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Stock Market Outlook for June 11, 2013

Todays_Markets

Upcoming US Events for Today:

  1. NFIB Small Business Optimism Index for May will be released at 7:30am.   The market expects 92.3 versus 92.1 previous.
  2. Wholesale Inventories for April will be released at 10:00am.   The market expects a month-over-month increase of 0.2% versus an increase of 0.4% previous.
  3. Job Openings and Labor Turnover Survey for April will be released at 10:00am.   The market expects 3.885M versus 3.844M previous.

 

Upcoming International Events for Today:

  1. Great Britain Industrial Production for April will be released at 4:30am EST.   The market expects a year-over-year decline of 0.6% versus a decline of 1.4% previous.
  2. Great Britain NISER GDP Estimate for May will be released at 10:00am EST.
  3. Japan PPI for May will be released at 7:50pm EST.   The market expects a year-over-year increase of 0.6% versus no change (0.0%) previous.
  4. Japan Machine Orders for April will be released at 7:50pm EST.   The market expects a year-over-year decline of 3.9% versus an increase of 6.1% previous.

 

Recap of Yesterday’s Economic Events:

Event Actual Forecast Previous
CNY Producer Price Index (YoY) -2.90% -2.50% -2.60%
CNY Consumer Price Index (YoY) 2.10% 2.50% 2.40%
CNY New Yuan Loans 667.4B 815.0B 792.9B
CNY Industrial Production YTD (YoY) 9.40% 9.40% 9.40%
CNY Industrial Production (YoY) 9.20% 9.40% 9.30%
CNY Fixed Assets Inv Excl. Rural YTD (YoY) 20.40% 20.50% 20.60%
CNY Retail Sales YTD (YoY) 12.60% 12.60% 12.50%
CNY Retail Sales (YoY) 12.90% 12.90% 12.80%
JPY Gross Domestic Product Deflator (YoY) -1.10% -1.20% -1.20%
JPY Nominal Gross Domestic Product (QoQ) 0.60% 0.40% 0.40%
JPY Gross Domestic Product Annualized 4.10% 3.50% 3.50%
JPY Gross Domestic Product (QoQ) 1.00% 0.90% 0.30%
JPY Current Account Total (Yen) ¥750.0B ¥350.0B ¥1251.2B
JPY Adjusted Current Account Total (Yen) ¥852.7B ¥380.0B ¥342.4B
JPY Trade Balance – BOP Basis (Yen) -Â¥818.8B -Â¥729.9B -Â¥219.9B
JPY Current Account Balance (YoY) 100.80% 5.70% -4.30%
JPY Bankruptcies (YoY) -8.97%   -10.45%
JPY Consumer Confidence 45.7 44.7 44.5
CHF Unemployment Rate 3.00% 3.00% 3.10%
CHF Unemployment Rate s.a. 3.20% 3.20% 3.10%
JPY Eco Watchers Survey: Current 55.7 56 56.5
JPY Eco Watchers Survey: Outlook 56.2 56.6 57.8
CHF Retail Sales (Real) (YoY) 3.30%   -0.80%
EUR Euro-Zone Sentix Investor Confidence -11.6 -11.3 -15.6
EUR Italian Gross Domestic Product s.a. and w.d.a. (QoQ) -0.60% -0.50% -0.50%
EUR Italian Gross Domestic Product s.a. and w.d.a. (YoY) -2.40% -2.30% -2.30%
CAD Housing Starts 200.2K 179.1K 174.9K

 

The Markets

Equity markets ended around the flat-line on Monday as investors took a breather following Friday’s surge attributed to the employment report for the month of May. Sector performance was mixed with no clear leadership between defensive and cyclical stocks.

Turning immediately to the S&P 500 index, the benchmark showed signs of struggle around its 20-day moving average line, suggesting that short-term weakness remains ingrained within trading activity. This short-term moving average level also marks the lower limit of the rising trend channel that stretches back to the mid-November low of last year. The positive trend of the market is under threat trading below these levels. Evidence is stacking-up that equities are poised for the long awaited pullback, but further evidence is still required.

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One indicator hinting of weakness ahead is the relative performance of the S&P 500 Equally Weighted Index. The benchmark has shown signs of struggle compared to its capitalization-weighted index over recent weeks, suggesting waning breadth. As broad market leadership starts to fade, stocks typically struggle, as they did from the middle of March through to the middle of April. Outperformance of the equally weighted index generally corresponds to periods of market strength and vice-versa when the benchmark underperforms.

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And finally, with a period of seasonal volatility ahead of us, the Volatility Index (VIX) is already showing a potentially bullish setup. The VIX has charted what appears to be a reverse head-and-shoulders pattern. The setup points to a target of as high as 25 should a breakout beyond the neckline of around 18 be realized.   This move would likely occur in conjunction with increasing market weakness. Technical analysis on the VIX can be a little troublesome due to the volatility that it represents, but the bottoming pattern is notable.

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VOLATILITY S&P 500 Index (^VIX) Seasonal Chart

Seasonal charts of companies reporting earnings today:

AEPI LDK MDCI OXM RLOG ULTA

Sentiment on Monday, as gauged by the put-call ratio, ended bearish at 1.08.

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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)

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2013 Year-to-Date Since Inception (Nov 19, 2009)
HAC.TO 4.17% 32.5%

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