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Stock Market Outlook for March 8, 2018

S&P 500 continues to battle 50-day moving average; tariffs and employment report ahead.

 

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:

SunLink Health Systems, Inc. (AMEX:SSY) Seasonal Chart

SunLink Health Systems, Inc. (AMEX:SSY) Seasonal Chart

Peoples Bancorp, Inc. (NASD:PEBO) Seasonal Chart

Peoples Bancorp, Inc. (NASD:PEBO) Seasonal Chart

Greenbrier Cos, Inc. (NYSE:GBX) Seasonal Chart

Greenbrier Cos, Inc. (NYSE:GBX) Seasonal Chart

Potlatch Corp. (NASD:PCH) Seasonal Chart

Potlatch Corp. (NASD:PCH) Seasonal Chart

Camden Property Trust (NYSE:CPT) Seasonal Chart

Camden Property Trust (NYSE:CPT) Seasonal Chart

Intuitive Surgical, Inc. (NASD:ISRG) Seasonal Chart

Intuitive Surgical, Inc. (NASD:ISRG) Seasonal Chart

Alliance Data Systems (NYSE:ADS) Seasonal Chart

Alliance Data Systems (NYSE:ADS) Seasonal Chart

Power Corporation of Canada  (TSE:POW) Seasonal Chart

Power Corporation of Canada (TSE:POW) Seasonal Chart

Wells Fargo & Company  (NYSE:WFC) Seasonal Chart

Wells Fargo & Company (NYSE:WFC) Seasonal Chart

U.S. Bancorp  (NYSE:USB) Seasonal Chart

U.S. Bancorp (NYSE:USB) Seasonal Chart

Simon Property Group, Inc  (NYSE:SPG) Seasonal Chart

Simon Property Group, Inc (NYSE:SPG) Seasonal Chart

Cummins Inc.  (NYSE:CMI) Seasonal Chart

Cummins Inc. (NYSE:CMI) Seasonal Chart

Astrazeneca PLC (NYSE:AZN) Seasonal Chart

Astrazeneca PLC (NYSE:AZN) Seasonal Chart

AvalonBay Communities, Inc. (NYSE:AVB) Seasonal Chart

AvalonBay Communities, Inc. (NYSE:AVB) Seasonal Chart

Avis Budget Group, Inc. (NASD:CAR) Seasonal Chart

Avis Budget Group, Inc. (NASD:CAR) Seasonal Chart

 

 

 

The Markets

Stocks closed mixed on Wednesday as investors reacted to the resignation of Trump advisor Gary Cohn.  The S&P 500 Index shed a mere five basis points, continued to be buoyed by areas less exposed to an international trade dispute, such as technology.  The Russell 2000, which is largely composed of companies that are more domestically focussed, added over three-quarters of one percent, continuing its outperformance versus large-cap counterparts from recent days.  The Russell 2000 index has advanced above its 50-day moving average, a level that the S&P 500 Index continues to struggle with. The strength in the small-cap benchmark relative to the large-cap counterpart comes at the end of its period of seasonal strength, which peaks on March 4th, on average.  The benchmark tends to underperform the S&P 500 index, on average, through to mid-May.

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RUSSELL 2000 Index Seasonal Chart

$RUT Relative to the S&P 500
$RUT Relative to the S&P 500

$RUT Monthly Averages

Turning back to the S&P 500 Index, we continue to monitor how investors are reacting to the 50-day moving average overhead, a significant hurdle in the way of achieving new all-time highs.  Support was held intraday on Wednesday at the 20-day moving average, where an interesting battle is materializing as shorter-term traders battle with those that take more of an intermediate to longer-term approach.  President Trump is expected to implement tariffs before the week is complete and Friday will bring the monthly employment report, which fuelled the inflation scare this time last month.  So two pivotal events that are likely to fuel a break one way or the other, helping to resolve direction of the broader market through the remainder of the period of seasonal strength, which peaks in May.  The 50-day moving average, which often proves most reliable in gauging the strength of seasonal trades, continues to point higher, but resistance from this intermediate hurdle could easily flip the direction negative, increasing the odds of a test of the February lows.

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On schedule for the Wednesday session is the weekly EIA petroleum status report, which pressured the price of oil lower on the day.  The EIA is indicating that oil stockpiles increased by 2.4 million barrels last week, while gasoline inventories declined by 800,000 barrels.  The result added around half of a day of supply to oil, which now sits at 26.7, almost four full days above the seasonal norm.  Oil inventories are now higher than where they were at the end of last year as the injection season lifts stockpiles from the late January lows, which was attributed to strong demand and production of the refined products.  Domestic production of oil once again jumped to new all-time highs, showing growth on the year that is over 6% above average.  Imports also bounced back as as the seasonally weak period for import activity in January and February looks to have concluded.  Imports seasonally rise between mid-March and mid-June, inflating oil inventories through to mid-Spring.  As for the refined product, after an earlier than average peak in the days of supply of gasoline in January, this gauge of the convergence of supply and demand has seemingly flat-lined over the past month, diverging from the seasonal trend that calls for declines starting from the middle of February.  Stockpiles of the refined product have been rising, also a slight divergence from seasonal norms.  This divergence would be expected to close in the weeks ahead as the weather warms and driving activity increases.  March typically sees the largest growth in vehicle miles traveled out of any month in the year.  The change in the product supplied, a gauge of demand, and production of gasoline continue to trend above average, working hard at keeping stockpiles of the raw input at reasonable levels.

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 shed over 2% on Wednesday, testing the lower limit of a pennant pattern.  This continuation setup would be confirmed by a break above the upper limit of the narrowing short-term range.    The energy sector was one of the largest drags on the broader market on Wednesday as investors wait for resolution in the direction of the commodities that these companies produce.  The S&P 500 Energy Sector Index continues to hold below its 200-day moving average, the only cyclical sector to show this status.  Seasonally, energy stocks and oil prices typically rise through early May.

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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

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Energy Sector Seasonal Chart

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

ENERGY Monthly Averages

On the economic front, Statscan released its look at international trade in the month of January.  The headline print indicated that the trade deficit narrowed from $3.1 billion to $1.9 billion in January.  Analysts had expected a deficit of $2.3 billion.  The aggregate tally was the result of a 4.3% decline in imports and a 2.1% decline in exports.  Stripping out the seasonal adjustments, exports actually declined by 1.5% and imports declined by 3.3%; the average change for each in the month of January is –0.5% and –0.7%, respectively.  On the export side, strength in energy products was not enough to offset the weakness in metals, chemicals, forestry products, machinery, and aircraft, each showing below average activity in the month.  A similar story exists on the import side where below average activity in some of the key inputs and products from the manufacturing process raises concerns pertaining to the longevity of the strength in the manufacturing economy.  Oddly enough, weakness in metal exports was felt long before tariffs on steel and aluminum were announced.  Seasonally, these inputs to the manufacturing process typically ramp up into the spring, therefore possible tariffs could come at a very inopportune point for many of the producers that rely on the free-flow of goods across the border.  For a complete breakdown of the report, the seasonal charts are accessible via the chart database at http://charts.equityclock.com/canadian-international-merchandise-trade-exports-imports.

Total Exports of all merchandise Seasonal Chart

Monthly Total Exports of all merchandise Data

Total Imports of all merchandise Seasonal Chart

Monthly Total Imports of all merchandise Data

Sentiment on Wednesday, as gauged by the put-call ratio, ended bearish at 1.04.  While some gyrations have been evident, option activity still suggests a certain degree of caution as investors look to hedge their positions for the volatility that remains intact.

 

 

 

Sectors and Industries entering their period of seasonal strength:

Paper Products Industry Seasonal Chart
S5PAPR Index Relative to the S&P 500S5PAPR Index Relative to the Sector

S5PAPR Index Monthly Averages

 

 

Seasonal charts of companies reporting earnings today:

American Eagle Outfitters, Inc. (AEO) Seasonal Chart Burlington Stores, Inc. (BURL) Seasonal Chart Christopher & Banks Corporation (CBK) Seasonal Chart Concordia International Corp. (CXRX) Seasonal Chart Del Frisco's Restaurant Group, Inc. (DFRG) Seasonal Chart  Diversified Restaurant Holdings, Inc. (SAUC) Seasonal Chart El Pollo Loco Holdings, Inc. (LOCO) Seasonal Chart Ferrellgas Partners, L.P. (FGP) Seasonal Chart Finisar Corporation (FNSR) Seasonal Chart FuelCell Energy, Inc. (FCEL) Seasonal Chart International Game Technology (IGT) Seasonal Chart Juniper Pharmaceuticals, Inc. (JNP) Seasonal Chart Kroger Company (The) (KR) Seasonal Chart Limoneira Co (LMNR) Seasonal Chart Marvell Technology Group Ltd. (MRVL) Seasonal Chart Navistar International Corporation (NAV) Seasonal Chart Peak Resorts, Inc. (SKIS) Seasonal Chart Renewable Energy Group, Inc. (REGI) Seasonal Chart Stage Stores, Inc. (SSI) Seasonal Chart The Cooper Companies, Inc. (COO) Seasonal Chart U.S. Auto Parts Network, Inc. (PRTS) Seasonal Chart United Natural Foods, Inc. (UNFI) Seasonal Chart Vail Resorts, Inc. (MTN) Seasonal Chart Verifone Systems, Inc. (PAY) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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