by Don Vialoux, EquityClock.com
The Bottom Line
North American equity indices were mixed again last week. Greatest influences on North American equity markets remain evidence of a possible third wave of the coronavirus (negative) and timing 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. On Friday, the S&P 500 Index closed at an all-time closing high, surpassing the previous record at 3,968.94.
The third distribution of COVID 19 relief cheques continues. The third series of cheques from the U.S. government, that started to be released in mid-March, are 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 late 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 from Overbought to 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 last week. It remained Extremely Overbought. See chart at the end of this report.
Short term momentum indicators for Canadian indices and sectors virtually unchanged last week
Medium term technical indicator for Canadian equity markets moved slightly lower 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) was unchanged last week. It remained Overbought. See Barometer chart at the end of this report.
Consensus estimates for earnings and revenues by S&P 500 companies continue 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 23.3% (versus previous estimate of 22.6% last week) and revenues are expected to increase 6.3% (versus previous estimate of 6.2%). Earnings in the second quarter are expected to increase 51.9% (versus previous estimate at 51.2%) and revenues are expected to increase 16.7% (versus previous estimate at 16.5%). Earnings in the third quarter are expected to increase 18.3% (versus previous estimate at 17.8%) and revenues are expected to increase 10.1% (versus previous estimate at 10.0%). Earnings in the fourth quarter are expected to increase 13.9% (versus previous estimate at 13.8%) and revenues are expected to increase 7.5% (versus previous estimate at 7.4%). Earnings for all of 2021 are expected to increase 25.4% (versus previous estimate at 24.9%) and revenues are expected to increase 9.6% (versus previous estimate at 9.5%).
The negative impact on equity prices due to quarter end rebalancing between bonds and equities by institutional investors ends early this week.
Economic News This Week
Canadian January GDP to be released at 8:30 AM EDT on Wednesday is expected to increase 0.5% versus a gain of 0.1% in December.
March Chicago PMI to be released at 9:45 AM EDT is expected to increase to 60.3 from 59.5 in February.
February Construction Spending to be released at 10:00 AM EDT is expected to drop 0.9% versus a gain of 1.7% in January.
March ISM Manufacturing to be released at 10:00 AM EDT is expected to increase to 61.2 from 60.8 in February.
North American and European equity markets are closed for the Good Friday holiday.
Despite the holiday, U.S. March Employment Reports are released at 8:30 AM EDT on Friday. March Non-farm Payrolls are expected to increase 182,000 versus a gain of 379,000 in February. March Unemployment Rate is expected to remain unchanged from February at 6.2%. March Average Hourly Earnings are expected to increase 0.2% versus a gain of 0.2% in February.
Selected Earnings News This Week
Six S&P 500 companies (including one Dow Jones Industrial Average stock: Walgreens Boots) are scheduled to release quarterly results this week.
Trader’s Corner
Equity Indices and Related ETFs
Daily Seasonal/Technical Equity Trends for March 26th 2021
Green: Increase from previous day
Red: Decrease from previous day
Commodities
Daily Seasonal/Technical Commodities Trends for March 26th 2021
Green: Increase from previous day
Red: Decrease from previous day
Sectors
Daily Seasonal/Technical Sector Trends for March 26th 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.com for a link to their weekly comment. Headline reads, “Liquidity trap, silver waves, diverging transport, mild correction, resistant high, precious support, ship chaos”. 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
Technical Notes from Friday
Telus (T), a TSX 60 stock moved below $25.04 completing a double top pattern.
Shopify (SHOP), aTSX 60 stock moved below $1.269.43 setting an intermediate downtrend.
Consumer Staples SPDRs (XLP) moved above $67.25 to an all-time high extending an intermediate uptrend.
CDW Corp (CDW), a NASDAQ 100 stock moved above $162.73 to an all-time high extending an intermediate uptrend.
Paychex (PAYX), a NASDAQ 100 stock moved above $99.25 to an all-time high extending an intermediate uptrend.
ASML Holdings (ASML), a NASDAQ 100 stock moved above $608.71 to an all-time high extending an intermediate uptrend
Accenture (ACN), an S&P 100 stock moved above $270.25 extending an intermediate uptrend.
Target (TGT), an S&P 100 stock moved above $199.25 to an all-time high extending an intermediate uptrend.
Union Pacific (UNP), an S&P 100 stock moved above $220.26 to an all-time high extending an intermediate uptrend.
CSX (CSX), an S&P 100 stock moved above $97.25 to an all-time high extending an intermediate uptrend.
American Tower (AMT), an S&P 100 stock moved above intermediate resistance at $237.98.
Changes in Seasonality Ratings relative to the S&P 500 Index
Nikkei Average: from Positive to March 28th to Negative to November 15th
Consumer Staples from Positive to March 30th to Negative to May 1st
Health Care from Negative to March 27th to Positive to June 28th
Utilities from Positive to March 30th to Negative to May 10th
TSX Technologies from Negative to March 28th to Positive to May 30th
S&P 500 Momentum Barometers
The intermediate Barometer added 6.81 on Friday and 8.22 last week to 82.77. It changed on Friday from Overbought to Extremely Overbought on a move above 80.00.
The long term Barometer gained 4.01 on Friday and 6.42 last week to 93.59. It remains Extremely Overbought.
TSX Momentum Barometers
The intermediate Barometer added 2.38 on Friday, but dropped 5.24 last week to 67.62. It remains Overbought.
The long term Barometer added 0.95 on Friday and was unchanged last week at 78.57. 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.
