Tech Talk for Monday January 8th 2024
Pre-opening Comments for Monday January 8th
U.S. equity index futures were higher this morning. S&P 500 futures were 2 points at 8:30 AM EST.
Boeing dropped $19.59 to $229.49 after its 737 Max 9 aircrafts were grounded by the FAA following a blow out of a panel on an Alaska Airlines flight.
Axonics jumped $12.37 to $69.94 after receiving a buyout offer valued at $71 per share from Boston Scientific. Value of the offer is $3.4 billion.
![clip_image002[5]](https://timingthemarket.ca/techtalk/wp-content/uploads/2024/01/clip_image0025-2.png "clip_image002[5]")
Harpoon Therapeutics jumped $10.61 to $21.16 on possible buyout talks by Merck.
Enphase gained $3.02 to $118.41after Wells Fargo upgraded the stock from Equal Weight to Overweight. Target price was raised from $98 to $141.
![clip_image004[5]](https://timingthemarket.ca/techtalk/wp-content/uploads/2024/01/clip_image0045-2.png "clip_image004[5]")
Technical Scoop for January 8th
The Bottom Line
Time for a pause in performance by U.S. equity markets into mid-March, most notably by the tech heavy NASDAQ Index and related ETFs! Thereafter, look for strength to the end of 2024 supported by accelerating earnings gains and a history of rising U.S. indices during the fourth year of the U.S. Presidential election cycle
U.S. equity indices are overbought based on percent of S&P 500 stocks trading above their 50 and 200 day moving averages and are vulnerable to a shallow correction into March. See S&P 500 Momentum Barometers at the end of this report.
This is the time of the year when ownership of Canadian equities relative to U.S. equities has been more profitable! The TSX 60 Index and its related ETFs (eg.XIU.TO) have a history of significantly outperforming the S&P 500 Index between mid-December and the first week in March. Outperformance is partially related to traditional annual contributions by Canadians into RRSP and TSFA accounts prior to the end of February (February 29th this year).
TSX 60 Index and related ETFs have just started to outperform the S&P 500 Index, a technical sign that the seasonal trade favouring Canadian equity indices and related ETF to early March has started on schedule.
Consensus for Earnings and Revenues for S&P 500 Companies
Source: www.FactSet.com
Since our last report on December 18th, Analysts slightly lowered earnings and revenue estimates to the fourth quarter of 2023 and the first quarter of 2024. Thereafter to the end of 2024, estimates were virtually unchanged from previous estimates: They show accelerating earnings gains with only slight modifications to previous estimates
Earnings estimates for the fourth quarter of 2023 were reduced slightly. Fourth quarter earnings are expected to increase 1.3% on a year-over- year basis (versus previous increase of 2.4% on December 18th). Fourth quarter revenue estimates are unchanged with a 3.1% increase.
The earnings recovery first surfaces in the first quarter of 2024, but at a slightly lower than previous rate. Consensus for the first quarter on a year-over-year basis calls for an earnings increase of 6.0 % (versus previous increase of 6.2%) and a revenue increase of 4.1% (versus previous increase of 4.3%).
Earnings gains accelerate thereafter to the end of 2024. Consensus for the second quarter calls for a 10.6% earnings increase (versus previous increase at 10.5%) and a 5.0% increase in revenues (versus previous increase of 5.2%). Consensus for the third quarter calls for an 8.6% increase in earnings (versus previous increase of 8.7%) and a 5.3% increase in revenues (versus previous 5.2% increase). Consensus for the fourth quarter calls for a 19.0% increase in earnings (versus previous increase of 18.1%) and a 5.8% increase in revenues. For all of 2024, consensus calls for an 11.8% increase in earnings (versus a previous increase of 11.5%) and a 5.5% increase in revenues.
Economic News This Week
Source: www.Investing.com
November U.S. Trade Deficit released at 8:30 AM EST on Tuesday is expected to increase to $64.50 billion from $64.30 billion in October.
November Canadian Trade is released at 8:30 AM EST on Tuesday.
December U.S. Consumer Price Index released at 8:30 AM EST on Thursday is expected to increase 0.2% versus a gain o f0.1% in November. Excluding food and energy, December CPI is expected to increase 0.3% versus a gain of 0.3% in November.
December U.S. Producer Price Index released at 8:30 AM EST on Friday is expected to increase 0.2% versus no change in November. Excluding food and energy, December PPI is expected to be up 0.2% versus no change in December.
Selected Earnings News This Week
Source: www.Investing.com
Eight S&P 500 companies (including two Dow Jones Industrial Average companies) are scheduled to release quarterly results this week. No TSX 60 companies are scheduled.
Trader’s Corner
Equity Indices and Related ETFs
Daily Seasonal/Technical Equity Trends for Jan.5th 2024
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 Jan 5th 2024
Green: Increase from previous day
Red: Decrease from previous day
Sectors
Daily Seasonal/Technical Sector Trends for Jan.5th 2024
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
(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
Links offered by valued providers
Prepare for 2024: Martin Pring’s Expert Insights on the Equity Market
Prepare for 2024: Martin Pring’s Expert Insights on the Equity Market – YouTube
What Lies Ahead for 2024: An Epic Kick-off or Dull Start? Bruce Fraser
What Lies Ahead for 2024: An Epic Kick-off or Dull Start? – YouTube
Market Magic: Anticipating The Next Surge! TG Watkins
Market Magic: Anticipating The Next Surge! – YouTube
Growth Stocks Drop Again and That’s Just the Beginning?!? The Final Bar
Growth Stocks Drop Again and That’s Just the Beginning?!? – YouTube
January 4, 2024 | Could 2024 be the Year of Bitcoin? Mark Leibovit
https://www.howestreet.com/2024/01/could-2024-be-the-year-of-bitcoin-mark-leibovit/
Three Charts to Track Impending Doom: David Keller
Three Charts to Track Impending Doom | The Mindful Investor | StockCharts.com
New Year Starts With a Bang as Leadership Areas Get Hit: Mary Ellen McGonagle
New Year Starts With a Bang as Leadership Areas Get Hit | The MEM Edge | StockCharts.com
Michael Campbell’s Money Talks for January 6th
January 6th Episode (mikesmoneytalks.ca)
Will The Government Confiscate Gold? Bob Hoye
Will The Government Confiscate Gold? – HoweStreet
Trading Desk Notes: Victor Adair
Trading Desk Notes For January 6, 2024 – HoweStreet
Technical Notes from Friday
Vietnam ETF $VNM moved above $13.03 and $13.09 completing a reverse Head & Shoulders pattern.
Keurig Dr. Pepper $KDP an S&P 100 stock moved below $31.60 completing a double top pattern.
AT&T $T an S&P 100 stock moved above $17.34 extending an intermediate uptrend.
Verizon $VZ an S&P 100 stock moved above $39.91 extending an intermediate uptrend.
Toronto Dominion Bank $TD.TO a TSX 60 stock moved above $86.05 extending an intermediate uptrend.
Gildan Activewear $GIL.TO a TSX 60 stock moved below Cdn$42.55 setting an intermediate downtrend.
S&P 500 Momentum Barometers
The intermediate term Barometer slipped 0.80 on Friday and dropped 1.80 last week to 88.20. It remains Overbought. Daily data shows early signs of a peak.
The long term Barometer added 1.00 on Friday, but slipped 1.00 last week to 77.40. It remains Overbought. Daily data shows early signs of a peak.
TSX Momentum Barometers
The intermediate term Barometer added 1.78 on Friday, but dropped 4.45 last week to 70.22. It remains Overbought. Daily data has rolled over.
The long term Barometer slipped 0.89 on Friday and dropped 2.66 last week to 57.78. It changed from Overbought to Neutral on a move below 60.00. Daily data has rolled over.
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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January 8th, 2024 at 5:49 pm
SPX was the most technically stretched on RSI in years and at the resistance level of the old high. It used two weeks as a breather (which should if anything be expected) until Stochastics got down to 20 and magically here we are bouncing back. Today was a reminder of who’s in control. What a breakout after four and half months of consolidation by NVDA.