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Stock Market Outlook for October 5, 2017

TSX Composite testing long-term horizontal resistance.

 

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:

Vecima Networks Inc. (TSE:VCM) Seasonal Chart

Vecima Networks Inc. (TSE:VCM) Seasonal Chart

Syngenta AG (NYSE:SYT) Seasonal Chart

Syngenta AG (NYSE:SYT) Seasonal Chart

Bunge Ltd. (NYSE:BG) Seasonal Chart

Bunge Ltd. (NYSE:BG) Seasonal Chart

Uranium Participation (TSE:U) Seasonal Chart

Uranium Participation (TSE:U) Seasonal Chart

CF Industries Holdings, Inc. (NYSE:CF) Seasonal Chart

CF Industries Holdings, Inc. (NYSE:CF) Seasonal Chart

Alamos Gold (TSE:AGI) Seasonal Chart

Alamos Gold (TSE:AGI) Seasonal Chart

Convergys Corporation  (NYSE:CVG) Seasonal Chart

Convergys Corporation (NYSE:CVG) Seasonal Chart

Hewlett-Packard Company  (NYSE:HPQ) Seasonal Chart

Hewlett-Packard Company (NYSE:HPQ) Seasonal Chart

Coca-Cola Enterprises Inc. (NYSE:CCE) Seasonal Chart

Coca-Cola Enterprises Inc. (NYSE:CCE) Seasonal Chart

Cameco Corporation  (TSE:CCO) Seasonal Chart

Cameco Corporation (TSE:CCO) Seasonal Chart

Danaher Corporation  (NYSE:DHR) Seasonal Chart

Danaher Corporation (NYSE:DHR) Seasonal Chart

United Technologies Corporation  (NYSE:UTX) Seasonal Chart

United Technologies Corporation (NYSE:UTX) Seasonal Chart

S&P Global Inc. (NYSE:SPGI) Seasonal Chart

S&P Global Inc. (NYSE:SPGI) Seasonal Chart

 

 

The Markets

Stocks mustered marginal gains on Wednesday as the S&P 500 Index charted a seventh straight session of gains.  The large-cap benchmark was higher by around a tenth of a percent with utilities topping the leaderboard.  North of the border, the TSX Composite closed in the red after testing levels from which it failed at back in April.  The Canadian benchmark traded to a high of around 15,750, representing gap resistance charted back in February, a level that it was unable to overcome in the months that followed.  Digestion of the recent gains and reaction to this important pivot point is likely as the benchmark seeks to resolve one of the most overbought moves in over a decade.  In recent days, the relative strength index (RSI) hit  high of around 79, the highest level since 2006.  Horizontal resistance spanning the past  three years is significant, suggesting a break would be substantial.  The chart pattern over the past three years gives the appearance of a reverse head-and-shoulders pattern with the shoulders apparent late in 2014 and mid-2017, while the head bottomed out at the early 2016 low.  Keep in mind that this is typically a bottoming pattern, realized at a significant low in the level of an investment and not typically around horizontal resistance that is derived around the all-time highs.  But regardless of where the pattern forms, the higher significant low charted this past summer is effectively step one of a series of higher-highs and higher-lows, a characteristic of a positive trending market.  The next step is to achieve those higher-high levels, which would be confirmed by a move above the February high around 15,943.  Seasonally, much like the US, the Canadian benchmark tends to hit a low in the month of October, moving higher through the end of the year, although its performance relative the the S&P 500 Index tends to be less given the drag from gold and oil producers through the fourth quarter.

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S&P/TSX Composite index Seasonal Chart

^GSPTSE Relative to the S&P 500
^GSPTSE Relative to the S&P 500

^GSPTSE Monthly Averages

On schedule for this time of week is the US petroleum status report for the period ending September 29.  The EIA indicated that oil inventories fell by 6.0 million barrels last week, while stockpiles of gasoline increased by 1.6 million.  The result put downward pressure on the days of supply of oil, which had charted four weeks of significant increases amidst the backlog created from shuttered refineries following Hurricane Harvey.  The days of supply now sits at 30.3, just over 9 days above average for this time of year.  Seasonally, this gauge of supply typically rises through the month of October amidst the backlog created from refinery maintenance.  On the production side for the refined product, the level has essentially flat-lined in recent weeks, having recouped only about a third of the loss attributed to Harvey.  The year-to-date change continues to hold above average as refiners seek to satisfy strong demand.  Demand, as gauged by the level of product supplied, dipped last week, but it is still almost 10% above average through the end of September.  Production and the level of product supplied of gasoline typically chart an intermediate low in October.

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

With energy commodities remain in a state of flux, investors took the opportunity to book profits in oil, which had traded to overbought levels in recent weeks.  The price of WTI Crude has retraced the gains charted since the break above its 200-day moving average last month, testing this level as a point of support.  Previous trendline resistance now hovers around $48.50.  Seasonally, the price of oil tends to fade during the fourth quarter as demand rolls back following the stronger summer period.

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Crude Oil Futures (CL) Seasonal Chart
FUTURE_CL1 Relative to the S&P 500FUTURE_CL1 Relative to Gold

FUTURE_CL1 Monthly Averages

Sentiment on Wednesday, as gauged by the put-call ratio, ended bullish at 0.83.

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Sectors and Industries entering their period of seasonal strength:

Railroads Industry Seasonal Chart
S5RAIL Index Relative to the S&P 500S5RAIL Index Relative to the Sector

S5RAIL Index Monthly Averages

 

 

Seasonal charts of companies reporting earnings today:

Constellation Brands Inc (STZ) Seasonal Chart Costco Wholesale Corporation (COST) Seasonal Chart Helen of Troy Limited (HELE) Seasonal Chart International Speedway Corporation (ISCA) Seasonal Chart Trilogy Metals Inc. (TMQ) Seasonal Chart 

 

 

S&P 500 Index

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TSE Composite

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