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Stock Market Outlook for June 11, 2018

Weekly MACD buy signal triggered on S&P 500 Index as consumer staples catch a bid.

 

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:

Lockheed Martin Corporation  (NYSE:LMT) Seasonal Chart

Lockheed Martin Corporation (NYSE:LMT) Seasonal Chart

Enbridge Inc.  (TSE:ENB) Seasonal Chart

Enbridge Inc. (TSE:ENB) Seasonal Chart

Abbott Laboratories (NYSE:ABT) Seasonal Chart

Abbott Laboratories (NYSE:ABT) Seasonal Chart

Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) Seasonal Chart

Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) Seasonal Chart

Eli Lilly & Co.  (NYSE:LLY) Seasonal Chart

Eli Lilly & Co. (NYSE:LLY) Seasonal Chart

Allied Properties REIT (TSE:AP-UN) Seasonal Chart

Allied Properties REIT (TSE:AP-UN) Seasonal Chart

 

 

The Markets

Stocks ended the week on a positive note as investors shook of geopolitical concerns ahead of the G7 meeting over the weekend.  The S&P 500 Index added around three-tenths of one percent, closing at a fresh multi-week high.  Gains were led by the consumer staples sector following news that Nelson Peltz’s reorganization plan for Procter & Gamble is gaining traction.  The consumer stapes ETF (XLP) was higher on the day by 1.23%, closing above its 50-day moving average for the first time since January.

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For the week overall, the large-cap benchmark was higher by 1.62%, triggering a weekly momentum buy signal with respect to MACD.  Momentum indicators are all pointing higher, remaining in bullish territory, despite some of the significant headwinds dealt in the past few months.  But while the trend appears to be on the side of the bulls, the next 100 points on the large-cap benchmark could be challenging as it enters a tremendous range of supply.  There is a fairly high probability that Investors that were trapped in positions following the abrupt pullback in January will look to this range as the place to trim allocations in order to mitigate the risks presented by resistance overhead.  A trading range through the weeks and possibly months ahead is a likely scenario.  Support is gradually cementing around the 20-week moving average around 2707, possibly representing the lower limit to the short-term span.

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On the economic front, Statscan released the latest look at the labour force in Canada. The headline print indicated that employment declined by 7,500 positions last month, well short of the 25,000 positions expected to be added in the month.  The unemployment rate remained unchanged at 5.8%.  Stripping out the seasonal adjustments, 367,400 jobs were added in the month, or an increase of 2.0%.  The average increase for May is 2.2%.  Year-to-date, employment is running eight-tenths of one percent below the seasonal norm, which is the worst performance through the first five months of the year since 2009.  A below average change in part-time employment is weighing on the aggregate result, while full-time employment is running slightly above the seasonal norm.  The story hasn’t changed too much from the last look; a below average trend with respect to manufacturing, finance, and retail employment.  Health care abruptly turned lower in May, placing the trend in a below average position heading into the middle of the year.  Utilities, agriculture, transportation, professional/ business services, and food services are picking up the slack, posting above average results through the first five months of the year.  Overall, the report suggests the ongoing slowdown in economic activity following the robust results posted last year amidst the global synchronized recovery.  The recently enacted tax cuts in the US appears to be drawing activity south of the border as the competitiveness of the US economy improves significantly.  For a complete breakdown of the results, the charts are available in the database at https://charts.equityclock.com/canada-labour-force-survey

Canada Employment Seasonal Chart

Canada Employment full-time Seasonal Chart Canada Employment part-time Seasonal Chart Canada Unemployment Seasonal Chart Canada Population Seasonal Chart

Turing to vehicle sales in the US, supplemental estimates for May were released during Friday’s session.  Sales of domestically made autos increased by 19.6% in May, while domestic light-weigh trucks increased by 15.6%.  The average change for each is +10.7% and +8.8% respectively.  Both are trending below average on the year, however, there is significant improvement from last year’s trend when “peak auto” was all the talk   The results bode well for a strong report on retail trade for May following April’s downbeat results, which were pressured by weak spending on big ticket items.  Seasonally, May has historically marked the peak in vehicle purchases for the year, but increasingly results are being pulled into the last two months of the year as consumers take advantage of end of year deals.

Motor Vehicle Retail Sales: Domestic Autos Seasonal Chart

Motor Vehicle Retail Sales: Domestic Light Weight Trucks Seasonal Chart

 Motor Vehicle Retail Sales: Heavy Weight Trucks Seasonal Chart Motor Vehicle Retail Sales: Foreign Autos Seasonal Chart Motor Vehicle Retail Sales: Foreign Light Weight Trucks Seasonal Chart

Just briefly on wholesale trade for April, a 3.3% decline in sales and a 0.6% in inventories continues a diverging pace with respect to the supply and demand equation.  Sales are running a full two percent below average, while inventories are trending nine-tenths of one percent above the seasonal norm.  The risk to wholesalers is that the demand that was expected, as gauged by the level of inventories, fails to materialize, forcing businesses to discount products in order to bring inventories back inline with the sales rate.  For a complete breakdown of the report, the charts can be accessed via the chart database at https://charts.equityclock.com/u-s-wholesale-trade-sales-and-inventories

Wholesale Sales  Seasonal Chart

Monthly Wholesale Sales  Data

Wholesale Sales Seasonal Chart

Wholesale Inventories Seasonal Chart

Sentiment on Friday, as gauged by the put-call ratio, ended close to neutral at 0.95.

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Seasonal charts of companies reporting earnings today:

Dave & Buster's Entertainment, Inc. (PLAY) Seasonal Chart  KMG Chemicals, Inc. (KMG) Seasonal Chart Limoneira Co (LMNR) Seasonal Chart RH (RH) Seasonal Chart Star Bulk Carriers Corp. (SBLK) Seasonal Chart 

 

 

S&P 500 Index

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TSE Composite

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