Editor’s Note: Next report is scheduled for release on Monday October 23rd
The Bottom Line
Third quarter report season is “off to a good start”. Reports released to date generally have recorded higher than consensus results (notably by the U.S. money center banks). Analysts were prompted to raise estimates. Revenue and earnings gains on a year-over-year basis are projected to accelerate in the fourth quarter. The stage is set for a recovery in North American equity markets until at least the beginning of 2024.
Consensus for Earnings and Revenues for S&P 500 Companies
Source: www.FactSet.com
Consensus earnings estimates for the third quarter of 2023 increased slightly last week. Consensus for the third quarter on a year-over-year basis is an earnings increase of 0.4% (versus previous decrease of 0.3%). Third quarter revenues are expected to increase 1.9% (versus previous increase of 1.7%). Fourth quarter earnings are expected to increase 7.6% (versus previous increase of 7.8%) Fourth quarter revenues are expected to increase 4.0% (versus previous increase of 3.9%). For all of 2023, consensus calls for an earnings increase of 0.9%. Revenues are expected to increase 2.4%.
The recovery continues into 2024, but at a slightly lower rate. Consensus for the first quarter on a year-over-year basis calls for an earnings increase of 8.1 % (versus previous increase of 8.2%. and a revenue increase of 4.7% (versus previous increase of 4.6%). Consensus for the second quarter calls for an 11.7% earnings increase (versus a previous increase of 11.8%) and a 5.4% revenue increase (versus a previous increase of 5.5%). Consensus for all of 2024 is an increase in earnings of 12.2% and a 5.6% increase in revenues (versus a previous increase of 5.5% last week).
Economic News This Week
Source: www.Investing.com
October Empire State Manufacturing Survey released at 8:30 AM EDT is expected to decline 1.50 versus a gain of 1.90 in September.
September Retail Sales released at 8:30 AM EDT on Tuesday are expected to increase 0.2% versus a gain of 0.6% in August. Excluding auto sales, September Retail Sales are expected to increase 0.1% versus a gain of 0.6% in August.
September Canadian Consumer Price Index is released at 8:30 AM EDT on Tuesday.
September U.S. Capacity Utilization released at 9:15 AM EDT on Tuesday is expected to slip from 79.7% to 79.6% September Industrial Production is expected to increase 0.1% versus a gain of 0.4% in August.
August U.S. Business Inventories released at 10:00 AM EDT on Tuesday are expected to increase 0.3% versus unchanged in July.
September Housing Starts released at 8:30 AM EDT on Wednesday are expected to increase to 1.404 million units from 1.283 million units in August.
October Philly Fed Index released at 8:30 AM EDT on Thursday is expected to decline 6.8 versus a decline of 13.5 in September.
September U.S. Existing Home Sales released at 10:00 AM EDT on Thursday are expected to drop to 3.94 million units from 4.04 million units in August.
September Leading Economic Indicators released at 10:00 AM EDT on Thursday are expected to drop 0.3% versus a drop of 0.4% in August.
Canadian August Retail Sales are released at 8:30 AM EDT on Friday.
Selected Earnings News This Week
Source: www.Investing.com
Six percent of S&P 500 companies have reported quarterly results to date. Another 55 companies are scheduled to report this week. No TSX 60 companies are scheduled to report.
Trader’s Corner
Equity Indices and Related ETFs
Daily Seasonal/Technical Equity Trends for Oct.13th 2023
Green: Increase from previous day
Red: Decrease from previous day
Source for all positive seasonality ratings: www.EquityClock.com
Commodities
Daily Seasonal/Technical Commodities Trends for October 13th 2023
Green: Increase from previous day
Red: Decrease from previous day
Sectors
Daily Seasonal/Technical Sector Trends for October 13th 2023
Green: Increase from previous day
Red: Decrease from previous day
Links offered by valued providers
Mike’s Money Talks: October 14th
Michael Campbell’s MoneyTalks – Complete Show (mikesmoneytalks.ca)
Gain GREATER CLARITY on The Market’s Latest Moves With Seasonality Charts! | StockCharts In Focus
https://www.youtube.com/watch?v=NNFmtKgPVRE&t=135s
Markets Stall As Week Progresses – Here’s Why | The MEM Edge (10.13.23)
https://www.youtube.com/watch?v=0wkFF8z1dhM
Growth Sectors Tumble as Defensive Plays Post a Strong Finish | The Final Bar (10.13.23)
https://www.youtube.com/watch?v=kBrKQDRtQP8
Looking At A Perfect Pullback Opportunity | Moxie Indicator Minutes (10.13.23)
https://www.youtube.com/watch?v=rkGW0-3RdIM
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
JP Morgan $JPM a Dow Jones Industrial Average stock moved above intermediate resistance at $149.15. The stock responded to a better than consensus third quarter report.
Regeneron $REGN a NASDAQ 100 stock moved above $847.50 to an all-time high extending an intermediate uptrend.
Gilead $GILD a NASDAQ 100 stock moved above $77.73 completing a double bottom pattern.
Allstate $ALL an S&P 100 stock moved above $116.12 extending an intermediate uptrend.
ConocoPhillips an S&P 100 stock moved above $125.50 extending an intermediate uptrend.
IBM a Dow Jones Industrial Average stock moved below $139.76 and $139.61 completing a short term Head & Shoulders pattern.
FedEx $FDX an S&P 100 stock moved below $246.05 completing a double top pattern.
eBay $EBAY a NASDAQ 100 stock moved below $41.99 and $41.78 setting an intermediate downtrend.
Canadian Pacific CP.TO a TSX 60 stock moved below Cdn$98.11 setting an intermediate downtrend.
S&P 500 Momentum Barometers
The intermediate term Barometer dropped 1.20 on Friday, but added 8.80 last week to 26.20. It remains Oversold. A bottom was reached a week ago at 8.60.
The long term Barometer dropped 1.00 on Friday, but added 1.00 last week to 39.40. It remains Oversold. Early signs of a bottom have appeared.
TSX Momentum Barometers
The intermediate term Barometer added 4.41 on Friday and gained 16.22 last week to 34.36. It remains Oversold. The bottom was reached a week ago at 11.89.
The long term Barometer slipped 0.88 on Friday, but added 1.61 last week to 35.24. It remains Oversold. The bottom likely was reached a week ago at 28.19.
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
|
|
October 20th, 2023 at 8:45 am
Economic slowdown in Canada. The data that keeps coming in is pointing in that direction with today’s retail sales data showing a small drop in Aug and Statscan estimating September will come in unchanged. It’s quite obvious that mortgage renewals are the biggest factor that is going to slowdown purchases. It boggles the mind when you do the math. Mortgage payments can easily double. If you owe $600k that is renewing and you were paying 2% interest that is renewing at 6% you are going to be paying $24,000 more per year in interest payments or $2,000 per month and that is all net income. I just bought a new Civic for $33k. That would pay for a new car in 16.5 months. When I was in the dealership I overheard someone talking about 8% plus financing rates. A lot of rust buckets are going to stay on the roads.
October 20th, 2023 at 1:00 pm
#1
And then there are people like myself that love to see high rates that can buy a GIC TFSA at those high rates and earn cash “TAX FREE”. There are winners and losers in this world and we all have to decide which one we are. These rate hikes are nothing new as they have been going on up and down since time began. No excuse to get caught with your pants down.
As far as buying a new car goes I’ve never bought a new car for myself as I don’t like depreciation. Prefer appreciation.
Two sides to every story……………………………
October 20th, 2023 at 4:56 pm
Hi Larry and Ron,
Cars
I am looking into purchasing a car to replace the one we have as its starting to give me headaches
I love Hondas especially civic’s I’ve owned 3 in the last 20 + years. my first civic 4 doors was stollen after 4 years so went with another one, which I owned for eleven years sold it for family peace of mind since the other civic had blown its 10th year on the road which we kept for 17 years until i got into an accident and the appraiser considered it to expensive to repair.
The only reason I switched company was Honda consider their cars better the others when they play in the same category and the price difference was 5k more for the civic. it reminded me of VW in who played the same game back in ’95 a 13K car they jumped the gun to 25k car.
I saw Nissan is asking 8.99%, if you want an electric either they go for 9% or you get a good discount but you pay the mrsp.
My accountant who used to have dealership as a client told me they play us for fools the car no matter how you do the maths you’ll always pay the same price. if they offer you a low rate the value of the car will be increased and next month they’ll catch you on the same car with lower interest rate but higher prices. Why does different car at the same dealer has different rate?
and dont’ tell me its a question of its a good seller or not.
Last December I leased a new 2022 truck and I did most of montreal to find a good deal. here was the trick most dealerships were telling me i had a a 2-6 month wait depending on the make. So went out of town I got the same speech. and asking price 1000$ more or less 50$. I end up seeing this add just before the holidays for an truck at 10k then retail so I drove up. the truck was sold. The sales rep tells me hes got other vehicules if interested i said ok lets go for a spin and As i was talking to him he tells me the truck is 700$ a month I asked him whats the catch. he said to me well its easy instead of purchasing a new 10-100km truck you are purchasing a truck with 2000-3000km so for this reason the manufacturer gives them a discount. so instead I got the vehicule I wanted for the price I wanted.
One thing is for sure never buy the first car always buy at the end of the month even better end of year clearance as they want to get rid of the old and get in with the new.
House
In my area there were very few house for sale now that interest spiked up to above 5 those who can’t afford it are selling. A neighboor who purchased a flip 5 years ago at 400K is now trying to sell his house for 800K. damn when I purchased my house ( which is the same model) I added an extension so almost 700sqft extra what should I ask for 1.1M When this past winter a neighboor sold his house which is 50 percent larger than mine for 1.2M people are dumb
October 20th, 2023 at 5:13 pm
Tony
I’ve always been able to get a good deal on most everything except for cars as I end up buying at a car dealership. I just don’t want to fight with a private seller even though it is much cheaper. Plus I want to trade in what I have. So I do get beat up a little on price. And I take the car for inspection to find out what it needs. Then I always replace the tires with “All Weather” tires (West Coast) and get a tune up. So in-spite of overpaying for the vehicle I know what I’ve got.
As far as housing goes I just buy and move in and sell in a couple of years typically and make a lot of money with no tax to pay. So far I’m happy where I am and don’t feel the need to move for now. And housing doesn’t always go up. A lot of home buyers lose their shirt “assuming” prices only go up so get huge mortgages with adjustable rate mortgages that see rates double over time and trash their financial lives and home life. Why they don’t see it coming is beyond me.
October 21st, 2023 at 3:37 pm
Has anyone noticed how on this recent runup in gold, the miners have not made much of a move. This “expert” thinks that the miners are outperforming. I don’t see that.
Here is a link but I don’t know if it will work.
https://www.bnnbloomberg.ca/video/the-latest-on-gold~2789863
here is a weekly chart of GDX and compared with gold.
https://schrts.co/SAgSggfI
October 21st, 2023 at 6:55 pm
Paula
You are correct (as usual)….the miners have been underperforming $GOLD since early 2022.
https://stockcharts.com/h-sc/ui?s=%24GOLD&p=W&yr=5&mn=0&dy=0&id=p36441243141&a=1380761185
October 22nd, 2023 at 2:55 pm
Ron/BC,
Thanks for confirming my opinion. I like how your chart shows the divergence between gold and GDX. I wonder if this will continue. If so, it is quite a departure from the historic thinking that gold equities traditionally outperform gold due to their ability to leverage ….
Here is a link to an article (published July 12, 2023) on the Sprott (ultimate gold bugs) website, explaining why gold stocks have underperformed physical gold so badly. Of course, they expect a mean reversion trade to begin any time now (skip to last paragraph):
https://sprott.com/insights/sprott-gold-report-gold-vs-gold-stocks-an-unresolved-incongruity/
As kids say, it was too long and I did not read it all (TLDNR) but there are some bullet point headlines that say it all.
Maybe instead of following GDX, I will consider PHYS Or just forget about gold and buy tech stocks. Of course, that would be when there is a big catch-up rally in gold stocks. LOL!
I substituted $GOLD with PHYS in your chart. I guess IAU would also work:
https://schrts.co/ZmaeISTV