by Don Vialoux, EquityClock.com
The Bottom Line
Most world equity indices moved higher last week. Greatest influences on North American equity markets are possibility of a fourth wave by COVID 19 (negative) and continued expansion of distribution of a vaccine (positive).
Observations
The S&P 500 Index is following its historic seasonal pattern for this time of year, a mixed, choppy period between early May and the second week in October. Average return during this period is close to zero. Note the tendency for the S&P 500 Index to decline until the third week in June followed by a recovery to the end of July. Positive returns for the May-to-October period are possible by selecting sector investments that outperform.
Short term short term indicators for U.S. equity indices and sectors (20 day moving averages, short term momentum indicators) moved higher 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 last week. It changed last week from Oversold to Neutral. See Barometer charts 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) moved higher last week. It remained Extremely Overbought. See Barometer chart at the end of this report.
Short term momentum indicators for Canadian indices and sectors moved higher last week.
Intermediate term technical indicator for Canadian equity markets moved higher last week. It changed from Neutral to 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) moved higher last week. It remained Overbought. See Barometer charts at the end of this report.
Consensus estimates for earnings by S&P 500 companies continued to increase from our report last week. According to www.FactSet.com earnings in the second quarter on a year-over-year basis are expected to increase 62.8% (versus previous estimate at 61.9%) and revenues are expected to increase 19.5% (versus previous estimate at19.4%). Earnings in the third quarter are expected to increase 23.2% (versus previous estimate at 23.0%) and revenues are expected to increase 12.1% (versus previous estimate at12.0%. Earnings in the fourth quarter are expected to increase 17.7% (versus previous estimate at 17.4%) and revenues are expected to increase 9.1% (versus previous estimate at 8.9%). Earnings for all of 2021 are expected to increase 35.2% (versus previous estimate at 34.8%) and revenues are expected to increase 12.3% (versus previous estimate at 12.1%).
Peak sales and earnings gains by S&P 500 companies into the second quarter of a Post Presidential Election Year historically have prompted the S&P 500 Index to move higher from the last week in June to the first week in August. Thereafter, the S&P 500 Index has moved into an intermediate correction when the recently elected President finds that major parts of his progressive agenda are less likely to be approved by Congress.
Economic News This Week
April Canadian GDP to be released at 8:30 AM EDT on Wednesday is expected to drop 0.8% versus a gain of 1.1% in March.
Canada Day holiday is on Thursday. Canadian markets are closed
May Construction Spending to be released at10:00 AM EDT on Thursday is expected to increase 0.4% versus a gain of 0.2% in April
June ISM Manufacturing Index to be released at 10:00 AM EDT on Thursday is expected to increase to 61.5 from 61.2 in May.
June Non-farm Payrolls to be released at 8:30 AM EDT on Friday are expected to increase to 675,000 from 559,000 in May. June Unemployment Rate is expected to drop to 5.6% from 5.8% in May. June Average Hourly Earnings are expected to increase 0.4% versus a gain of 0.5% in May.
May U.S. Trade Deficit to be released at 8:30 AM EDT on Friday is expected to increase to $70.8 billion from $68.9 billion in April.
May Canadian Trade Balance to be released at 8:30 AM EDT on Friday is expected to move to a $700 million deficit from a $590,000 surplus in April.
May Factory Orders to be released at 10:00 AM EDT on Friday are expected to increase 1.4% versus a drop of 0.6% in April.
Earnings News This Week
Another quiet week! Focus is on Micron and Walgreens Boots.
Trader’s Corner
Equity Indices and Related ETFs
Daily Seasonal/Technical Equity Trends for June 25th 2021
Green: Increase from previous day
Red: Decrease from previous day
Commodities
Daily Seasonal/Technical Commodities Trends for June 25th 2021
Green: Increase from previous day
Red: Decrease from previous day
Sectors
Daily Seasonal/Technical Sector Trends for June 25th 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 Scoop
Thank you to David Chapman and www.EnrichedInvesting for a link to their weekly comment.
Comments from “uncommon SENSE Investor”
Thank you to Mark Bunting and www.uncommoninvestor.com for a link to the enclosed video:
Headline reads, “Canadian Stocks Are Trading at a Discount, But That Doesn’t Mean You Should Buy Them” Following is the link:
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
Tony Dwyer talks about his history on Wall Street
Interesting interview taped on Feb. 27, 2020! See: https://www.youtube.com/watch?v=s1Lg2DMrRPE
Technical Notes released on Friday at
Charter Communications $CHTR a NASDAQ 100 stock moved above $712.41 to an all-time high extending an intermediate uptrend.
Nike $NKE an S&P 100 stock moved above $147.35 to an all-time high extending an intermediate uptrend.
Natural gas ETF breaking out of a massive bottoming pattern as the change in inventories falls below average through this point in the year. equityclock.com/2021/06/24/… $UNG $UNL $NG_F $UGAZ $DGAZ #NatGas
Restaurant Brands International $QSR.CA a TSX 60 stock moved below $79.75 completing a Head & Shoulders pattern.
S&P 500 Momentum Barometers
The intermediate term Barometer added 7.62 on Friday and 22.44 last week to 55.11. It changed last week from Oversold to Neutral.
The long term Barometer added 2.00 on Friday and 3.60 last week to 92.18. It remains Extremely Overbought
TSX Momentum Barometers
The intermediate Barometer slipped 1.38 on Friday, but gained 4.99 last week to 61.01. It changed last week from Neutral to Overbought on a return above 60.00.
The long term Barometer was unchanged on Friday and gained 2.99 last week. It remains 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.
