Contact | RSS Feed

Stock Market Outlook for October 11, 2017

Stocks in “wait-and-see” mode ahead of earnings.

 

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:

SeaChange Intl, Inc. (NASD:SEAC) Seasonal Chart

SeaChange Intl, Inc. (NASD:SEAC) Seasonal Chart

Clear Channel Outdoor Holdings Inc. (NYSE:CCO) Seasonal Chart

Clear Channel Outdoor Holdings Inc. (NYSE:CCO) Seasonal Chart

Aecom Technology Corp. (NYSE:ACM) Seasonal Chart

Aecom Technology Corp. (NYSE:ACM) Seasonal Chart

Equinix, Inc. (NASD:EQIX) Seasonal Chart

Equinix, Inc. (NASD:EQIX) Seasonal Chart

Crown Castle Intl Corp. (NYSE:CCI) Seasonal Chart

Crown Castle Intl Corp. (NYSE:CCI) Seasonal Chart

Morgan Stanley  (NYSE:MS) Seasonal Chart

Morgan Stanley (NYSE:MS) Seasonal Chart

Agilent Technologies Inc. (NYSE:A) Seasonal Chart

Agilent Technologies Inc. (NYSE:A) Seasonal Chart

The Charles Schwab Corporation  (NYSE:SCHW) Seasonal Chart

The Charles Schwab Corporation (NYSE:SCHW) Seasonal Chart

CBS Corp. (NYSE:CBS) Seasonal Chart

CBS Corp. (NYSE:CBS) Seasonal Chart

CA, Inc.  (NASDAQ:CA) Seasonal Chart

CA, Inc. (NASDAQ:CA) Seasonal Chart

 

 

The Markets

Stocks are in “wait-and-see” mode as investors prepare for key earnings reports scheduled to be released at the end of the week.  The S&P 500 Index saw a gain of around two-tenths of one percent, remaining pinned to all-time high levels.  A look at the hourly chart shows a minor trading range has developed between 2540 on the downside at 2555 on the upside, which has brought an end to the rising short-term trend that spanned the last week of September and the first week of October.  Momentum on this hourly look, according to the relative strength index (RSI), had recently become the most overbought in decades, reaching a high of around 87.  Levels 70 and above are considered to have overbought characteristics.  Consolidation was inevitable.  Downside risks outside of the short-term range point to 2525, representing trendline support stemming from the August lows.  Seasonally, trading activity in the broad market tends to become mixed in the middle of October as investors digest the earnings reports; plenty of catalysts are ahead to push and pull equity prices in the weeks to come.

image

image

Tuesday’s session had a risk-off tilt as utilities and consumer staples, two defensive sectors, topped the leaderboard.  The jump in shares of Wal-Mart (WMT) acted as a benefit to the consumer staples sector as the massive retailer announced a $20 billion share buyback.  Shares of WMT gapped higher by around 5%, breaking above an ascending triangle continuation pattern, which easily projects upside potential beyond $90.  Seasonally, shares of Wal-Mart tend to post gains in September, October, and November, benefitting from end of year consumer spending patterns surrounding the holidays.

image

Wal-Mart Stores, Inc.  (NYSE:WMT) Seasonal Chart
WMT Relative to the S&P 500WMT Relative to the Sector

WMT Monthly Averages

Flipping back to the S&P 500 Index, today is a rather important anniversary for the large-cap benchmark as it was 10 years ago that the last all-time intraday high was charted before the economic recession dragged upon stocks in the years that followed.  The benchmark charted a high of 1576.09 on October 11, 2007, a level that was not exceeded until 2013.  It was in 2007 that one of the worst favourable six month periods for stocks was recorded as the S&P 500 Index shed 8.32% between the close of October 26th and the close of May 5th of the following year.  But for seasonal investors that relied on dates alone, the favourable six month trend provided a rather nerve-racking experience with declines of around 20% near the trough in both the 2007/2008 and 2008/2009 seasonal timeframes.  An appropriate technical and fundamental overlay would have provided a much better experience.  With stocks at fresh all-time highs into the month of October, it could be easy to make the same assumption that the market could suffer a similar fate going into this year’s seasonal trend, but that would be premature to say.  One simple technical indicator to look at is the cumulative advance-decline volume line for the NYSE.  This gauge of breadth has been charting new highs in recent days, whereas in 2007 the indicator peaked out in May and was already in the midst of defining a trend of lower-highs and lower-lows by the time the October 2007 buy date for the broad market rolled around.  So while anything is possible between the average buy and sell dates for the broad market, there is still very little to grasp technically or fundamentally that suggests a similar outcome to the results recorded a decade ago.

image

Then

image

Now

image

Another technical indicator and gauge of sentiment that was flagging a warning sign back in 2007 was the copper/gold ratio.  The ratio of the industrial metal, which typically performs well during periods of economic strength, and the precious metal, which tends to excel during periods of equity market volatility, peaked in October of 2006 and charted a series of lower-highs through 2008 before plunging to its ultimate low early in 2009.  The decline in risk sentiment warranted caution going into the risk-on time of year between October and May.  The ratio is now seemingly on a trend of higher-highs and higher-lows, rebounding from a significant low charted one year ago. Strength in the industrial metal can be attributed to strong manufacturing data recorded around the globe in recent months and the period of strength for the commodity is still ahead.  The price of copper tends to move higher between mid-December and mid-April, giving lift to the copper/gold ratio during the same timeframe.  The ratio is presently testing an important pivot point around 0.0024, a level that has shown support and resistance characteristics in the past.

image

Copper Futures (HG) Seasonal Chart
FUTURE_HG1 Relative to the S&P 500FUTURE_HG1 Relative to Gold

FUTURE_HG1 Monthly Averages

Sentiment on Tuesday, as gauged by the put-call ratio, ended bullish at 0.73.

image

 

 

Seasonal charts of companies reporting earnings today:

Bank of the Ozarks (OZRK) Seasonal Chart Blackhawk Network Holdings, Inc. (HAWK) Seasonal Chart BlackRock, Inc. (BLK) Seasonal Chart Delta Air Lines, Inc. (DAL) Seasonal Chart Fastenal Company (FAST) Seasonal Chart 

 

 

S&P 500 Index

image

image

 

 

TSE Composite

image

image

 

Sponsored By...

Comments are closed.