Pre-opening Comments for Monday May 15th
U.S. equity index futures were higher this morning. S&P 500 futures were up 9 points at 8:35 AM EDT.
Index futures weakened following release of the May Empire State Manufacturing Survey at 8:30 AM EDT. Consensus was a drop to -2.00 from +10.80 in June. Actual was a drop to
-31.8.
Magellan Midstream Partners advanced $8.39 to $63.80 after Oneok offered to acquire the company in a cash and share deal valued at US$18.8 billion.
![clip_image001[1]](https://timingthemarket.ca/techtalk/wp-content/uploads/2023/05/clip_image0011-6.png "clip_image001[1]")
Shake Shack added $2.42 to$67.63 after Engage Capital announced acquisition of a 6.6% stake in the company.
Charles Schwab advanced $1.17 to $50.11 after Raymond James upgraded the stock from Market Perform to Outperform.
![clip_image003[1]](https://timingthemarket.ca/techtalk/wp-content/uploads/2023/05/clip_image0031-6.png "clip_image003[1]")
Newmont Mining was unchanged at $45.85 after Newcrest Mining accepted Newmont’s takeover offer valued at US$17.5 billion.
EquityClock’s Daily Comment
Headline reads “Difficult to be bullish of stocks if the US Dollar is no longer declining”.
http://www.equityclock.com/2023/05/13/stock-market-outlook-for-may-15-2023/
The Bottom Line
Prices for most world equity indices recorded small losses last week, typical of historic technical action early in May after most first quarter reports have been released Analysts take a closer look at projections for the remainder of the year and adjust their earnings and revenue estimates accordingly. This year, they are taking a more cautious approach: Earnings and revenue estimates were reduced again last week.
As noted on CNBC late Friday, the U.S. equity market has entered a “bifurcation” pattern where a handful of big cap stocks (Think FANGG stocks plus Microsoft) are driving performance of the S&P 500 Index. The Index only trades 1.7% below its nine month high at 4,195.44 while the Equal Weight S&P 500 ETF (Symbol: RSP) trades 8.7% below its nine month high. Technical pattern by RSP is much less attractive than the technical pattern by the S&P 500 Index. Also, moves by RSP below their 50 and 200 day moving averages last week suggest short term caution.
As noted on CNBC on Friday, resolution of a “bifurcation” pattern historically has ended in a “painful experience” for investors when the outperforming securities revert to mean. As Cramer mentioned on “Mad Money” on Friday, “Prepare for another difficult week “
Investor concerns have begun to focus on expectations that the Federal Reserve will hold the Fed Fund Rate at 5.00%-5.25% for an extensive period beyond its next scheduled announcement on June 13th. Accordingly, the U.S. Dollar Index and its related ETN: UUP moved sharply higher on Friday.
Investors also are concerned that failure by Congress and the U.S. President to reach an agreement on the U.S. debt ceiling before June 1st will unsettle equity and bond markets.
Consensus for Earnings and Revenues for S&P 500 Companies
Source: www.Factset.com
Frequency of first quarter results is winding down. Another 7% of reports were released last week with 92% of companies reporting to date: 78% have reported higher than consensus earnings per share and 75% have reported higher than consensus revenues. Consensus calls for a year-over-year drop in first quarter earnings of 2.5% (versus a drop of 2.2% last week) and an increase in first quarter revenues of 4.0% (up from a gain of 3.9% last week).
Earnings estimates for the remainder of the year eased again .Consensus for the second quarter calls for a drop of 6.3% in earnings (versus a drop of 5.7% last week) and a drop of 0.4% in revenues (versus a drop of 0.1% last week). Consensus for the third quarter calls for a 0.7% increase in earnings (down from 1.2% last week) and a 1.2% increase in revenues (down from 1.5% last week). Consensus for the fourth quarter calls for an 8.1% increase in earnings (down from 8.5% last week) and a 3.4% increase in revenues (down from 3.7% last week). For all of 2023, consensus calls for an increase of 1.0% in earnings (down from 1.2% last week) and a 2.3% increase in revenues (down from 2.4% last week).
Economic News This Week
Source: www.Investing.com
May Empire State Manufacturing Survey released at 8:30 AM EDT on Monday is expected to drop to -2.00 versus a gain of 10.80 in April.
April U.S. Retail Sales released at 8:30 AM EDT on Tuesday is expected to increase 0.7% versus a drop of 0.6% in March. Excluding auto sales, April U.S. Retail Sales are expected to increase 0.3% versus a drop of 0.4% in March.
April Canadian Consumer Price Index released at 8:30 AM EDT on Tuesday is expected to increase 0.5% versus a gain of 0.5% in March. On a year-over-year basis, the Index is expected to increase 4.3% versus a gain of 4.3% in March. Excluding food and energy, April CPI is expected to increase 0.5% versus a gain of 0.5% in March. On a year-over-year basis core April CPI is expected to increase 4.4% versus a gain of 4.3% in March
April U.S. Capacity Utilization Rate released at 9:15 AM EDT on Tuesday is expected to slip to 79.7 from 79.8 in March. April Industrial Production is expected to slip 0.1% versus a gain of 0.4% in March.
March Business Inventory released at 10.00 AM EDT on Tuesday is expected to increase 0.1% versus a gain of 0.2% in February.
April U.S. Housing Starts released at 8:30 AM EDT on Wednesday are expected to slip to 1.400 million units from 1.4200 million units in March.
May Philly Fed released at 8:30 AM EDT on Thursday is expected to improve to -19.0 from -31.3 in April.
April U.S. Existing Home Sales released at 10:00 AM EDT on Thursday are expected to slip to 4.30 million units from 4.44 million units in March.
April Leading Economic Indicators released at 10:00 AM EDT on Thursday are expected to drop 0.5% versus a decline of 1.2% in March.
March Canadian Retail Sales released at 8:30 AM EDT on Friday are expected to drop 0.6% versus a decline of 0.2% in February. Excluding auto sales, March Canadian Retail Sales are expected to slip 0.1% versus a decline of 0.7% in February.
Selected Earnings News This Week
Source: www.investing.com
Trader’s Corner
Equity Indices and Related ETFs
Daily Seasonal/Technical Equity Trends for May 12th 2023
Green: Increase from previous day
Red: Decrease from previous day
Commodities
Daily Seasonal/Technical Commodities Trends for May12th 2023
Green: Increase from previous day
Red: Decrease from previous day
Sectors
Daily Seasonal/Technical Sector Trends for May 12th 2023
Green: Increase from previous day
Red: Decrease from previous day
Source for positive seasonal ratings: www.equityclock.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
The U.S. Dollar Index and its related ETN: UUP recorded strong gains last week (notably on Friday). The Canadian Dollar adjusted accordingly to the downside.
Danaher $DHR an S&P 100 stock moved below $227.00 extending an intermediate downtrend.
Schlumberger $SLB an S&P 100 stock moved below $43.82 completing a Head & Shoulders pattern..
FedEx $FDX an S&P 100 stock moved below $221.70 completing a double top pattern.
Canadian Pacific $CP.TO a TSX 60 stock moved above Cdn$111.00 to an all-time high extending an intermediate uptrend.
Links offered by valued providers
False Breakouts Developing | TG Watkins | Your Daily Five (05.11.23)
False Breakouts Developing | TG Watkins | Your Daily Five (05.11.23) – YouTube
Bitcoin Slippage: Greg Schnell May 12, 2023 at 01:27 PM
Bitcoin Slippage | The Canadian Technician | StockCharts.com
Michael Campbell’s Money Talks for May 13th
Michael Campbell’s MoneyTalks – Complete Show (mikesmoneytalks.ca)
Top Strategies To Outperform This Market | Mary Ellen McGonagle | The MEM Edge (05.12.23)
Top Strategies To Outperform This Market | Mary Ellen McGonagle | The MEM Edge (05.12.23) – YouTube
The Chart Master: Comparing Apple, Amazon, Alphabet, and Microsoft as Big Tech bounces back
Equities Rallies Strong Into Close | David Keller, CMT | The Final Bar (05.12.23)
Editor’s Note: See confirmation of a Head & Shoulders pattern on Bitcoin
Equities Rallies Strong Into Close | David Keller, CMT | The Final Bar (05.12.23) – YouTube
Bob Hoye May 12, 2023: The Fed, Interest Rates, Credit Tightening
The Fed, Interest Rates, Credit Tightening
Victor Adair Trading Desk Notes for May 13th 2022
Trading Desk Notes For May 13, 2023
Comments by Ross Clark, Eric Hadic and Mark Leibovit
This Week in Money – HoweStreet
Link from Mark Bunting and www.uncommonsenseinvestor.com
Record Number of Canadians Restructuring Their Debts – Uncommon Sense Investor
Technical Scoop from David Chapman and www.EnrichedInvesting.com
S&P 500 Momentum Barometers
The intermediate term Barometer added 0.40 on Friday, but dropped 5.20 last week to 47.60. It remains Neutral.
The long term Barometer added 0.20 on Friday, but dropped 3.20 last week to 48.80. It remains Neutral.
TSX Momentum Barometers
The intermediate term Barometer added 1.29 on Friday, but dropped 2.58 last week to 53.02. It remains Neutral.
The long term Barometer added 1.29 on Friday and gained 2.16 last week to 59.91. It remains Neutral.
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
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Equity Clock Publications