Tech Talk for Monday July 25th 2022

The Bottom Line

Broadly based U.S. equity indices including S&P 500 Index, Dow Jones Industrial Average, NASDAQ Composite Index and Russell 2000 completed double bottom patterns last week.

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Earnings and Revenue Outlook for S&P 500 companies

Consensus earnings and revenue estimates for S&P 500 companies on a year-over-year basis in the second quarter of 2022 increased significantly last week. Over-all results reported by 20% of S&P 500 companies exceeded consensus estimates. According to www.FactSet.com consensus for second quarter earnings on a year-over-year basis calls for an increase of 4.8% (versus 4.2% last week) and consensus for revenues calls for an increase of 10.9% (versus 10.2% last week).

Consensus earnings estimates for S&P 500 companies beyond the second quarter on a year-over-year basis dropped significantly last week while consensus revenues increased slightly. According to www.FactSet.com earnings in the third quarter are expected to increase 9.2% (versus 10.1% last week) and revenues are expected to increase 9.8% (versus 9.5% last week). Earnings in the fourth quarter are expected to increase 8.7% (versus 9.2% last week) and revenues are expected to increase 7.4% (versus 7.2% last week). Earnings on a year-over-year basis for all of 2022 are expected to increase 9.8% (versus 9.9% last week) and revenues are expected to increase 10.8% (versus 10.7% last week).

Economic News This Week

Focuses this week are on FOMC meeting on Wednesday and PCE Price Index on Friday.

June U.S. Home Sales released at 10:00 AM EDT on Tuesday is expected to slip to 666,000 units from 696,000 units in May.

June Durable Goods Orders released at 8:30 EDT on Wednesday is expected to slip 0.5% versus a gain of 0.8% in May. Excluding Transportation Orders, June Durable Goods are expected to increase 0.3% versus a gain of 0.7% in May.

FOMC statement on interest rates is released at 2:00 PM EDT on Wednesday. Consensus calls for another 0.75% increase in the Fed Fund Rate. Press conference is held at 2:30 PM EDT.

Second quarter U.S. Real GDP released at 8:30 AM EDT on Thursday is expected to increase 0.4% versus a drop of 1.6% in the first quarter.

June PCE Price Index is released at 8:30 AM EDT on Friday. May Index was 6.3%. Consensus for Core PCE Price Index is unchanged from May at 4.7%.

June Personal Income released at 8:30 AM EDT on Friday is expected to increase 0.5% versus a gain of 0.5% in May. June Personal Spending is expected to increase 0.9% versus a gain of 0.2% in May.

Canadian May GDP released at 8:30 AM EDT on Friday is expected to increase 0.3% versus a gain of 0.3% in April.

Chicago July Purchasing Managers Index released at 9:45 AM EDT on Friday are expected to remain unchanged from June at 56.0.

July Michigan Consumer Sentiment released at 10:00 AM EDT on Friday is expected to remain unchanged from June at 51.1

Selected Earnings News This Week

Twenty one percent of S&P 500 companies have reported quarterly results to date. Another 35% are expected to report this week (including 12 Dow Jones Industrial Average companies).

Nine TSX 60 companies are scheduled to report quarterly results this week.

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Trader’s Corner

Equity Indices and Related ETFs

Daily Seasonal/Technical Equity Trends for July 22nd 2022

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Green: Increase from previous day

Red: Decrease from previous day

Commodities

Daily Seasonal/Technical Commodities Trends for July 22nd 2022

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Green: Increase from previous day

Red: Decrease from previous day

Sectors

Daily Seasonal/Technical Sector Trends for July 22nd 2021

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Green: Increase from previous day

Red: Decrease from previous day

All seasonality ratings are based on performance relative to the S&P 500 Index (except TSX)

Links offered by valued providers

Mark Leibovit asks “Is buying oil dip a good idea”?

Is Buying Oil Dip a Good Idea? – HoweStreet

Greg Schnell says “Sector Rotation Model is working nicely

https://stockcharts.com/articles/canada/2022/07/sector-rotation-model-is-worki-351.html

Michael Campbell’s Money Talks for July 23rd

July 23rd Episode (mikesmoneytalks.ca)

David Keller says “It’s all about the 50 day moving average”.

It’s All About That 50-Day Moving Average | The Mindful Investor | StockCharts.com

Tom Bowley says “These three earnings massacre last night had one thing in common”.

These 3 Earnings Massacres Last Night Had 1 Thing in Common | Trading Places with Tom Bowley | StockCharts.com

Mish Schneider asks “What will drive the commodities market”?

Weekend Daily: What Will Drive the Commodities Market? | Mish’s Market Minute | StockCharts.com

Bob Hoye discusses “U.S. Home Builder Sentiment and the Laffer Curve

US Home Builder Sentiment, Laffer Curve – HoweStreet

Links offered by Mark Bunting and www.uncommonsenseinvestor.com

10 Top Signal Strength Stocks from Hedgeye’s Keith McCullough – Uncommon Sense Investor

Big Picture: Stocks, Economy, the Loonie, Inflation & More – Uncommon Sense Investor

Leveraged Speculation Shifts to the Short Side – Uncommon Sense Investor

Jeff Sniders says “A nasty recession is coming”.

https://www.youtube.com/watch?v=PHYZ4YJkzvE

More links to follow.

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

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Technical Notes for Friday

Long term U.S. Treasury prices $TLT moved above $117.75 completing a reverse Head & Shoulders pattern.

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Conversely, yield on 10 year Treasuries moved below 2.75% completing a Head & Shoulders pattern.

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Real Estate ETFs on both sides of the border are responding to lower interest rates. U.S. Real Estate iShares $IYR moved above $95.00 completing a bottoming pattern. TSX Real Estate iShares $XRE.TO moved above $17.19 completing a double bottom pattern.

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Aerospace & Defense iShares $ITA moved above $100.81 completing a base building pattern.

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Australia iShares $EWA moved above intermediate resistance at $21.98

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S&P 100 stocks breaking intermediate resistance/setting uptrends included $HD, $USB $MDT $NEE and $UPS

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IDEXX $IDXX a NASDAQ 100 moved above $398.96 extending an intermediate uptrend.

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Brookfield Infrastructure $BIP a TSX 60 stock moved above US$39.07 setting an intermediate uptrend.

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Corn ETN $CORN moved below $23.17 extending an intermediate downtrend.

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S&P 500 Momentum Barometers

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The intermediate term Barometer slipped 0.80 on Friday but advanced 27.60 last week to 56.20. It changed from Oversold to Neutral on a move above 40.00. Trend is up.

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The long term Barometer was unchanged on Friday, but added 3.00 last week to 22.80. It remains Oversold. Trend is up.

TSX Momentum Barometers

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The intermediate term Barometer was unchanged on Friday, but advanced 19.33 last week to 39.92. It remains Oversold. Trend is up.

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The long term Barometer slipped 1.26 on Friday, but added 5.88 last week to 27.73. It remains Oversold. Trend is up.

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

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