The Bottom Line
Broadly based U.S. equity indices moved higher last week despite release of mixed first quarter reports on Friday. Notably stronger were the money center banks and their related ETFs. After opening weaker on news, they closed significantly higher.
Most international equity indices outperformed broadly based U.S. equity indices last week including the Canadian, Australian, European and Emerging Markets indices.
Technical indicators show that most equity indices are intermediate and long term Overbought, but have yet to show signs of rolling over.
Consensus for Earnings and Revenues for S&P 500 Companies
Analysts slightly increased fourth quarter earnings and revenue estimates since our last report on January 9th. According to www.factset.com fourth quarter earnings are expected to decrease 3.9% (versus previous decrease of 4.1%) and revenues are expected to increase 3.9% (versus previous increase of 3.8%). For all of 2022 earnings are expected to increase 4.8% (versus previous increase of 4.7%) and revenues are expected to increase 10.3% (versus previous 10.4%).
Preliminary earnings estimates for 2023 continued moving lower. According to www.factset.com first quarter 2023 earnings are expected to decrease 0.6% (versus previous decrease at 0.1%) but revenues are expected to increase 3.1% (versus previous increase of 3.8%). Second quarter 2023 earnings are expected to decrease 0.7% (versus previous decrease at 0.5%) and revenues are expected to increase 0.7% (versus previous increase at 0.9%). For all of 2023, earnings are expected to increase 4.6% (versus previous increase of 4.8%) and revenues are expected to increase 3.2%.
Economic News This Week
Martin Luther King Jr. Holiday in the U.S. on Monday. U.S. equity markets are closed.
Canadian December Consumer Price Index released at 8:30 AM EST on Tuesday is expected to decline 0.5% versus a gain of 0.1% in November. On a year-over-year basis, December CPI is expected to increase 6.3% versus a gain of 6.8% in November.
December Retail Sales released at 8:30 AM EST on Wednesday are expected to drop 0.8% versus a decline of 0.6% in November. Excluding auto sales, December Retail Sales are expected to decline 0.4% versus a decline of 0.2% in November.
December Producer Price Index released at 8:30 AM EDT on Wednesday is expected to decrease 0.1% versus a gain of 0.3% in November. On a year-over-year basis, December Producer Price Index is expected to increase 6.8% versus a gain of 7.4% in November. Excluding food and energy, December Producer Price Index is expected to increase 0.1% versus a gain of 0.4% in November. On a year-over-year basis, core December Producer Price Index is expected to increase 5.9% versus a gain of 6.2% in November.
December Capacity Utilization released at 9:15 AM EST on Wednesday is expected to slip to 79.6 from 79.7 in November. December Industrial Production is expected to slip 0.1% versus a decline of 0.2% in November.
Beige Book is released at 2:00 PM EST on Wednesday
December Housing Starts released at 8:30 AM EST on Thursday are expected to drop to 1.385 million units from 1.427 million units in November.
January Philly Fed Index released at 8:30 AM EST on Thursday is expected to drop to -11.0 versus a drop to 13.8 in December.
December Canadian Retail Sales released at 8:30 AM EST on Friday are expected to drop 0.5% versus a gain of 1.4% in November. Excluding auto sales December Canadian Retail Sales are expected to versus a gain of 1.7% in November.
December Existing Home Sales released at 10:00 AM EST on Friday are expected to slip to 3.95 million units from 4.09 million units in November.
Selected Earnings News This Week
Focus this week is on reports by Financial Services companies. Twenty six S&P 500 companies (including two Dow Jones Industrial companies) are scheduled to release results.
Traderās Corner
Equity Indices and Related ETFs
Daily Seasonal/Technical Equity Trends for January 13th 2023
Green: Increase from previous day
Red: Decrease from previous day
Commodities
Daily Seasonal/Technical Commodities Trends for January 13th 2023
Green: Increase from previous day
Red: Decrease from previous day
Sectors
Daily Seasonal/Technical Sector Trends for January 13th 2023
Green: Increase from previous day
Red: Decrease from previous day
Technical Scores
Calculated as follows:
Intermediate Uptrend based on at least 20 trading days: Score 2
Ā Ā Ā Ā Ā Ā Ā Ā Ā (Higher highs and higher lows)
Intermediate Neutral trend: Score 0
Ā Ā Ā Ā Ā Ā Ā Ā Ā (Not up or down)
Intermediate Downtrend: Score -2
Ā Ā Ā Ā Ā Ā Ā Ā Ā (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 ā2
Above 20 day moving average: Score 1
At 20 day moving average: Score: 0
Below 20 day moving average: ā1
Up trending momentum indicators (Daily Stochastics, RSI and MACD): 1
Mixed momentum indicators: 0
Down trending momentum indicators: ā1
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
The S&P 500 Index closed above its 200 day moving average.
Lockheed Martin $LMT an S&P 100 stock moved below intermediate support at $455.21. The stock was downgraded by Goldman Sachs.
General Dynamics $GD an S&P 100 stock moved below $241.92 completing a Head & Shoulders pattern.
Netflix $NFLX a NASDAQ 100 stock moved above $332.72 extending an intermediate uptrend.
Saputo $SAP.TO a TSX 60 stock moved above $35.86 extending an intermediate uptrend.
Links offered by valued providers
Mark Leibovitās weekly column
Bitcoin, Gold, US Dollar, Stock Markets ā HoweStreet
Michael Campbellās Money Talks for January 14th
Michael Campbellās MoneyTalks ā Complete Show (mikesmoneytalks.ca)
2023 Outlook by Martin Pring and Bruce Fraser
2023 Equity Market Outlook | Martin Pring & Bruce Fraser (01.12.23) ā YouTube
Charting First Quarter Market Outlook: Comments by Mish Schneider, Greg Schnell and Tom Bowley
Charting Forward: Q1 Market Outlook (01.13.23) ā YouTube
āFive charts to focus onā by Larry Tentareli
5 Charts To Focus On | Larry Tentarelli | Your Daily Five (01.13.23) ā YouTube
David Keller discusses āFour scenarios for the S&P 500ā.
The Four Scenarios for the S&P 500 | The Mindful Investor | StockCharts.com
Arthur Hill discusses āRelative seasonality and Monthly Equity Curveā
Relative Seasonality and a Monthly Equity Curve | Artās Charts | StockCharts.com
Greg Schnell discusses āStock market rallies:Is the light switch turning onā?
Stock Market Rallies: Is This Light Switch Turning On? | The Canadian Technician | StockCharts.com
Tyler Wood discusses āChanging Tides for Risk Assetsā.
Changing Tides for Risk Assets | Tyler Wood, CMT | GoNoGo Charts (01.12.23) ā YouTube
Victor Adairās Trading Notes
https://victoradair.ca/trading-desk-notes-for-january-14-2023/
Links from Mark Bunting and www.uncommonsenseinvesting.com
Four Top Internet Stock Ideas ā Uncommon Sense Investor
Best Stock Ideas for 2023 From Our All-Star Roster ā Uncommon Sense Investor
Central Bank Losses Make Them Buy Record Amounts of Gold | dlacalle.com
Investors look for 2023 outlooks from companies as earnings season looms (yahoo.com)
Weekly Technical Scoop from David Chapman and www.EnrichedInvesting.com
S&P 500 Momentum Barometers
The intermediate term Barometer slipped 0.26 on Friday, but gained 9.20 last week to 77.00. It remains Overbought. Short term trend is up.
The long term Barometer slipped 0.40 on Friday, but gained 8.60 last week to 66.20. It changed from Neutral to Overbought on a move above 60.00. Short term trend is up.
TSX Momentum Barometers
The intermediate term Barometer added 2.54 on Friday and gained 10.59 last week to 75.00. It remains Overbought. Short term trend is up.
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The long term Barometer advanced 2.54 on Friday and gained 11.87 last week to 66.53. It changed from Neutral to Overbought on a move above 60.00. Short term trend is up.
Disclaimer: Seasonality ratings 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
