by Don Vialoux, EquityClock.com
The Bottom Line
North American equity indices were mixed/slightly lower last week. 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 stalled last week 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 was ramped up last week 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) deteriorated slightly last week and remained at elevated levels.
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 lower 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 lower last week. It remained Extremely Overbought. See Barometer chart at the end of this report.
Short term momentum indicators for Canadian indices and sectors deteriorated slightly last week
Medium term technical indicator for Canadian equity markets moved lower last week. It changed from Extremely Overbought to Overbought on a move below 80.00. 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) was virtually unchanged 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. Twenty five percent have reported results to date with 84% reporting higher than consensus earnings estimates and 77% 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 33.8% (versus previous estimate at 30.2% last week) and revenues are expected to increase 7.5% (versus previous estimate at 63% last week). Earnings in the second quarter are expected to increase 55.4% (versus previous estimate at 54.6%) and revenues are expected to increase 17.4% (versus previous estimate at 17.0%). Earnings in the third quarter are expected to increase 20.3% (versus previous estimate at 20.0%) and revenues are expected to increase 10.6% (versus previous estimate at 10.3%). Earnings in the fourth quarter are expected to increase 15.6% (versus previous estimate at 15.4%) and revenues are expected to increase 7.8% (versus previous estimate at 7.6%). Earnings for all of 2021 are expected to increase 29.0% (versus previous estimate at 27.9%) and revenues are expected to increase 10.3% (versus previous estimate at 10.0%)
Economic News This Week
March Durable Goods Orders to be released at 8:30 AM EDT on Monday are expected to increase 2.5% versus a decline of 1.2% in February. Excluding transportation orders, March Durable Goods Orders are expected to increase 1.6% versus a decline of 0.9% in February.
Canadian February Retail Sales to be released at 8:30 AM EDT on Wednesday are expected to drop 3.0% versus a decline of 1.1% in January. Excluding auto sales, February Retail Sales are expected to increase 2.6% versus a drop of 1.2% in January.
FOMC meeting results are released at 2:00 AM EDT on Wednesday. Fed Fund Rate is expected to remain unchanged at 0.00-0.25%. Press conference is offered at 2:30 PM EDT.
U.S. first quarter real GDP to be released at 8:30 AM EDT on Thursday is expected to grow at a 6.5% annual rate versus a 4.3% annual rate in the fourth quarter of 2020.
March Personal Income to be released at 8:30 AM EDT on Friday is expected to increase 20.3 versus a decline of 7.1% in February. March Personal Spending is expected to increase 4.3% versus a decline of 1.0% in February.
Canadian February GDP to be released at 8:30 AM EDT on Friday is expected to increase 0.5% versus a gain of 0.7% in January.
April Chicago PMI to be released at 9:45 AM EDT on Friday is expected to slip to 65.5 from 66.3 in March.
Michigan April Consumer Sentiment to be released at 10:00 AM EDT on Friday is expected to increase from March at 86.5 to 88.0.
Selected Earnings News This Week
Report season by S&P 500 companies reaches a peak this week. Another 181 companies (including 10 Dow Jones Industrial Average companies) are scheduled to report.
Reports by TSX 60 companies start to appear in volume this week.
Trader’s Corner
Equity Indices and Related ETFs
Daily Seasonal/Technical Equity Trends for April 23nd 2021
Green: Increase from previous day
Red: Decrease from previous day
Commodities
Daily Seasonal/Technical Commodities Trends for April 23nd 2021
Green: Increase from previous day
Red: Decrease from previous day
Sectors
Daily Seasonal/Technical Sector Trends for April 23nd 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 asks, “Bitcoin under 50,000 – Opportunity”? Following is a link:
Bitcoin Under $50,000 – Opportunity? | The Canadian Technician | StockCharts.com
Technical Scoop
Thank you to David Chapman and www.EnrichedInvesting.com for a link to the following comment:
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 Notes for Friday
Raytheon Technologies (RTX) an S&P 100 stock moved above $80.06 extending an intermediate uptrend.
Fiserv (FISV), a NASDAQ 100 stock moved above $126.25 to an all-time high extending an intermediate uptrend.
Commerce Bank (CM), a TSX 60 stock moved above $125.86 to an all-time high extending an intermediate uptrend.
S&P 500 Momentum Barometers
The intermediate term Barometer added 4.01 on Friday, but dropped 4.40 last week to 87.78. It remains Extremely Overbought.
The long term Barometer slipped 0.40 to 96.39 on Friday and 0.40 last week. It remains Extremely Overbought.
TSX Momentum Barometers
The intermediate term Barometer added 0.37 on Friday, but dropped 7.41 last week. It changed from Extremely Overbought to Overbought on a move below 80.00.
The long term Barometer added 1.40 on Friday, but dropped 0.38 last week. It returned above 80.00 on Friday to an Extremely Overbought level.
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.
