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Stock Market Outlook for September 8, 2017

Impact of Hurricane Harvey virtually eliminated the year-to-date increase in the level of domestic oil production.

 

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:

Farmer Brothers Co. (NASD:FARM) Seasonal Chart

Farmer Brothers Co. (NASD:FARM) Seasonal Chart

Capella Education Co. (NASD:CPLA) Seasonal Chart

Capella Education Co. (NASD:CPLA) Seasonal Chart

Mastercard (NYSE:MA) Seasonal Chart

Mastercard (NYSE:MA) Seasonal Chart

Google Inc. (NASDAQ:GOOG) Seasonal Chart

Google Inc. (NASDAQ:GOOG) Seasonal Chart

Darden Restaurants, Inc.  (NYSE:DRI) Seasonal Chart

Darden Restaurants, Inc. (NYSE:DRI) Seasonal Chart

Agilent Technologies Inc. (NYSE:A) Seasonal Chart

Agilent Technologies Inc. (NYSE:A) Seasonal Chart

Altaba Inc. (NASD:AABA) Seasonal Chart

Altaba Inc. (NASD:AABA) Seasonal Chart

 

The Markets

Stocks closed lower on Thursday as shares of financial and telecommunications companies leaned on broad market benchmarks.  The bank (KBE) and telecom (IYZ) ETFs broke below the lower limit of their descending triangle patterns, negative setups that were profiled in recent reports.  Next level of support for each is around the 2015 highs at $36 and $30, respectively.  The two industries have diverging tendencies in the month of September with banks averaging negative performance during this period of volatility for equity markets while telecom has historically caught a bid as a result of the more defensive characteristics that they present.

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Banks Industry Seasonal Chart
S5BANKX Index Relative to the S&P 500S5BANKX Index Relative to the Sector

S5BANKX Index Monthly Averages

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Telecommunications Sector Seasonal Chart

TELECOMMUNICATIONS Relative to the S&P 500
TELECOMMUNICATIONS Relative to the S&P 500

TELECOMMUNICATIONS Monthly Averages

The move lower amongst the bank stocks follows a breakdown in the yield on the 10-year treasury note, which is now retracing the breakout move that followed the US election.  The yield is on track to test a previous level of support and resistance at an even 2%, an important psychological level that investors are likely to react to.  While the intermediate trend of yields is clearly that of lower-lows and lower-highs, the possibility of a higher significant low above the July 2016 low of 1.37% currently seems more likely than not, given the trajectory of the Fed funds rate.  Once confirmed, a long-term head-and-shoulders bottoming pattern could be carved out with the neckline around 2.6%.  Treasury bonds remain in a period of seasonal strength through the start of October, on average.

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10 Year U.S. Treasury Notes Futures (TY) Seasonality

CME_TY1 Relative to the S&P 500CME_TY1 Relative to the Sector

Monthly Seasonal 10 Year U.S. Treasury Notes Futures (TY)

Delayed by a day due to the Labor Day holiday, the weekly petroleum status report from the EIA was released on Thursday, providing insight to the impact that Hurricane Harvey had on production and inventories.  The headlines revealed that oil inventories expanded by 4.6 million barrels, the first weekly increase since June, while gasoline recorded a draw of 3.2 million barrels.  The result saw the days of supply of oil rise by 1 and a half days to 27.5, while gasoline remained essentially unchanged at 23.8.  On the oil side, the storm impact eliminated virtually all of the year-to-date increase to the level of domestic production, an element of concern for oil investors all year.  Imports were similarly disrupted as ships were unable to make their way to port.  The sustainability of each of these moves remains in question given the clean-up effort from Hurricane Harvey and the other approaching storms that are likely to keep the oil market in flux through the days/weeks ahead.  As for gasoline, production of the refined commodity has fallen back to levels seen at the end of last year as refiners were unable to operate through the storm.  Demand, as gauged by the change in the level of product supplied, dipped as well, but still remains above average through to the start of September.  The price of oil remained pinned to declining trendline resistance following the report, also testing its 200-day moving average.  The technicals and the fundamentals for the price of oil are at a very pivotal point, while positive seasonal tendencies are peaking.

Weekly U.S. Days of Supply of Crude Oil excluding SPR  (Number of Days) Seasonal Chart

Weekly U.S. Days of Supply of Crude Oil excluding SPR (Number of Days) Seasonal Chart

Weekly U.S. Ending Stocks excluding SPR of Crude Oil Seasonal ChartWeekly U.S. Field Production of Crude Oil Seasonal ChartWeekly U.S. Commercial Crude Oil Imports Excluding SPR Seasonal Chart

Weekly U.S. Days of Supply of Total Gasoline  (Number of Days) Seasonal Chart

Weekly U.S. Days of Supply of Total Gasoline (Number of Days) Seasonal Chart

Weekly U.S. Ending Stocks of Total Gasoline Seasonal Chart Weekly U.S. Refiner and Blender Adjusted Net Production of Finished Motor Gasoline Seasonal Chart Weekly U.S. Product Supplied of Finished Motor Gasoline Seasonal Chart

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Sentiment on Thursday, as gauged by the put-call ratio, ended bearish at 1.13.

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Seasonal charts of companies reporting earnings today:

Kroger Company (The) (KR) Seasonal Chart Urstadt Biddle Properties Inc. (UBA) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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