimate at 18.3%) and revenues are expected to increase 10.1%. Earnings in the fourth quarter are expected to increase 14.5% (versus previous estimate at 13.9%) and revenues are expected to increase 7.5%. Earnings for all of 2021 are expected to increase 25.9% (versus previous estimate at 25.4%) and revenues are expected to increase 9.9% (versus previous estimate at 9.6%).
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Economic News This Week
Response by U.S. equity futures to the U.S. March Employment Report released at 8:30 AM EDT on Friday was positive. Consensus was an increase in Non-farm Payrolls of 647,000 versus an increase of 418,000 in February. Actual was an increase of 916,000.
February Factory Orders to be released at 10:00 AM EDT on Monday are expected to slip 0.5% versus a gain of 2.6% in January.
March Non-Manufacturing ISM to be released at 10:00 AM EDT on Monday is expected to increase from 55.3 in February to 58.5.
Canadian February Trade to be released at 8:30 AM EDT on Wednesday is expected to slip to $1.0 billion from $1.4 billion in January.
March Producer Price Index to be released at 8:30 AM EDT on Friday is expected to increase 0.5% versus a gain of 0.5% in February. Excluding food and energy, March Producer Price Index is expected to increase 0.3% versus a gain of 0.2% in February.
Canadian March Employment to be released at 8:30 AM EDT on Friday is expected to increase 90,000 versus a gain of 259,200 in February. March Unemployment Rate is expected to slip from 8.2% in February to 8.0%.
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Selected Earnings News This Week
Quiet week! Three S&P 500 companies are scheduled to report quarterly results: Paychex on Tuesday, Constellation Brands on Thursday and Conagra on Thursday.
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Traderās Corner
Equity Indices and Related ETFs
Daily Seasonal/Technical Equity Trends for April 1st 2021
Green: Increase from previous day
Red: Decrease from previous day
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Commodities
Daily Seasonal/Technical Commodities Trends for April 1st 2021
Green: Increase from previous day
Red: Decrease from previous day
Sectors
Daily Seasonal/Technical Sector Trends for April 1st 2021
Green: Increase from previous day
Red: Decrease from previous day
All seasonality ratings are based on performance relative to the S&P 500 Index
The Canadian Technician
Greg Schnell discusses āLooking Renewedā. Following is a link:
Looking Renewed ! | The Canadian Technician | StockCharts.com
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Technical Scoop
Thank you to David Chapman and www.EnrichedInvesting.com for a link to their weekly comment. Headline reads, āArchego liquidation, Biden Stimulus, Golden Cycle, Market Bull, Fed backingā. Following is a link:
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Technical Scores
Calculated as follows:
Intermediate Uptrend based on at least 20 trading days: Score 2
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Intermediate Neutral trend: Score 0
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Intermediate Downtrend: Score -2
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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 ā2
Above 20 day moving average: Score 1
At 20 day moving average: Score: 0
Below 20 day moving average: ā1
Up trending momentum indicators (Daily Stochastics, RSI and MACD): 1
Mixed momentum indicators: 0
Down trending momentum indicators: ā1
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
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Changes Last Week
Technical Notes for Thursday April 1st
TSX Composite Index closed above its previous all-time closing high at 18,983.10
Ditto for the TSX 60 Index above its previous all-time closing high at 1,130.83!
Micron (MU), a NASDAQ 100 stock gained $4.20 to $92.41 after reporting higher than consensus fiscal second quarter sales and earnings after the close yesterday
Microsoft (MSFT), a Dow Jones Industrial Average stock gained $6.58 to 242.35 after winning a U.S. Army contract valued at $21.9 billion to produce AR handsets.
KLA Tencor (KLAC), a NASDAQ 100 stock moved above $341.28 to an all-time high extending an intermediate uptrend.
Lam Research (LRCX), a NASDAQ 100 stock moved above $602.14 to an all-time high extending an intermediate uptrend.
Salesforce.com (CRM), an S&P 100 stock moved above $218.17 completing a double bottom pattern.
Copart (CPRT), a NASDAQ 100 stock moved above $112.32 completing a double bottom pattern.
Water Resources ETF (PHO) moved above $49.67 to an all-time high extending an intermediate uptrend.
Canadian Pacific (CP), a TSX 60 stock moved above Cdn$481.72 to an all-time high extending an intermediate uptrend.
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S&P Momentum Barometers
The intermediate Barometer added 3.61 on Thursday and 3.20 last week to 85.97. It remains Extremely Overbought
The long term Barometer gained 0.43 on Thursday and 0.80 last week to 94.39. It remains Extremely Overbought.
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TSX Momentum Barometers
The intermediate Barometer added 9.57 on Thursday and 8.46 last week to 76.08. It remains Overbought.
The long term Barometer added 1.44 on Thursday and 12.28 last week to 79.80. It remains Overbought.
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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
This post was originally publised at Vialoux's Tech Talk.
