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Stock Market Outlook for January 11, 2018

Domestic production of oil dipped sharply to start the year, a reverse of last year’s start.

 

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 pulled back slightly on Wednesday as investors found concern in a report that China may curb the purchases of US sovereign debt.  News suggesting that the US may pull out of NAFTA also didn’t help.  The S&P 500 Index shed just over a tenth of one percent, taking some of the steam out of overbought momentum indicators.  Financials and interest rate sensitive sectors continued to move inversely to one another as the market reacts to the ongoing rise in yields.  The iShares US Real Estate ETF fell by 1.22%, gapping below its 200-day moving average to chart the first close below this level of long-term support since the spring of last year.  The ETF is presently testing long-term trendline support that spans the past eight years, a break of which could trigger a cascade of selling pressures in this fund that remains as one of the most actively traded ETFs in the market.  The next period of strength for real estate stocks runs through the spring.

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iShares Dow Jones US Real Estate (ETF) (NYSE:IYR) Seasonal Chart
IYR Relative to the S&P 500IYR Relative to the Sector

IYR Monthly Averages

Turning to the weekly report on petroleum inventories in the US, the EIA is indicating that oil stockpiles declined by 4.9 million barrels last week, stripping another four-tenths of a day of supply from the market.  Days of supply now sits at 24.2, which is around two and a half days above average for this time of year.  A decline in imports and a sharp drop in domestic production influenced the weekly tally.  Domestic production of crude oil saw the largest decline to start the year on record, the reverse of what was realized at this time last year.  Domestic production has become an important area to watch as producers in the US capture market share and threaten a renewed supply glut should OPEC choose to discontinue caps that have brought inventories back inline with historical averages.

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

As for gasoline, the 4.1 million barrel injection to inventories propelled the days of supply higher by seven-tenths to 26.1.  The average level for this time of year is 24.9.  The gain, as a percentage change in the level of inventories, is inline with the seasonal average for the start of the year.  Meanwhile, production of the refined commodity was down, inline with the seasonal average change, while the level of product supplied was higher, moving inversely to seasonal norms.  Product supplied plunged sharply into the end of last year, therefore a rebound into the start of the new year is not that unexpected as deliveries get back on schedule following the holidays.  Seasonally, production and product supplied typically dip through the colder winter period as demand for driving purposes wanes.  Seasonally, gas prices tend to rise at the pumps starting from the end of January through to the start of summer.

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 moved higher following the report, adding close to one percent on the day.  Price remains on track to test previous support around $77, representing the target of a large-scale head-and-shoulders bottoming pattern.

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Crude Oil Futures (CL) Seasonal Chart

Sentiment on Wednesday, as gauged by the put-call ratio, ended bullish at 0.72.

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Seasonal charts of companies reporting earnings today:

Delta Air Lines, Inc. (DAL) Seasonal Chart FuelCell Energy, Inc. (FCEL) Seasonal Chart  Shaw Communications Inc. (SJR) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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