Contact | RSS Feed

Stock Market Outlook for February 1, 2018

S&P 500 Index has averaged a gain of 0.2% in February; positive in 56% of periods.

 

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:

Cherokee, Inc. (NASD:CHKE) Seasonal Chart

Cherokee, Inc. (NASD:CHKE) Seasonal Chart

Aon Corp. (NYSE:AON) Seasonal Chart

Aon Corp. (NYSE:AON) Seasonal Chart

McCormick & Company, Incorporated  (NYSE:MKC) Seasonal Chart

McCormick & Company, Incorporated (NYSE:MKC) Seasonal Chart

ENSCO International PLC  (NYSE:ESV) Seasonal Chart

ENSCO International PLC (NYSE:ESV) Seasonal Chart

Chevron Corporation  (NYSE:CVX) Seasonal Chart

Chevron Corporation (NYSE:CVX) Seasonal Chart

Brown-Forman Corporation (NYSE:BF.B) Seasonal Chart

Brown-Forman Corporation (NYSE:BF.B) Seasonal Chart

Comstock Resources, Inc.  (NYSE:CRK) Seasonal Chart

Comstock Resources, Inc. (NYSE:CRK) Seasonal Chart

AutoNation, Inc.  (NYSE:AN) Seasonal Chart

AutoNation, Inc. (NYSE:AN) Seasonal Chart

Cimarex Energy Co. (NYSE:XEC) Seasonal Chart

Cimarex Energy Co. (NYSE:XEC) Seasonal Chart

 

 

The Markets

Stocks capped off the month of January with a slight gain on Wednesday as investors squared away portfolio positions ahead of the new month.  The S&P 500 Index shed a mere five basis points, flat-lining after testing gasp resistance at the highs of the session closer to 2840.

image

For the month, the large-cap index was higher by 5.62%, the best January performance in 20 years.  The return far surpasses the 0.8% average gain for the benchmark, based on data from the past 50 years.  The gain was led by consumer discretionary, technology, and health care stocks, playing out well from a seasonal perspective, which has historically resulted in leadership from two of the top three performers.  Only utilities posted a loss in the month as interest rate sensitive stocks react to the selloff in the bond market.  Each sector benchmark has maintained support around 20 and 50 month moving averages with the exception of the energy sector, which closed at its 50-month moving average in this final session of January’s trade.  Energy is the only sector showing signs of resistance on this long-term look, presenting a hurdle in the way of fulfilling its average tendency for gains through to the spring.

imageimageimageimageimageimageimageimageimageimage

Looking ahead, as noted in a previous report, the month of February tends to be the weakest month of the six month positive trend for equity benchmarks in the US.  Over the past 50 years, the S&P 500 Index has averaged a gain of a mere 0.2% in the month of February with positive results recorded in 56% of periods.  Returns have ranged from a loss of 11.0% in 2009 to a gain of 7.1% in 1986.  Gyrations in the month tend to follow the conclusion of earnings season, leaving investors to fend for themselves until companies report again in April.

image

image

Parsing through the sectors, energy and materials have averaged the best performance for the month, returning 1.3% and 1.6%, respectively, based on data from the past 20 years.  Utilities, Technology, Industrials, and Financials, meanwhile, have averaged declines, dragging on broad market benchmarks over the period.  A pickup in manufacturing activity following the winter slowdown is a dominant factor keeping a bid under the price of commodity producers, as well as the commodities themselves.  Oil, gold, silver, platinum, and copper have each averaged solid returns in the month as demand outweighs supply.  Amongst the broader equity benchmarks, small caps tend to outperform large caps, stocks in Canada tend to outperform those in the US, and value has outperformed growth, on average, in this winter month.  The month then gives way to two of the strongest consecutive months of the year in March and April as funds flow into stocks surrounding the tax deadline.  Given the overbought state of stocks at present, weakness in the month of February would not be out of the question as some of the high flyers that sprinted out of the gate for 2018 rest and/or retrace.

Energy Sector Seasonal Chart

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

ENERGY Monthly Averages

Materials Sector Seasonal Chart

MATERIALS Relative to the S&P 500
MATERIALS Relative to the S&P 500

MATERIALS Monthly Averages

On the economic front, Statscan released their monthly look at Gross Domestic Product in Canada.  The headline print indicated that GDP increased by 0.4% in November, firmly above the consensus analyst estimate that called for no change in the second to last month of the calendar year.  Stripping out the seasonal adjustments, GDP actually increased by 0.5%, positively diverging form the 0.3% average decline for the month.  The result puts the year-to-date change nine-tenths of a percent above the seasonal norm with just one month left in the year to report.  This is the best performance through the first eleven months of the year since 2005.  Manufacturing and industrial production were substantial positives in the report, showing gains that were well above average as the Canadian dollar pulled back following its summer rise, helping export demand.  Strength remains fairly broad across the board with business sector goods and services by far leading the way.  Bottom line is that the economy is firing on all cylinders, benefiting from the global synchronized growth that kicked into high gear within the past year.  Moving forward, however, the strength in the domestic currency that began last spring looks positioned to act as a headwind into 2018, potentially keeping a lid on growth as investment instead flows to US counterparts.  The Canadian Dollar, relative to the US currency, has been carving out a massive bottoming pattern over the past few years, presenting upside potential beyond the September highs around 83 cents.  Seasonally, the Canadian Dollar tends to move higher into the spring.  For a complete breakdown of the Canada’s GDP report, the seasonal 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

Canadian Dollar Forex (CAD) Seasonality

Monthly Seasonal Canadian Dollar Forex (CAD)

On to the weekly petroleum status report, the EIA is indicating that oil stockpiles increased by 6.8 million barrels last week, reversing a trend of drawdowns that had become the norm over the past few months.  The resulting impact saw the days of supply of the commodity jump by a full day to 25.1, now three days above average for this time of year.  A rise in imports and another increase in domestic production kept pressure on supplies of the commodity throughout the week, threatening to destabilize the progress made to bring the oil market back into balance.  Oil inventories seasonally rise between now and May.  But while oil inventories returned to a path of growth, gasoline stockpiles saw their first drawdown in a month, suggesting an earlier than average peak to inventories of the refined commodity.  Gasoline inventories typically hit a high for the year around the second week in February when demand is the weakest and producers prepare to transition from winter to summer blend production.   As it pertains to demand, product supplied remained surprisingly upbeat, pushing higher in the past week and diverging from the average seasonal trend that calls for declines into February.  The colder weather and the high price of this fuel has yet to deter consumers from buying.  Investors may need a week or two to digest and confirm these new trends as the price of oil trades back to levels of support.  Declines in oil inventories since September has seen around $20 added to the price of West Texas Intermediate Crude and a trend of inventory injections could cause investors to question whether the trend of higher-highs and higher-lows remains warranted.  Trend channel support for WTI Crude is around $62.

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

image

Crude Oil Futures (CL) Seasonal Chart

FUTURE_CL1 Monthly Averages

Sentiment on Wednesday, as gauged by the put-call ratio, ended bullish at 0.90.

image

 

 

 

Seasonal charts of companies reporting earnings today:

ABIOMED, Inc. (ABMD) Seasonal Chart Alibaba Group Holding Limited (BABA) Seasonal Chart Alphabet Inc. (GOOGL) Seasonal Chart Altria Group (MO) Seasonal Chart Amazon.com, Inc. (AMZN) Seasonal Chart Amgen Inc. (AMGN) Seasonal Chart Apple Inc. (AAPL) Seasonal Chart athenahealth, Inc. (ATHN) Seasonal Chart AutoNation, Inc. (AN) Seasonal Chart Baxter International Inc. (BAX) Seasonal Chart Bemis Company, Inc. (BMS) Seasonal Chart Boston Scientific Corporation (BSX) Seasonal Chart Brunswick Corporation (BC) Seasonal Chart Cigna Corporation (CI) Seasonal Chart ConocoPhillips (COP) Seasonal Chart DowDuPont Inc. (DWDP) Seasonal Chart Eastman Chemical Company (EMN) Seasonal Chart Eaton Corporation, PLC (ETN) Seasonal Chart Edwards Lifesciences Corporation (EW) Seasonal Chart Hershey Company (The) (HSY) Seasonal Chart International Paper Company (IP) Seasonal Chart Marathon Petroleum Corporation (MPC) Seasonal Chart Marsh & McLennan Companies, Inc. (MMC) Seasonal Chart Mastercard Incorporated (MA) Seasonal Chart Mattel, Inc. (MAT) Seasonal Chart McKesson Corporation (MCK) Seasonal Chart Parker-Hannifin Corporation (PH) Seasonal Chart Quest Diagnostics Incorporated (DGX) Seasonal Chart Ralph Lauren Corporation (RL) Seasonal Chart Royal Dutch Shell PLC (RDS.A) Seasonal Chart Time Warner Inc. (TWX) Seasonal Chart United Parcel Service, Inc. (UPS) Seasonal Chart USG Corporation (USG) Seasonal Chart Valero Energy Corporation (VLO) Seasonal Chart Visa Inc. (V) Seasonal Chart Vodafone Group Plc (VOD) Seasonal Chart Xylem Inc. (XYL) Seasonal Chart

 

 

S&P 500 Index

image

image

 

 

TSE Composite

image

image

 

Sponsored By...
Seasonal Advantage Portfolio by CastleMoore

Comments are closed.