by Don Vialoux, EquityClock.com
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).
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 initiated in mid-March continues 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) remained at elevated levels last week.
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 slightly higher last week. It remained Extremely Overbought. See chart at the end of this report.
Short term momentum indicators for Canadian indices and sectors also remained elevated last week
Medium term technical indicator for Canadian equity markets moved higher again last week. It remained Extremely 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 Extremely Overbought. See Barometer chart at the end of this report.
Consensus estimates for earnings by S&P 500 companies continued to increase last week. Nine percent have reported results to date with 81% reporting higher than consensus earnings estimates and 84% reporting higher than consensus revenue estimates. According to www.FactSet.com earnings in the first quarter of 2021 on a year-over-year basis are expected to increase 30.2% (versus previous estimate at 24.5% last week) and revenues are expected to increase 6.3% (versus previous estimate at 6.3% last week). Earnings in the second quarter are expected to increase 54.6% (versus previous estimate at 53.1%) and revenues are expected to increase 17.0% (versus previous estimate at 16.7%). Earnings in the third quarter are expected to increase 20.0% (versus previous estimate at 19.2%) and revenues are expected to increase 10.3% (versus previous estimate at 10.1%). Earnings in the fourth quarter are expected to increase 15.4% (versus previous estimate at 14.8%) and revenues are expected to increase 7.6% (versus previous estimate at 7.5%). Earnings for all of 2021 are expected to increase 27.9% (versus previous estimate at 26.3%) and revenues are expected to increase 10.0% (versus previous estimate at 9.7%)
Economic News This Week
Canadian Federal Government Budget is released at 4:00 PM EDT on Monday.
Canadian March Consumer Price Index to be released at 8:30 AM EDT on Wednesday is expected to increase 0.6% versus a gain of 0.5% in February.
Bank of Canada’s interest rate policy announced at 10:00 AM EDT on Wednesday is expecting to maintain its overnight lending rate for major Canadian banks at 0.25%.
March Existing Home Sales to be released at 10:00 AM EDT on Thursday are expected to slip to 6.21 million units from 6.22 million units in February.
March Leading Economic Indicators to be released at 10:00 AM EDT on Thursday are expected to increase 0.6% versus a gain of 0.2% in February.
March New Home Sales to be released at 10:00 AM EDT on Friday are expected to increase to 880,000 units from 775,000 units in February.
Selected Earnings News This Week
Another 81 S&P 500 companies are scheduled to release quarterly results this week (including 10 Dow Jones Industrial Average companies).
Trader’s Corner
Equity Indices and Related ETFs
Daily Seasonal/Technical Equity Trends for April 16th 2021
Green: Increase from previous day
Red: Decrease from previous day
Commodities
Daily Seasonal/Technical Commodities Trends for April 16th 2021
Green: Increase from previous day
Red: Decrease from previous day
Sectors
Daily Seasonal/Technical Sector Trends for April 16th 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
Technical Scores
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
Changes Last Week
Technical Scoop
Thank you to David Chapman and www.EnrichedInvesting.com for a link to their weekly comment. Headline reads, “Misplaced fear, precious hedge, bubble joke, overbought indicators, gold breakout, copper surge, bright oil”. Following is the link:
Technical Notes for Friday April 16th
Utilities SPDRs (XLU) moved above $66.86 extending an intermediate uptrend.
Palladium ETN (PALL) moved above $257.91 extending an intermediate uptrend.
Insurance iShares (IAK) moved above $77.83 to an all-time high extending an intermediate uptrend.
Agriculture ETF (COW) moved above Cdn$59.04 to an all-time high extending an intermediate uptrend.
CGI Group (GIB), a TSX 60 stock moved above US$87.12 to an all-time high extending an intermediate uptrend.
Sun Life Financial (SLF), a TSX 60 stock moved above $65.37 to an all-time high extending an intermediate uptrend.
eBay (EBAY), a NASDAQ 100 stock moved above $64.65 to an all-time high extending an intermediate uptrend.
Check Point (CHKP), a NASDAQ 100 stock moved above $119.20 completing a double bottom pattern.
S&P 500 Momentum Barometers
The intermediate term Barometer slipped 0.39 on Friday, but added 2.20 last week to 92.18. It remains Extremely Overbought
The long term Barometer added 0.41 on Friday and 1.60 last week to 96.79. It remains Extremely Overbought.
TSX Momentum Barometers
The intermediate term Barometer slipped 0.99 on Friday and dropped 2.22 last week to 81.28. It remains Extremely Overbought.
The long term Barometer slipped 0.49 on Friday, but added 0.70 last week to 81.28. It remains Extremely Overbought.
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.
