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Stock Market Outlook for March 7, 2018

Natural gas positioned well technically and fundamentally ahead of period of seasonal strength.

 

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:

TransAct Technologies, Inc. (NASD:TACT) Seasonal Chart

TransAct Technologies, Inc. (NASD:TACT) Seasonal Chart

Moog, Inc. (NYSE:MOG-B) Seasonal Chart

Moog, Inc. (NYSE:MOG-B) Seasonal Chart

Prudential PLC (NYSE:PUK) Seasonal Chart

Prudential PLC (NYSE:PUK) Seasonal Chart

Manulife Financial Corp. (NYSE:MFC) Seasonal Chart

Manulife Financial Corp. (NYSE:MFC) Seasonal Chart

Shenandoah Telecommunications Co. (NASD:SHEN) Seasonal Chart

Shenandoah Telecommunications Co. (NASD:SHEN) Seasonal Chart

Sun Life Financial Inc. (NYSE:SLF, TSE:SLF) Seasonal Chart

Sun Life Financial Inc. (NYSE:SLF, TSE:SLF) Seasonal Chart

Magna International Inc. (USA) (NYSE:MGA, TSE:MG) Seasonal Chart

Magna International Inc. (USA) (NYSE:MGA, TSE:MG) Seasonal Chart

Vornado Realty Trust  (NYSE:VNO) Seasonal Chart

Vornado Realty Trust (NYSE:VNO) Seasonal Chart

The Coca-Cola Company  (NYSE:KO) Seasonal Chart

The Coca-Cola Company (NYSE:KO) Seasonal Chart

CSX Corporation  (NYSE:CSX) Seasonal Chart

CSX Corporation (NYSE:CSX) Seasonal Chart

Ryder System, Inc.  (NYSE:R) Seasonal Chart

Ryder System, Inc. (NYSE:R) Seasonal Chart

Capital One Financial Corp. (NYSE:COF) Seasonal Chart

Capital One Financial Corp. (NYSE:COF) Seasonal Chart

 

 

The Markets

Stocks gyrated on either side of the flatline on Tuesday as investors continue to monitor the ongoing developments pertaining to the prospect of a trade war as the Trump administration appears steadfast on implementing tariffs on steel and aluminum.  The S&P 500 Index closed higher by just over a quarter of one percent, continuing to push up against its rising 50-day moving average.  We continue to monitor this level for signs of investor reaction as resistance could have intermediate-term negative implications if confirmed.  The Nasdaq Composite continues to hold support at this significant intermediate average and the Russell 2000, which is less exposed to an international “trade spat,” broke above the 50-day moving average during Tuesday’s session.  Both have been outperforming the broader market in recent days as investors price in the risks of an international dispute.  **Update** As of 6:00pm, equity futures are sharply lower in a response to news that Trump economic advisor Gary Cohn has resigned.  Cohn recently expressed his disapproval of the Trump tariffs.  The loss of this business friendly advisor to the president will no doubt raise concerns amongst equity investors.

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With concerns pertaining to an emerging trade war, the US dollar Index closed lower on Tuesday, pulling back from the 50-day moving average level of its own.  Currency weakness, in turn, fuelled strength in the metal commodities, the ETFs of which gapped higher at Tuesday’s open.  The gold and silver ETFs saw gains of over one percent, attempting to chart higher intermediate highs.  Gold has been on the verge of charting a breakout above resistance around $1360 for the past couple of months, an outcome that could see significant gains ahead as the metal looks to fulfil a massive bottoming pattern from the past couple of years.  While the weak US dollar, inflationary pressures, and strong manufacturing economy are conducive to gains in the metal commodities, they may have to advance without the help of positive seasonal tendencies.  Gold and silver typically trade flat to negative between the end of February and the end of June, although some of the miners remain seasonally positive through May.

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Gold Futures (GC) Seasonal Chart

FUTURE_GC1 Relative to the S&P 500
FUTURE_GC1 Relative to the S&P 500

FUTURE_GC1 Monthly Averages

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Silver Futures (SI) Seasonal Chart
FUTURE_SI1 Relative to the S&P 500FUTURE_SI1 Relative to Gold

FUTURE_SI1 Monthly Averages

Another commodity gapping higher on Tuesday was natural gas as favourable demand fundamentals catch up with the energy commodity.  The natural gas ETF (UNG) gained 1.86%, advancing beyond gap resistance that had constrained upside momentum for the past month.  The ETF is showing an apparent double bottom low coming into its period of seasonal strength, which runs through to mid-June.  Demand has been strong for the commodity with consumption showing above average growth in each of the past two years.  This elevated demand has pressured inventories below five-year average levels, a shift from the above average levels recorded in prior years.  Stockpiles have shown their largest percentage declines in the first two months of the year since 2014, supportive of prices through the period of seasonal strength ahead.  Previous gap resistance, now support, provides an ideal level to shoot against in the seasonal trade ahead.

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Natural Gas Futures (NG) Seasonal Chart
FUTURE_NG1 Relative to the S&P 500FUTURE_NG1 Relative to Gold

FUTURE_NG1 Monthly Averages

http://charts.equityclock.com/seasonal_charts/economic_data/NATURALGAS_seasonal_chart.PNG

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On the economic front, a report on factory orders shed further light on the state of manufacturing in the first month of the year.  The headline print indicated that factory orders declined by 1.4% in January, missing the consensus estimate that called for a 1.3% fall.  Stripping out the seasonal adjustments, the Value of Manufacturers’ New Orders for All Manufacturing Industries fell by 7.0%, which is actually the best start to a year since 2011.  The average decline in January is 7.8%.  Shipments for all manufacturing industries were 3.8% above the seasonal norm in the month, the best performance in a decade.  Strength in non-durable goods orders were certainly a boost as petroleum, pharmaceuticals, and paper showed above average performance.  One of the few areas of weakness on the non-durable side was in the fertilizer category, continuing a trend of below average results from the past year.  The 4.8% decline in January was a divergence from the 5.2% gain that is average in the month as robust crop yields continue to weigh on the demand for this agricultural chemical.  Fertilizer shipments typically ramp up through the spring, ahead of the traditional planting season in the northern hemisphere.  Overall, the report indicates that manufacturing demand is solid coming into the new year, continuing the strength that dominated throughout 2017.  Seasonally, manufacturers orders typically ramp up through June as activity rebounds from the winter slowdown, giving boost to the broader economy in the process.

Value of Manufacturers' New Orders for All Manufacturing Industries Seasonal Chart

Monthly Value of Manufacturers' New Orders for All Manufacturing Industries Data

Value of Manufacturers’ New Orders for All Manufacturing Industries Seasonal Chart

Value of Manufacturers' Total Inventories for All Manufacturing Industries  Seasonal Chart Value of Manufacturers' Shipments for All Manufacturing Industries  Seasonal Chart Value of Manufacturers' New Orders for Nondurable Goods Industries  Seasonal Chart Value of Manufacturers' Shipments for Nondurable Goods Industries  Seasonal Chart Value of Manufacturers' Total Inventories for Nondurable Goods Industries Seasonal Chart Value of Manufacturers' New Orders for Consumer Goods: Consumer Nondurable Goods Industries  Seasonal Chart Value of Manufacturers' Shipments for Nondurable Goods Industries: Chemical Products: Pharmaceuticals and Medicines  Seasonal Chart Value of Manufacturers' Inventories, by Stage of Fabrication: Finished Goods for Nondurable Goods Industries: Petroleum and Coal Products  Seasonal Chart Value of Manufacturers' Shipments for Nondurable Goods Industries: Paper Products: Pulp, Paper, and Paperboard Mills  Seasonal Chart Value of Manufacturers' Total Inventories for Nondurable Goods Industries: Beverage and Tobacco Products: Beverages  Seasonal Chart Value of Manufacturers' Shipments for Nondurable Goods Industries: Chemical Products: Pesticides, Fertilizers, and Other Agricultural Chemicals  Seasonal Chart Value of Manufacturers' Shipments for Nondurable Goods Industries: Petroleum and Coal Products  Seasonal Chart Value of Manufacturers' Shipments for Nondurable Goods Industries: Beverage and Tobacco Products: Tobacco  Seasonal Chart Value of Manufacturers' Shipments for Nondurable Goods Industries: Petroleum and Coal Products: Petroleum Refineries  Seasonal Chart Value of Manufacturers' Shipments for Nondurable Goods Industries: Beverage and Tobacco Products: Beverages  Seasonal Chart

Sentiment on Tuesday, as gauged by the put-call ratio, ended bullish at 0.93.

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Sectors and Industries entering their period of seasonal strength:

Automobiles & Components Industry Seasonal Chart
S5AUCO Index Relative to the S&P 500S5AUCO Index Relative to the Sector

S5AUCO Index Monthly Averages

Brewers Industry Seasonal Chart
S5BREW Index Relative to the S&P 500S5BREW Index Relative to the Sector

S5BREW Index Monthly Averages

 

 

Seasonal charts of companies reporting earnings today:

Abercrombie & Fitch Company (ANF) Seasonal Chart Autohome Inc. (ATHM) Seasonal Chart Brown Forman Corporation (BF.B) Seasonal Chart Caesars Entertainment Corporation (CZR) Seasonal Chart Caseys General Stores, Inc. (CASY) Seasonal Chart Costco Wholesale Corporation (COST) Seasonal Chart Craft Brew Alliance, Inc. (BREW) Seasonal Chart Dollar Tree, Inc. (DLTR) Seasonal Chart Franco-Nevada Corporation (FNV) Seasonal Chart Obsidian Energy Ltd. (OBE) Seasonal Chart Plug Power, Inc. (PLUG) Seasonal Chart Rosetta Stone (RST) Seasonal Chart Speedway Motorsports, Inc. (TRK) Seasonal Chart Thor Industries, Inc. (THO) Seasonal Chart TransGlobe Energy Corporation (TGA) Seasonal Chart tronc, Inc. (TRNC) Seasonal Chart Vivint Solar, Inc. (VSLR) Seasonal Chart Volt Information Sciences, Inc. (VISI) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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