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Stock Market Outlook for December 6, 2017

Consumer Goods exports from Canada showing the weakest calendar year performance on record.

 

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:

  • No stocks identified for today

 

 

The Markets

Stocks closed lower on Tuesday as investors continued to book profits from the recent rally attributed to the prospect of tax reform.  The S&P 500 Index shed nearly four-tenths of one percent, following through with Monday’s reversal from all-time highs.  Momentum indicators are once again rolling over, triggering sell signals on Stochastics and RSI.  Some of the market darlings from recent days, such as transportation retail, banks, and telecom, were the largest drags during Tuesday’s session.  The Vanguard Telecommunications Services ETF (VOX) is rolling over from the upper limit of a broadening, declining trend channel, maintaining a series of lower-lows and lower-highs as investors shy away from this defensive, low growth subsector.  Seasonally, stocks in this industry tend to strengthen between early September and late December, but, while the industry is showing gains, thus far, over the period, the trend of the industry ETF certain is not very confidence inspiring.  Resistance around the declining 200-day moving average suggests concerns pertaining to the longer-term trend.  Average gain for this market segment in the month of December is 1.7%.

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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

Aside from a handful of ISM service reports, which were mostly lacklustre, economic news was light during Tuesday’s session.  North of the border, Statscan released merchandise trade figures for the month of October.  The headline print indicated that exports increased by 2.7% in the month, while imports declined by 1.6%, cutting the trade deficit by over half to $1.5 Billion.  Stripping out the seasonal adjustments, exports were actually higher by 6.5% and imports higher by 1.0%; the average gain for each in October is 3.6% and 4.3%, respectively.  Both exports and imports remain below their seasonal average trends year-to-date.  Evidence of a strong manufacturing economy remains apparent in the results with various metals, lubricants, packaging materials, machinery, and heavy trucks showing growth this year that is firmly above average, helping to fulfil the demand for durable goods orders.  On the flipside is the below average growth in the consumer categories, emphasizing the fractured state of the economy.  Consumer goods exports are down by 1.7% year-to-date, the weakest performance on record.  The average increase in consumer goods exports through the month of October is 25.0%.  Part of the disparity between the manufacturing and consumer statistics relates to the strong inflationary pressures being realized by producers and rather tame consumer price increases, but, yet again, this stems from robust demand in the manufacturing economy and subdued demand amongst consumer goods.  Consumer spending tends to dominate market and economic activity through the holiday season, therefore it will be interesting to see if these hints of weakness coming into the final weeks of the year materialize in the actual results.  November’s report on retail sales in the US will be released next Thursday.  For a breakdown of all of the categories in this report, you can access the seasonal charts via the database at http://charts.equityclock.com/canadian-international-merchandise-trade-exports-imports.

Total Exports of all merchandise Seasonal Chart

Monthly Total Exports of all merchandise Data

Industrial machinery, equipment and parts Seasonal ChartMedium and heavy trucks, buses and other motor vehicles Seasonal ChartForestry products and building and packaging materials Seasonal Charthttp://charts.equityclock.com/seasonal_charts/economic_data/v54056946_seasonal_chart.PNG

Total Imports of all merchandise Seasonal Chart

Monthly Total Imports of all merchandise Data

While we wait those results on retail trade, automobile sale tallies for November are rather encouraging.  Total vehicle sales were higher by 2.3% last month, positively diverging from the 6.1% average decline for November.  Vehicle sales are now lower on the year by 17.5%, below the seasonal norm by 5.3%.  The result remains on track for the weakest calendar year performance since the years leading into the last recession.  Heavy weight trucks remains the lone category that is trending above average.  Part of the reason for the lag in auto sales by consumers through most of the year is the result of the increasing shift towards purchases at the end of the year when year-end/holiday deals entice buyers to showrooms.  Historically, buyers would make their purchases following the colder winter months, but with deals including free winter packages, discounted lease payments, and the reduction of the price of current year models, the seasonal trend has shifted towards the end of the year, which is attempting to overtake the spring buying season.  December is the second best month of the year for vehicle sales, rising by 18.3%, on average.  The strong vehicle sales result for November is a positive for next week’s report on retail spend.

Total Vehicle Sales Seasonal Chart

Monthly Total Vehicle Sales Data

Total Vehicle Sales Seasonal Chart

Motor Vehicle Retail Sales: Domestic and Foreign Autos Seasonal Chart Motor Vehicle Retail Sales: Light Weight Trucks Seasonal Chart Motor Vehicle Retail Sales: Heavy Weight Trucks Seasonal Chart

Sentiment on Tuesday, 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:

Energy Equipment Industry Seasonal Chart
S5ENRE Index Relative to the S&P 500S5ENRE Index Relative to the Sector

S5ENRE Index Monthly Averages

 

 

Seasonal charts of companies reporting earnings today:

American Eagle Outfitters, Inc. (AEO) Seasonal Chart Analogic Corporation (ALOG) Seasonal Chart  Broadcom Limited (AVGO) Seasonal Chart Brown Forman Corporation (BF.B) Seasonal Chart Cherokee Inc. (CHKE) Seasonal Chart Comtech Telecommunications Corp. (CMTL) Seasonal Chart  Fred's, Inc. (FRED) Seasonal Chart Greif Bros. Corporation (GEF) Seasonal Chart H&R Block, Inc. (HRB) Seasonal Chart  John Wiley & Sons, Inc. (JW.A) Seasonal Chart Keysight Technologies Inc. (KEYS) Seasonal Chart  Korn/Ferry International (KFY) Seasonal Chart Lee Enterprises, Incorporated (LEE) Seasonal Chart lululemon athletica inc. (LULU) Seasonal Chart NCI Building Systems, Inc. (NCS) Seasonal Chart   SeaChange International, Inc. (SEAC) Seasonal Chart  Tailored Brands, Inc. (TLRD) Seasonal Chart Vera Bradley, Inc. (VRA) Seasonal Chart Verint Systems Inc. (VRNT) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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