Don Vialoux: Trends

Posted by Don Vialoux: Timing the Market

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The Bottom Line

Strength in equity markets continues to surprise on the upside. However, a lack of favourable seasonal influences, mixed responses to quarterly reports, a slowdown in U.S. economic growth, concerns about a slowdown in monetary stimulus and virtually no progress on U.S. fiscal policy suggest that upside potential is limited and downside risk is significant. Appropriate action is recommended. 

(Editor’s Note: Jon Vialoux is scheduled to appear on BNN’s “Money Talks” at 8:00 PM EDT)

U.S. equity index futures were lower this morning. S&P 500 futures were down 3 points in pre-opening trade. Futures are responding to less than expected growth in China’s industrial production.

Index futures recovered after April retail sales were released.Consensus was a decline of 0.3% versus a revised decline of 0.5% in March. Actual was a gain of 0.1%. Excluding auto sales, consensus was a decline of 0.2% versus a drop of 0.4% in March. Actual was a gain of 0.1%.

Boeing eased $0.67 to $93.57 despite an increase in target price by Sterne Agee from $100 to $120.

Autozone (AZO $420.95) is expected to open lower after Deutsche Bank downgraded the stock from Buy to Hold.

Cisco (CSCO $21.10) is expected to open higher after FBR Capital upgraded the stock from Under Perform to Market Perform. Target was raised from $17 to $19.

AuRico Gold (AUQ C$4.86) is expected to open higher after Desjardins upgraded the stock from Hold to Buy.

Equity Trends

The S&P 500 Index gained 19.28 points (1.19%) last weekTrend remains up. The Index remains above its 20, 50 and 200 day moving averages. Short term momentum indicators remain overbought.

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Percent of S&P 500 stocks trading above their 50 day moving average increased last week to 89.20% from 80.80%. Percent remains intermediate overbought

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Percent of S&P 500 stocks trading above their 200 day moving average increased last week to 93.98% from 90.60%. Percent remains intermediate overbought

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Bullish Percent Index for S&P 500 stocks increased last week to 86.40% from 81.40% and remained above its 15 day moving average. The Index remains intermediate overbought

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Bullish Percent Index for TSX Composite stocks was unchanged last week at 59.58% and remained above its 15 day moving average. The Index remains intermediate overbought.

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The TSX Composite Index added 151.06 points (1.21%) last week. Trend remains down. The Index remains above its 20 and 200 day moving averages and moved above its 50 day moving average. Strength relative to the S&P 500 Index remains negative, but showing early signs of change. Technical score based on the above technical indicators remains at 1.0. Short term momentum indicators remain overbought.

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Percent of TSX Composite stocks trading above their 50 day moving average increased last week to 50.42% from 46.25%. Percent has recovered to a slightly overbought level.

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Percent of TSX Composite stocks trading above their 200 day moving average increased last week to 55.42% from 52.08%.Percent has recovered to a slightly overbought level.

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The Dow Jones Transportation Average gained 156.62 points (2.52%) last week. Trend changed from neutral to up on a move above 6,291.65. The Average remains above its 20, 50 and 200 day moving averages. Strength relative to the S&P 500 Index changed from negative to positive. Technical score improved from 1.5 to 3.0. Short term momentum indicators remain overbought.

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The Australia All Ordinaries Composite Index added 85.70 points (1.68%) last week. Trend remains up. The Index remains above its 20, 50 and 200 day moving averages. Strength relative to the S&P 500 Index changed from positive to neutral. Technical score eased from 3.0 to 2.5. Short term momentum indicators remain overbought.

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The Nikkei Average jumped 913.50 points (6.67%) last week. Trend remains up. The Average remains above its 20, 50 and 200 day moving averages. Strength relative to the S&P 500 Index remains positive. Technical score remains at 3.0. Short term momentum indicators remain overbought.

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Europe 350 iShares added $0.35 (0.83%) last week. Trend remains up. Units remain above their 20, 50 and 200 day moving averages. Strength relative to the S&P 500 Index remains positive. Technical score remains at 3.0. Short term momentum indicators remain overbought.

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Currencies

The U.S. Dollar Index gained 1.03 (1.25%) last week. The dollar moved above its 20 and 50 day moving averages. Short term momentum indicators are trending up.

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Gold fell $27.60 U.S. per ounce (1.88%) last week. Trend remains down. Gold remains above its 20 day moving average. Strength relative to the S&P 500 Index remains negative, but showing early signs of change. Technical score remains at 1.0. Short term momentum indicators are mixed.

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Silver dropped $0.35 per ounce (1.46%) last week. Trend remains down. Silver moved above its 20 day moving average. Strength relative to Gold and the S&P 500 Index remains negative. Technical score improved from 0.0 to 1.0. Short term momentum indicators have recovered to neutral levels.

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