Contact | RSS Feed

Stock Market Outlook for December 4, 2017

Strong data released out of Canada sends the Canadian Dollar soaring.

 

Real Time Economic Calendar provided by Investing.com.

 

*** 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:

Teck Resources Limited (TSE:TCK-b) Seasonal Chart

Teck Resources Limited (TSE:TCK-b) Seasonal Chart

National-Oilwell Varco, Inc.  (NYSE:NOV) Seasonal Chart

National-Oilwell Varco, Inc. (NYSE:NOV) Seasonal Chart

GMP Capital Inc. (TSE:GMP) Seasonal Chart

GMP Capital Inc. (TSE:GMP) Seasonal Chart

Tesco Corp. (NASD:TESO) Seasonal Chart

Tesco Corp. (NASD:TESO) Seasonal Chart

Noble Drilling Corp. (NYSE:NE) Seasonal Chart

Noble Drilling Corp. (NYSE:NE) Seasonal Chart

Transocean, Inc. (NYSE:RIG) Seasonal Chart

Transocean, Inc. (NYSE:RIG) Seasonal Chart

Stornoway Diamond (TSE:SWY) Seasonal Chart

Stornoway Diamond (TSE:SWY) Seasonal Chart

ShawCor (TSE:SCL) Seasonal Chart

ShawCor (TSE:SCL) Seasonal Chart

Premium Brands Holdings (TSE:PBH) Seasonal Chart

Premium Brands Holdings (TSE:PBH) Seasonal Chart

Edwards Lifesciences Corp. (NYSE:EW) Seasonal Chart

Edwards Lifesciences Corp. (NYSE:EW) Seasonal Chart

Pan American Silver Corp.  (TSE:PAAS) Seasonal Chart

Pan American Silver Corp. (TSE:PAAS) Seasonal Chart

Agnico-Eagle Mines Ltd.  (TSE:AEM) Seasonal Chart

Agnico-Eagle Mines Ltd. (TSE:AEM) Seasonal Chart

Husky Energy Inc.  (TSE:HSE) Seasonal Chart

Husky Energy Inc. (TSE:HSE) Seasonal Chart

 

 

The Markets

A wild day for stocks to start the last month of the year as investors reacted to headlines that Michael Flynn would testify against President Donald Trump in the Russia investigation.  The S&P 500 Index fell by over 1% within minutes of the headlines crossing the wire, attracting a bid in volatility plays, including bonds and gold.  However, with the Senate nearing a positive resolution to their tax reform bill, investors attempted to set aside the unknown relating to the Trump/Russia scandal and focussed, once again, on the positive impact that should materialize from this significant piece of legislation.  The large-cap benchmark ended lower by around two-tenths of one percent, remaining supported over the short-term at the rising 20-day moving average.

image

Energy stocks managed to escape much of the selling  pressures that materialized intraday as investors reacted to the OPEC output cut extension, which has kept the price of oil pinned to the highs of the year just below $60.  The S&P 500 Energy sector benchmark is approaching previous short-term resistance around 520.  Support has become apparent around the 200-day moving average, which continues to point lower.  Performance relative to the market has been generally flat for much of the past few months.  As noted in the section below on sectors/industries entering their period of seasonal strength, energy companies start to perk up around this time of year, emerging from their period of seasonal weakness and trading higher through the spring.  While the peak period of strength for the trade is between January and May, energy stocks appear to be solidifying a base, attempting to entice investors back to this market segment that has been left for dead following the supply glut in oil that still persists.

image

Energy Sector Seasonal Chart

ENERGY Relative to the S&P 500
ENERGY Relative to the S&P 500

ENERGY Monthly Averages

With the monthly employment report in the US delayed by a week as a result of the Thanksgiving holiday, we look to data released out of Canada for a glimpse at the state of employment in North America.  The headline print of Canada‚Äôs Labour Force Survey indicated that 79,500 jobs were added last month, far surpassing the 10,000 jobs forecasted by analysts.  The unemployment rate fell by four-tenths to 5.9%, also better than the consensus estimate of 6.2%.  Stripping out the seasonal adjustments, 5,100 jobs were actually added, or an increase of 0.03%, firmly better than the 0.4% average decline for this second to last month of the year.  Only one other year in the past 20 has shown an increase in the level of employment in the month of November; amidst the economic rebound  from the Great Recession in 2009, employment showed a rare November increase of 0.1%.  The abnormal result recorded this year is creating the large seasonal adjustment that the market is reacting to.  Year-to-date, growth in employment is running five-tenths of a percent above average, on track for the best calendar year performance in a decade.  Looking below the surface, full-time employment actually declined by 0.7%, inline with the average decrease for November, while part-time employment was higher by 2.9%, above average for the month by 1.3%.  On an industry level, manufacturing is dominating this year, showing a rare gain in November and moving back towards the high of the year.  Wholesale and retail trade also surged in the month as retailers hire workers for the Christmas rush.  Finance jobs also showed an abnormal increase for this second to last month of the year.  On the flipside, employment in utilities remains under pressure as efficiencies with respect to demand and supply limit the need for workers.  As well, weakness in professional and business support services, along with an abnormal November decline in health care is weighing on the aggregate result and potentially keeping a lid of wage growth given the higher paying opportunities that these areas present.  Overall, removing the part-time bump attributed to the above average seasonal hiring in retail, this was a fairly normal result with pockets of strength and weakness underlying the headline print.  Manufacturing remains a driving force on both sides of the border, even during this period that typically sees waning activity through the fourth quarter.  Strength in this segment of the economy typically elevates into the spring.  Seasonal charts for the remaining categories of the report are available in the chart database at http://charts.equityclock.com/canada-labour-force-survey.

Canada Employment Seasonal Chart

 Canada Employment full-time Seasonal Chart Canada Employment part-time Seasonal Chart Canada Unemployment Seasonal Chart Canada Labour force Seasonal ChartCanada Population Seasonal Chart

Also released north of the border was GDP figures for the month of September.  The headline print indicated that the economy grew by 0.2% in September, marginally better than the consensus estimate calling for a 0.1% rise.  Year-over-year, the rate now stands at 3.3%.  Stripping out the seasonal adjustments, monthly GDP was higher by 5.0%, slightly better than the 4.8% average gain for the month of September.  Year-to-date, GDP is higher by 8.7%, marginally above the 8.5% average gain through the first three quarters of the year.  This is the best pace through this point in the year since 2006.  Parsing through the details, construction shows prominent in the results with contributions from this category running over four percent above average through the nine months ending in September.  Inputs to the construction process, including building materials, cement, steel, and machinery are showing impressive gains, trending well above average.  This is precisely what you want to see for an economy that is expected to grow into the future as construction projects anticipate longer-term future needs.  Beyond that, above average strength in transportation, information technology, and energy shows an economy that is humming along, participating in the uptick in economic activity around the globe.  For a breakdown of all of the categories from a seasonal perspective, the charts are accessible via the chart database at http://charts.equityclock.com/canada-monthly-gross-domestic-product-gdp-by-industry.

Canada GDP - All industries Seasonal Chart

Monthly Canada GDP - All industries Data

The strong economic results fuelled a surge in the value of the Canadian dollar, which rallied by almost 1.6% relative to its US counterpart.  The domestic currency is now back to short-term resistance around 0.79, having bounced firmly from support around 0.77.  Momentum indicators for the currency have been bearish for the past few months, conducive for a downtick in the currency during its period of seasonal weakness, but early signs that momentum is shifting more bullish are emerging.  A significant point of resistance at the 50-day moving average is directly overhead at 0.79, a level that will either confirm the negative intermediate trend or suggest the resumption of the longer-term positive direction.  The two cent range suggests a calculated move of an equivalent magnitude beyond the upper or lower limit of the span, depending on the direction of the break.  The Canadian currency remains seasonally weak into January.

image

Canadian Dollar Forex (CAD) Seasonality

Monthly Seasonal Canadian Dollar Forex (CAD)

Sentiment on Friday, as gauged by the put-call ratio, ended bullish at 0.78.

image

 

 

 

 

Sectors and Industries entering their period of seasonal strength:

PHLX Oil Service Sector Seasonal Chart

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

^OSX Monthly Averages

Oil & Gas Equipment Industry Seasonal Chart
S5OILE Index Relative to the S&P 500S5OILE Index Relative to the Sector

S5OILE Index Monthly Averages

S&P/TSX Smallcap Index Seasonality

$SPTSES Relative to the S&P 500
$SPTSES Relative to the S&P 500

Monthly Seasonal S&P/TSX Smallcap Index

 

 

Seasonal charts of companies reporting earnings today:

Ascena Retail Group, Inc. (ASNA) Seasonal Chart  GW Pharmaceuticals Plc (GWPH) Seasonal Chart

 

 

S&P 500 Index

image

image

 

 

TSE Composite

image

image

 

Sponsored By...

Comments are closed.