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Stock Market Outlook for June 14, 2017

Fertilizer stocks look set to move higher within period of seasonal strength.

 

Real Time Economic Calendar provided by Investing.com.

 

**NEW** As part of the ongoing process to offer new and up-to-date information regarding seasonal and technical investing, we are adding a section to the daily reports that details the stocks that are entering their period of seasonal strength, based on average historical start dates.   Stocks highlighted are for information purposes only and should not be considered as advice to purchase or to sell mentioned securities.   As always, the use of technical and fundamental analysis is encouraged in order to fine tune entry and exit points to average seasonal trends.

Stocks Entering Period of Seasonal Strength Today:

Pembina Pipeline Corp (TSE:PPL) Seasonal Chart

Pembina Pipeline Corp (TSE:PPL) Seasonal Chart

 

 

The Markets

Stocks continued their rise on Tuesday with the S&P 500 Index and Dow Jones Industrial Average charting a fresh set of closing highs.  The blue-chip benchmark is showing its first signs of outperformance versus the large-cap S&P 500 Index in three months as it realizes benefits from the industrial and financial constituents within.  Horizontal support for the Dow is apparent at 21,100, representing the upper limit to the almost three month trading range from which the benchmark recently broke.  The breakout projects upside potential to around 21,800, or 2.2% above present levels.  Seasonally, the Dow Jones Industrial Average trades rather flat, on average, between May and July, then dipping into August and September.

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North of the border, the main equity benchmark in Canada hasn’t been as fortunate, holding below resistance at the now rolling over 50-day moving average.  The TSX Composite has struggled since hitting a high in February, finding resistance at two different gaps that have limited any type of advance.  A descending triangle is now apparent with a break of the lower limit of the setup around 15,250 projecting downside potential towards 14,550.  The TSX Composite has lagged its American counterparts since the end of last October, weighed down by weak commodity prices that have yet to realize any benefits from a weaker US Dollar.  Seasonally, the TSX tends to reach an important peak around the beginning of June, following which the benchmark tends to flatline through the middle of September.

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Perhaps acting as the catalyst to fuel the break in the Canadian equity market is the abrupt rise in the Canadian Dollar.  The loonie has surged higher by around 1.5% in just two sessions following hawkish comments from a Bank of Canada official. The Canadian Dollar, relative to the US, is presently testing declining trendline resistance that spans the highs of the past couple of years.  Seasonally, the Canadian Dollar tends to fall between mid-June and the end of August.

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Canadian Dollar Forex (CAD) Seasonality

Monthly Seasonal Canadian Dollar Forex (CAD)

And finally for today, fertilizer stocks are catching a bid as they look set to move higher into the first of two periods of seasonal strength that span the back half of the year.  The Fertilizer ETF (SOIL) broke above resistance at $9.45, completing a short-term bottoming pattern.  Longer-term, a cup-and-handle pattern could be argued, a bullish setup that could see a move back to the highs charted in 2015 around $11.25.  The ETF recently tested previous resistance, now support, at $9.00.  Seasonally, fertilizer stocks tend to gain between June and September, reacting to the summer growing season in the northern hemisphere.

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Sentiment on Tuesday, as gauged by the put-call ratio, ended close to neutral at 0.97.

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Seasonal charts of companies reporting earnings today:

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S&P 500 Index

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TSE Composite

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