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Stock Market Outlook for April 20, 2018

Widely traded treasury bond fund rolling over from the neckline of the previous head-and-shoulders pattern.

 

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:

Apartment Investment and Management Co.  (NYSE:AIV) Seasonal Chart

Apartment Investment and Management Co. (NYSE:AIV) Seasonal Chart

Packaging Corp Of America (NYSE:PKG) Seasonal Chart

Packaging Corp Of America (NYSE:PKG) Seasonal Chart

Sparton Corp. (NYSE:SPA) Seasonal Chart

Sparton Corp. (NYSE:SPA) Seasonal Chart

Shire Ltd. (NASD:SHPG) Seasonal Chart

Shire Ltd. (NASD:SHPG) Seasonal Chart

Altisource Portfolio Solutions S.A. (NASD:ASPS) Seasonal Chart

Altisource Portfolio Solutions S.A. (NASD:ASPS) Seasonal Chart

Unifi, Inc. (NYSE:UFI) Seasonal Chart

Unifi, Inc. (NYSE:UFI) Seasonal Chart

Loncor Resources Inc. (TSE:LN) Seasonal Chart

Loncor Resources Inc. (TSE:LN) Seasonal Chart

AT&T Inc.  (NYSE:T) Seasonal Chart

AT&T Inc. (NYSE:T) Seasonal Chart

Enbridge, Inc. (NYSE:ENB) Seasonal Chart

Enbridge, Inc. (NYSE:ENB) Seasonal Chart

 

 

The Markets

Stocks dipped on Thursday as mixed earnings and rising rates caused investors to step back and reassess.  The S&P 500 Index closed lower by just less than six-tenths of one percent, led by the consumer staples sector following the release of earnings from Procter & Gamble and Phillips Morris.  At the lows of the session, the benchmark closed the gap that was charted during Tuesday’s session, coming within points of testing previous horizontal resistance around 2672.  The benchmark continues to hold above the neckline to a head-and-shoulders bottoming pattern, which projects upside towards the March highs around 2800.

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But the bigger news in the market on Thursday was the rise in yields, causing bond funds to gap lower on the day.  The iShares 7-10 year Treasury Bond Fund (IEF) gapped below its 50-day moving average, falling by a quarter of one percent.  The iShares 20+ year treasury bond ETF (TLT) shed around eight-tenths of one percent, moving below short-term rising trendline support.  The rollover in the TLT has become apparent at the neckline to the head-and-shoulders topping pattern, which fuelled the sharp selloff in January and February.  Long-term rising trendline support can be derived around $117, forming the basis of a neckline to an even larger topping pattern.  The path of least resistance for treasury bond prices appears to be lower.

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While the broader market didn’t welcome higher rates, particularly the home building stocks, the financial sector recorded a solid gain on Thursday as investors once again play the net interest margin card.  The sector has been beaten down over the past month as investors react negatively to earnings following reports of lacklustre loan growth and weaker than expected fixed income trading activity. The sector recently concluded its average period of seasonal strength, but rising rates and cheap valuations could support the sector into the summer.  The sector index continues to hold trendline support stemming from the February 2016 lows.

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Financial Sector Seasonal Chart

FINANCIAL Relative to the S&P 500
FINANCIAL Relative to the S&P 500

FINANCIAL Monthly Averages

In economic news, the Philadelphia Fed Business Outlook Survey came out ahead of estimates, rising just less than one point from the previous report to 23.2.  The consensus estimate was for a print of 20.1.  Stripping out the seasonal adjustments, the general business conditions index actually came in at +31.4, well above the +19.4 that is average for this time of year.  The report continues a string of upbeat results stemming from the manufacturing sector, boding well for cyclically sensitive areas of the equity market.  The results are showing up more notably in commodity prices, a number of which have broken out in just the past few days.  Seasonally, broad commodity market strength, as gauged by the CRB Index, tends to hit an important peak around the start of May.

Philadelphia Manufacturing Business Outlook Survey Seasonal Chart

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Briefly on the report of natural gas inventories in the US, the EIA indicated that stockpiles fell by 36 billion cubic feet last week.  This is now two weeks into the traditional injection season, but with colder than average temperatures dominating the US northeast, consumers have been running their furnaces longer than average into the spring.  Despite the bullish result, the price of Natural Gas continues to hold around the lows of the year.  The price of the commodity remains in a period of strength through the middle of June.

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Natural Gas Futures (NG) Seasonal Chart

FUTURE_NG1 Monthly Averages

Sentiment on Thursday, as gauged by the put-call ratio, ended bullish at 0.97.

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Sectors and Industries entering their period of seasonal strength:

Swiss Franc Futures (SF) Seasonal Chart

FUTURE_SF1 Monthly Averages

 

 

Seasonal charts of companies reporting earnings today:

Acme United Corporation. (ACU) Seasonal Chart Ameris Bancorp (ABCB) Seasonal Chart Baker Hughes, a GE company (BHGE) Seasonal Chart Citizens Financial Group, Inc. (CFG) Seasonal Chart Cleveland-Cliffs Inc. (CLF) Seasonal Chart Ericsson (ERIC) Seasonal Chart General Electric Company (GE) Seasonal Chart Gentex Corporation (GNTX) Seasonal Chart Honeywell International Inc. (HON) Seasonal Chart Kansas City Southern (KSU) Seasonal Chart Regions Financial Corporation (RF) Seasonal Chart Roper Technologies, Inc. (ROP) Seasonal Chart Schlumberger N.V. (SLB) Seasonal Chart Stanley Black & Decker, Inc. (SWK) Seasonal Chart State Street Corporation (STT) Seasonal Chart Steven Madden, Ltd. (SHOO) Seasonal Chart SunTrust Banks, Inc. (STI) Seasonal Chart Synchrony Financial (SYF) Seasonal Chart  Waste Management, Inc. (WM) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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