by Don Vialoux, EquityClock.com
The Bottom Line
Most North American equity indices moved higher last week. All-time highs were reached at the close on Friday by the S&P 500 Index, Dow Jones Industrial Average, Dow Jones Transportation Average and the TSX Composite Index. 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 extended gains last week by reaching another all-time high, typical of performance during its strongest eight week period of seasonal strength for the year from mid-March to the first week in May. Now, the Index has moved into a mixed, choppy period of seasonal performance between early May and the second week in October
The TSX Composite Index is following history by moving higher on a real basis and by outperforming the S&P 500 Index on a relative basis between now and early June.
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$TSX Relative to the S&P 500 |
Short term short term indicators for U.S. equity indices, commodities and sectors (20 day moving averages, short term momentum indicators) increased slightly again 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) were virtually unchanged 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) moved slightly lower again last week. It remained Extremely Overbought. See Barometer chart at the end of this report.
Short term momentum indicators for Canadian indices and sectors increase slightly last week and remain overbought.
Medium term technical indicator for Canadian equity markets moved higher 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) moved slightly lower last week. It remained Overbought. See Barometer chart at the end of this report.
Consensus estimates for earnings by S&P 500 companies continued to increase last week. Eighty eight percent have reported results to date with 86% reporting higher than consensus earnings estimates and 76% 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 49.4% (versus previous estimate at 45.8% last week) and revenues are expected to increase 10.0% (versus previous estimate at 9.1% last week). Earnings in the second quarter are expected to increase 59.5% (versus previous estimate at 58.3%) and revenues are expected to increase 18.7% (versus previous estimate at 18.1%). Earnings in the third quarter are expected to increase 22.7% (versus previous estimate at 21.7%) and revenues are expected to increase 11.4% (versus previous estimate at 11.2%). Earnings in the fourth quarter are expected to increase 16.7% and revenues are expected to increase 8.6% (versus previous estimate at 8.2%). Earnings for all of 2021 are expected to increase 32.9% (versus previous estimate at 31.7%) and revenues are expected to increase 11.5% (versus previous estimate at 10.9%)
Economic News This Week
April Consumer Price Index to be released at 8:30 AM EDT on Wednesday is expected to increase 0.2% versus a gain of 0.6% in March. Excluding food and energy, April Consumer Price Index is expected to increase 0.3% versus a gain of 0.3% in March.
April Producer Price Index to be released at 8:30 AM EDT on Thursday is expected to increase 0.3% versus a gain of 1.0% in March. Excluding food and energy, April Producer Price Index is expected to increase 0.4% versus a gain of 0.7% in March.
April Retail Sales to be released at 8:30 AM EDT on Friday are expected to increase 1.0% versus a gain of 9.7% in March. Excluding auto sales, April Retail Sales are expected to increase 0.9% versus a gain of 0.4% in March.
March Canadian Wholesale Sales to be released at 8:30 AM EDT on Friday are expected to increase 1.0% versus a decline of 0.7% in February.
April Capacity Utilization to be released at 9:15 AM EDT on Friday is expected to increase to 75.1 from 74.4 in March. April Industrial Production is expected to increase 1.1% versus a gain of 1.4% in March.
March Business Inventories to be released at 10:00 AM EDT on Friday are expected to increase 0.3% versus a gain of 0.5% in February.
May Michigan Consumer Sentiment to be released at 10:00 AM EDT on Friday is expected to increase to 90.3 from 88.3 in April.
Selected Earnings News This Week
Another 18 S&P 500 companies and one Dow Jones Industrial Average company are scheduled to release quarterly results this week. Reports by TSX 60 companies wind down this week.
Trader’s Corner
Equity Indices and Related ETFs
Daily Seasonal/Technical Equity Trends for May 7th 2021
Green: Increase from previous day
Red: Decrease from previous day
Commodities
Daily Seasonal/Technical Commodities Trends for May 7th 2021
Green: Increase from previous day
Red: Decrease from previous day
Sectors
Daily Seasonal/Technical Sector Trends for May 7th 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
Following is a link to the weekly comment by David Chapman and www.EnrichedInvesting.com
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
Editor’s Note: Each of the following comments were released on StockTwits on Friday as they appeared during the day. Go to www.stocktwits.com and select EquityClock.
Pharmaceutical ETF PPH moved above $70.79 to an all-time high extending an intermediate uptrend.
Junior Gold ETF (GDXJ) moved above $51.19 extending an intermediate uptrend.
Gold stocks and related ETFs are responding to higher gold prices. Barrick Gold, a TSX 60 stock, moved above Cdn$28.88 extending an intermediate uptrend.
Another Canadian Gold stock breakout! Yamana Gold moved above Cdn$6.20 extending an intermediate uptrend.
Kirkland Lake Gold (KL), a TSX 60 stock moved above $49.69 extending an intermediate upteend
Base metal stocks continue to respond to higher copper prices. HudBay Minerals (HBM) moved above $Cdn10.67 extending an intermediate uptrend.
Italy iShares (EWI) moved above $32.45 to an all-time high extending an intermediate uptrend.
Germany iShares $EWG moved above $35.29 to an all-time high extending an intermediate uptrend.
Canadian Natural Resources (CNQ), a TSX 60 stock moved above $40.56 extending an intermediate uptrend.
North American forest product stocks continue to advance on higher than average lumber prices. Canfor moved above $33.93 extending an intermediate uptrend.
Cameco (CCJ), a TSX 60 stock moved above US$19.71 and Cdn$24.57 extending an intermediate uptrend.
TSX Energy iShares (XEG) moved above $8.21 extending an intermediate uptrend.
Lowe’s (LOW), an S&P 100 stock moved above $208.37 to an all-time high extending an intermediate uptrend.
Oracle (ORCL), an S&P 100 stock moved above $80.21 to an all-time high extending an intermediate uptrend.
S&P 500 Momentum Barometers
The intermediate term Barometer added 4.21 on Friday and 0.20 last week to 84.77. It remains Extremely Overbought.
The long term Barometer added 0.40 to 92.79 on Friday, but down 2.00 last week. It remains Extremely Overbought and is trending down.
TSX Momentum Barometers
The intermediate term Barometer added 2.01 on Friday and 11.38 last week to 76.88. It remains Overbought.
The long term Barometer added 1.00 on Friday, but slipped 2.12 last week to 76.38. 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.
