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Stock Market Outlook for May 7, 2013

Todays_Markets

Upcoming US Events for Today:

  1. Consumer Credit for March will be released at 3:00pm.   The market expects $15.0B versus $18.1B previous.

 

Upcoming International Events for Today:

  1. German Factory Orders for March will be released at 6:00am EST.   The market expects a year-over-year decline of 2.9% versus no change (0.0%) previous.

 

Recap of Yesterday’s Economic Events:

Event Actual Forecast Previous
CNY Leading Index 99.38   99.98
AUD Retail Sales s.a. (MoM) -0.40% 0.10% 1.30%
AUD Retail Sales Ex Inflation(QoQ) 2.20% 1.70% 0.10%
CNY HSBC Services PMI 51.1   54.3
EUR Italian Purchasing Manager Index Services 47 45.9 45.5
EUR French Purchasing Manager Index Services 44.3 44.1 44.1
EUR German Purchasing Manager Index Services 49.6 49.2 49.2
EUR Euro-Zone Purchasing Manager Index Services 47 46.6 46.6
EUR Euro-Zone Purchasing Manager Index Composite 46.9 46.6 46.5
EUR Euro-Zone Sentix Investor Confidence -15.6 -15.2 -17.3
EUR Euro-Zone Retail Sales (MoM) -0.10% -0.10% -0.20%
EUR Euro-Zone Retail Sales (YoY) -2.40% -2.20% -1.70%
CAD Building Permits (MoM) 8.60% 1.00% 1.50%
CAD Ivey Purchasing Managers Index s.a. 52.2 57.9 61.6
AUD AiG Performance of Construction Index 35.2   39

 

The Markets

Stocks pushed marginally higher on Monday, following through from Friday’s breakout move that resulted from the better than expected employment report.   The marginal gains were accompanied by dismal volumes; volume on the S&P 500 ETF (SPY) hovered around the lowest of the year.   Performance was once again dominated by cyclical sectors as the risk-on trade continues to show signs of reemerging; defensive sectors traded lower.   Strength in higher beta assets, which have largely lagged broad market performance for the bulk of the year, thus far, could continue to propel equity markets higher.   However, the more that investors rotate from risk-off to risk-on, the more vulnerable the market becomes.   Investors have been heavily hedged and aggressively defensive since January, limiting the downside potential of equity markets.   The rotation into cyclical assets during a period of the year when fundamental tendencies don’t typically support it increasingly puts the market in a vulnerable position.   It still remains premature to call a peak in the present trend, but better entry points to equity positions look probable further into the future.  

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Commodities have reached a critical juncture.   The CRB commodity index has traded back to the 50-day moving average over recent sessions, a point at which it has previously found resistance.   The commodity market continues on a trend of underperformance against equity markets and momentum indicators continue to trend negative as well.   Very few commodities seasonally perform well in at this time of year; many commodities seasonally peak into the month of May, particularly the white metals, such as Silver, Palladium, and Platinum.   Each of the white metals have been trading lower for a number of months and bear-flag setups imply further downside to come.   Average decline for the price of silver is 0.8% in the month of May, which is topped by a 2.8% average decline in the month of June.   With inflation expectations continuing to roll over and gauges of manufacturing showing sluggish results, little is present to support commodities, such as silver, in the near future.

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Silver Futures (SI) Seasonal Chart

Seasonal charts of companies reporting earnings today:

ARIA CQB DISCA FOSL HCN HBC LPX TAP OMX PQ AWK BMC CHRW COKE DVA EA IAG MCK SYMC DIS WFM WMB

Sentiment on Monday, as gauged by the put-call ratio, ended bullish at 0.78.

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S&P 500 Index

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Chart Courtesy of StockCharts.com

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TSE Composite

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Chart Courtesy of StockCharts.com

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Horizons Seasonal Rotation ETF (TSX:HAC)

  • Closing Market Value: $13.40 (down 0.07%)
  • Closing NAV/Unit: $13.38 (unchanged)

Performance*

2013 Year-to-Date Since Inception (Nov 19, 2009)
HAC.TO 5.19% 33.8%

* performance calculated on Closing NAV/Unit as provided by custodian 

Click Here to learn more about the proprietary, seasonal rotation investment strategy developed by research analysts Don Vialoux, Brooke Thackray, and Jon Vialoux.

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