Pre-opening Comments for Monday July 8th
U.S. equity index futures were higher this morning. S&P 500 futures were up 3 points at 8:30 AM EDT
Morphic Holding advanced $24.57 to $56.41 after Eli Lilly agreed to purchase the company at $57.00 per share. Value of the offer is $3.2 billion.
Paramount Global added $0.28 to $12.09 after the company agreed to a merger with Skydance.
![clip_image002[5]](https://timingthemarket.ca/techtalk/wp-content/uploads/2024/07/clip_image0025.png "clip_image002[5]")
Corning added $2.71 to $41.15 after the company raised second quarter sales and earning guidance.
Oppenheimer raised its target price for the S&P 500 to 5,900.
![clip_image004[5]](https://timingthemarket.ca/techtalk/wp-content/uploads/2024/07/clip_image0045.png "clip_image004[5]")
EquityClock’s Stock Market Outlook for July 8th
Headline reads “Economic momentum is waning, but this could be the catalyst for the third quarter rally in the bond market”.
See: https://equityclock.com/2024/07/06/stock-market-outlook-for-july-8-2024/
The Bottom Line
The Summer Stock Market Rally from late June until at least the end of July has started.
Corporate focuses this week are on second quarter results released on Friday by U.S. money-centered banks (including JP Morgan Chase, Wells Fargo, Citigroup and Bank of New York Mellon): According to www.FactSet.com “Bank earnings season begins on Friday, July 12, and in the broad contours, is apt to look remarkably similar to the first quarter” when earnings by the sector increased 4.9% on a year-over-year basis”
Another important focus this week is on Federal Reserve Chairman Powell’s testimony before Congressional Finance Committees on Tuesday and Wednesday. His comments about possible timing of the first decline in the Fed Fund Rate below its current 5.25%-5.50% rate will be watched closely. U.S. and Canadian June labour reports released on Friday are expected to set the stage for the FOMC and Bank of Canada to lower rates sooner than previously anticipated.
Consensus for Earnings and Revenues for S&P 500 Companies
Source: www.FactSet.com
Changes since our last report on June 24th have been slight. Earnings gains accelerate from a year-over-year earnings increase of 5.9% recorded in the first quarter. Consensus for the second quarter remained at an 8.8% earnings increase and a 4.6% revenue increase. Consensus for the third quarter calls for an 8.1% earnings increase (versus previous 8.2%) and a 4.9% revenue increase.
Earnings gains accelerate further in the fourth quarter. Consensus calls for a 17.3% increase in earnings (versus previous 17.6% increase) and a 5.6% increase in revenues (versus previous 5.5% increase).
For all of 2024, consensus calls for an 11.3% earnings increase (versus previous 11.2% increase) and a 5.0% revenue increase.
Earnings gains remain elevated in 2025. First quarter earnings are expected to increase
15.2 % on a year-over-year basis (versus previous 15.4% increase) and revenues are expected to increase 5.9% (versus 5.8% increase). Second quarter earnings are expected to increase 15.6% (versus previous 15.5% increase) and revenues are expected to increase 5.9%. For all of 2025 earnings are expected to increase 14.4% (versus previous 14.3% increase) and revenues are expected to increase 6.0%.
Economic News This Week
Source: www.Investing.com
Federal Reserve Chairman Powell’s first testimony before Congress at 11:00 AM EDT on Tuesday. Second testimony is on Wednesday.
May U.S. Wholesale Inventories released at 10:00 AM EDT on Wednesday are expected to increase 0.6% versus a gain of 0.1% in April.
June U.S. Consumer Price Index released at 8:30 AM EDT on Thursday is expected to increase 0.1% versus no change in May. Excluding food and energy, June CPI is expected to increase 0.2% versus a gain of 0.2% in May.
June U.S. Producer Price Index released at 8:30 AM EDT on Friday is expected to increase 0.1% versus a decline of 0.2% in May. Excluding food and energy, June PPI is expected to increase 0.2% versus unchanged in May.
July Michigan Consumer Sentiment is released at 10:00 AM EDT on Friday
Selected Earnings News This Week
Source: www.Investing.com
Trader’s Corner
Equity Indices and Related ETFs
Daily Seasonal/Technical Equity Trends for July 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 July 5th 2024
Green: Increase from previous day
Red: Decrease from previous day
Sectors
Daily Seasonal/Technical Sector Trends for July 5th 2024
Green: Increase from previous day
Red: Decrease from previous day
Technical Notes on Friday
Emerging Markets iShares $EEM moved above $43.57 to a 30 month high extending an intermediate uptrend. Canadian equivalent BMO Emerging markets ETF moved above Cdn$21.40 to a 30 month high.
South Korea i\Shares $EWY moved above $68.20 to a 27 month high extending an intermediate uptrend.
Internet ETF $FDN moved above $208.31 to a 30 month high extending an intermediate uptrend.
Meta Platform $META a NASDAQ 100 stock moved above $530.96 to an all-time high extending an intermediate uptrend.
Agnico-Eagle Mines $AEM.TO a TSX 60 stock moved above Cdn$95.79 to a 33 month high extending an intermediate uptrend.
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
Technology Shares SOAR to New All-Time Highs: David Keller
Technology Shares SOAR to New All-Time Highs – YouTube
Michael Campbell’s Money Talks for July 6th
July 6 Episode (mikesmoneytalks.ca)
The Economy Is Slowing – Are You In The Right Stocks? Mary Ellen McGonagle
Weekly Update with Larry Berman – July 6, 2024
https://www.youtube.com/watch?v=t-K9dWdmU8s
Comments by Ross Clark, Mark Leibovit and Martin Straith
Are Canada and US in Recession? Bob Hoye
Are Canada and US in Recession? – HoweStreet
Trading Desk Notes for July 6th : Victor Adair
Trading Desk Notes For July 6, 2024 – HoweStreet
Real Estate Bust Has Compound Impacts: Danielle Park
Real Estate Bust Has Compound Impacts – HoweStreet
S&P 500 Momentum Barometers
The intermediate term Barometer slipped 1.20 on Friday and dropped 3.20 last week to 45.60. It remains Neutral.
The long term Barometer slipped 1.20 on Friday and dropped 4.20 last week to 65.40. It remains Overbought.
TSX Momentum Barometers
The intermediate term Barometer dropped 7.96 on Friday but gained 8.85 last week to 54.87. It returned to Neutral on Friday after moving below 60.00.
The long term Barometer dropped 3.98 on Friday but gained 1.33 last week to 67.70. It remains Overbought.
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 guarantee
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July 8th, 2024 at 6:13 pm
Hi Ron
I was going to wait until the summer rally is behind us before making my move on BMO. Ideally once it is between 116-118, but not married to this as I need to see how the market and group perform. Like everything, might have to sit on my hands until the fall given the euphoric mood in the market.