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Stock Market Outlook for February 2, 2018

If averages hold true, Friday’s Non-Farm Payroll report could show a decline of 3.1 million positions, non-seasonally adjusted of course.

 

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:

Westport Fuel Systems Inc. (NASD:WPRT) Seasonal Chart

Westport Fuel Systems Inc. (NASD:WPRT) Seasonal Chart

Cass Commercial Corp. (NASD:CASS) Seasonal Chart

Cass Commercial Corp. (NASD:CASS) Seasonal Chart

Yum! Brands, Inc.  (NYSE:YUM) Seasonal Chart

Yum! Brands, Inc. (NYSE:YUM) Seasonal Chart

Murphy Oil Corporation  (NYSE:MUR) Seasonal Chart

Murphy Oil Corporation (NYSE:MUR) Seasonal Chart

Stage Stores, Inc. (NYSE:SSI) Seasonal Chart

Stage Stores, Inc. (NYSE:SSI) Seasonal Chart

Adobe Systems Incorporated  (NASDAQ:ADBE) Seasonal Chart

Adobe Systems Incorporated (NASDAQ:ADBE) Seasonal Chart

Newpark Resources, Inc. (NYSE:NR) Seasonal Chart

Newpark Resources, Inc. (NYSE:NR) Seasonal Chart

CSS Industries, Inc. (NYSE:CSS) Seasonal Chart

CSS Industries, Inc. (NYSE:CSS) Seasonal Chart

Rent-A-Center, Inc  (NASDAQ:RCII) Seasonal Chart

Rent-A-Center, Inc (NASDAQ:RCII) Seasonal Chart

 

 

The Markets

Stocks closed lower on Thursday, ahead of the release of the monthly non-farm payroll report for the month of January.  Analysts are expecting this pivotal report to show a gain of 175,000, a notable improvement from the 148,000 payroll gain reported for December.  Stripping out seasonal adjustments, January is typically the weakest month of the year for payrolls, declining by 2.1%, on average, based on data from the past 50 years.  This would equate to the reduction in the payroll count of 3.1 million as seasonal hires are let go following the end of year holidays.  If recent reports on jobless claims are any gauge of what to expect in the report ahead, the change in January’s payrolls would be expected to be better than average given that initial claims have been well below average through the survey period.  As of January 27th, claims were running 6.9% below average for 2018, a surprisingly strong start given that the economy is at or near full employment.  The performance could be interpreted as employers unwilling to let go any members of their staff as demand for labor outweighs supply.  These are signs of a healthy labor market and confirm the strength in the broader economy.  We’ll have the complete breakdown of the monthly employment report, from a seasonal perspective, in our next report.

Total Nonfarm Seasonal Chart

Monthly Total Nonfarm Data

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On the economic front, a report on construction spending capped off a rather lacklustre year for this segment of the economy.  The headline print indicated that spending on construction projects increased by 0.7% in December, edging out estimates that called for a 0.5% rise.  Stripping out the seasonal adjustments, construction spending actually decreased by 8.6%, better than the 9.9% decline that is average in this last month of the year.  For the year overall, spending was higher by a mere 1.6%, the weakest performance since 2010, in the midst of the economic recovery following the recession.  The average calendar year increase is 4.1%.  Weakness for the year stemmed from private non-residential spending, which closed the year lower by 3.4%.  Declines in lodging, office, power, and manufacturing took a toll on this category, reacting to, among other things, higher rates and efficiencies in utility production.  Seasonally, construction activity continues to weaken into January before picking up closer to the spring as weather conditions improve for building activity.

Total Construction Spending  Seasonal Chart

Monthly Total Construction Spending  Data

Total Construction Spending Seasonal Chart

Private Construction Spending: Nonresidential  Seasonal Chart Private Construction Spending: Residential  Seasonal Chart Public Construction Spending Seasonal Chart

Sentiment on Thursday, as gauged by the put-call ratio, ended bullish at 0.91.

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Seasonal charts of companies reporting earnings today:

Aon plc (AON) Seasonal Chart Astrazeneca PLC (AZN) Seasonal Chart Charter Communications, Inc. (CHTR) Seasonal Chart Chevron Corporation (CVX) Seasonal Chart Clorox Company (The) (CLX) Seasonal Chart Estee Lauder Companies, Inc. (The) (EL) Seasonal Chart Exxon Mobil Corporation (XOM) Seasonal Chart Honda Motor Company, Ltd. (HMC) Seasonal Chart Imperial Oil Limited (IMO) Seasonal Chart Johnson Outdoors Inc. (JOUT) Seasonal Chart LyondellBasell Industries NV (LYB) Seasonal Chart Merck & Company, Inc. (MRK) Seasonal Chart Norbord Inc. (OSB) Seasonal Chart Phillips 66 (PSX) Seasonal Chart Roper Technologies, Inc. (ROP) Seasonal Chart Sony Corp Ord (SNE) Seasonal Chart Spirit Aerosystems Holdings, Inc. (SPR) Seasonal Chart Sprint Corporation (S) Seasonal Chart  Valero Energy Partners LP (VLP) Seasonal Chart Weatherford International plc (WFT) Seasonal Chart Weyerhaeuser Company (WY) Seasonal Chart WisdomTree Investments, Inc. (WETF) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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