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Stock Market Outlook for December 14, 2017

Prices running hot for producers.

 

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:

Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) Seasonal Chart

Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) Seasonal Chart

 

 

The Markets

Stocks closed generally higher on Wednesday, although weakness in financials capped the gains on the day.  The S&P 500 Index shed a mere five basis points as investors reacted to Janet Yellen’s last press conference as Fed Chair.  As part of her final duties as Fed chief, she announced a quarter point increase in the Fed Funds Rate, continuing a path towards a tighter monetary policy.  Bond investors were undeterred by the action, sending treasury yields lower and pressuring the stocks of financial institutions.  The US Dollar also took a sharp turn lower as some anticipated a more hawkish tone.  Support on the US Dollar Index is apparent around 92.50.  Seasonally, both yields and the dollar tend to move higher through the first few months of the new year.

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US Dollar Index Futures (DX) Seasonal Chart

DX.FUT Relative to the S&P 500
DX.FUT Relative to the S&P 500

DX.FUT Monthly Averages

Turning to the weekly look at the state of petroleum in the US, the EIA is indicating that oil inventories declined by 5.1 million barrels last week, a result that was more than offset by the 5.7 million barrel rise in gasoline stockpiles.  The days of supply of oil is back to around the lows of the year originally charted prior to the storms that hit the southern states back in September.  The gap versus the average level of supply for this time of year is now closer to four days.  However, offsetting the progress on the oil side is the growing supply of gasoline, which now sits at an even 25 days of supply.  The average for this time of year is 24.3.  The level of gasoline product supplied continues to trend lower as consumer demand wanes, threatening demand for the raw input in future weeks.  Gasoline stockpiles seasonally rise through the colder winter months, while oil stockpiles begin to rise, on average, around the middle of January.

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

The price of oil closed lower following the report, shedding close to one percent by the closing bell.  A short-term head-and-shoulders topping pattern presents downside risks towards $53 for the price of WTI Crude.

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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

On the economic front, inflation data released over the past couple of sessions shows that the robust manufacturing activity that has been realized over the past year is having an impact on the prices that producers are paying.  The Producer Price Index for all commodities was higher by 0.5% in November, a positive divergence versus the 0.2% average decline for the second to last month of the year.  Year-to-date, PPI is running 1.6% above average, the best calendar year performance since 2011.  Less food and energy, the performance is more muted at half of a percent above the seasonal norm, but this is also one of the best reads in years.  As for the prices that are impacting consumers, the consumer prices index for all urban consumers was essentially unchanged in November, two-tenths of a percent above the average change for the month.  The inflation gauge remains around two-tenths of one percent below the seasonal average change on the year.  Excluding food and energy, the gap versus the seasonal average trend is closer to four-tenths.  The result, at least on the consumer side, almost gives the Fed a free pass to enact monetary policy as they please given that prices remain stable on a 2% path, a level implied by the Fed as their desired target.  Seasonally, while inflation tends to be soft in the month of December, pricing pressures tend to pick up in the first half of the new year as production activity picks up following the early winter slowdown.

Consumer Price Index for All Urban Consumers: All Items Seasonal Chart

Monthly Consumer Price Index for All Urban Consumers: All Items Data

Consumer Price Index for All Urban Consumers: All Items Seasonal Chart

Consumer Price Index for All Urban Consumers: All Items Less Food and Energy Seasonal Chart Producer Price Index for All Commodities Seasonal Chart  Producer Price Index by Commodity for Final Demand: Finished Goods Seasonal Chart  Producer Price Index by Commodity for Final Demand: Finished Goods Less Foods and Energy Seasonal Chart

Sentiment on Wednesday, as gauged by the put-call ratio, ended bullish at 0.75.

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Seasonal charts of companies reporting earnings today:

Adobe Systems Incorporated (ADBE) Seasonal Chart Costco Wholesale Corporation (COST) Seasonal Chart Jabil Inc. (JBL) Seasonal Chart Oracle Corporation (ORCL) Seasonal Chart Sanderson Farms, Inc. (SAFM) Seasonal Chart Scholastic Corporation (SCHL) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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