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Stock Market Outlook for December 5, 2013


Upcoming US Events for Today:

  1. Chain Store Sales for November will be released throughout the day.
  2. GDP for the Third Quarter will be released at 8:30am.   The market expects a quarter-over-quarter increase of 3.1% versus an increase of 2.8% previous.
  3. Weekly Jobless Claims will be released at 8:30am.   The market expects 322K versus 316k previous.
  4. Factory Orders for October will be released at 10:00am.   The market expects a month-over-month decline of 1.2% versus a decline of 0.1% previous.


Upcoming International Events for Today:

  1. Bank of England Announcement will be held at 7:00am EST.   The market expects no change in rates at 0.50%.
  2. The ECB Announcement will be held at 7:45am EST.   The market expects no change in rates at 0.25%.
  3. Canadian Ivey PMI for November will be released at 10:00am EST.   The market expects 60.0 versus 62.8 previous.


Recap of Yesterday’s Economic Events:

Event Actual Forecast Previous
AUD Gross Domestic Product (QoQ) 0.60% 0.70% 0.70%
AUD Gross Domestic Product (YoY) 2.30% 2.60% 2.40%
CNY HSBC/Markit Services PMI 52.5   52.6
EUR Italian Purchasing Manager Index Services 47.2 50.4 50.5
EUR French Purchasing Manager Index Services 48 48.8 48.8
EUR German Purchasing Manager Index Services 55.7 54.5 54.5
EUR Euro-Zone Purchasing Manager Index Services 51.2 50.9 50.9
EUR Euro-Zone Purchasing Manager Index Composite 51.7 51.5 51.5
GBP Purchasing Manager Index Services 60 62 62.5
EUR Euro-Zone Gross Domestic Product s.a. (QoQ) 0.10% 0.10% 0.10%
EUR Euro-Zone Retail Sales (MoM) -0.20% 0.10% -0.60%
EUR Euro-Zone Retail Sales (YoY) -0.10% 1.00% 0.30%
EUR Euro-Zone Gross Domestic Product s.a. (YoY) -0.40% -0.40% -0.40%
USD MBA Mortgage Applications -12.80%   -0.30%
USD ADP Employment Change 215K 170K 184K
CAD International Merchandise Trade (Canadian dollar) 0.08B -0.77B -0.30B
USD Trade Balance -$40.6B -$40.0B -$43.0B
USD New Home Sales 444K 429K 354K
USD New Home Sales (MoM) 25.40%   -6.60%
USD New Home Sales 354K 425K 379K
USD New Home Sales (MoM) -6.60%   1.60%
CAD Bank of Canada Rate Decision 1.00% 1.00% 1.00%
USD ISM Non-Manufacutring Composite 53.9 55 55.4
USD DOE U.S. Crude Oil Inventories -5585K -500K 2953K
USD DOE Cushing OK Crude Inventory -18K   676K
USD DOE U.S. Distillate Inventory 2649K -1500K -1666K
USD DOE U.S. Gasoline Inventories 1828K 1250K 1751K


The Markets

Stocks declined for a fourth consecutive session on Wednesday as taper jitters influenced investors to sell equities.   Wednesday also marked the third consecutive decline for the S&P 500 index to start the month of December, typically a negative omen of what to expect through the remainder of the month.   Only eight other similar occurrences of consecutive declines during the first three days of December have been realized over the past 60 years, the last being 2002 in the midst of a recession.   Six of the eight Decembers ended negative on the month, unable to recover from the early month loss.   Losses for the month of December under this scenario averaged 2.10%.    However, four of the eight periods offered investors a buying opportunity following the first three negative sessions as stocks traded higher following this point into the end of the year.   A loss during the first three trading sessions of the month does not guarantee a loss on the month.   Looking at Decembers from the past 60 years that have recorded losses after three trading sessions, regardless of whether declines were consecutive or not, shows that 12 of the 23 periods that met this criteria ended positive on the month.   December loss under this scenario averaged 0.10%.   December is typically one of the strongest months of the year for stocks with the S&P 500 recording gains during 45 of the past 60 periods,.   Losses for this last month of the year remain rare, making the three consecutive losing sessions quite notable.



Looking at the daily chart of the S&P 500, the benchmark continues to find support around the 20-day moving average, closing above this key level on Wednesday following an afternoon rebound from session lows.   Previous resistance around 1775 is being tested, once again, as a level of support.   Short-term resistance for the large-cap benchmark is starting to become apparent at a declining 20-hour moving average, which restrained the trading activity into Wednesday’s close.   Momentum indicators on this short-term look at the market continue to trend negative, suggesting a downside bias remains.


Seasonal charts of companies reporting earnings today:
















Sentiment on Wednesday, as gauged by the put-call ratio, ended bullish at 0.89.



S&P 500 Index




TSE Composite




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