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Stock Market Outlook for July 6, 2018

Real Estate ETF breaks out to a new all-time high as the broad market remains range-bound.

 

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:

Symantec Corporation  (NASDAQ:SYMC) Seasonal Chart

Symantec Corporation (NASDAQ:SYMC) Seasonal Chart

Polo Ralph Lauren Corporation  (NYSE:RL) Seasonal Chart

Polo Ralph Lauren Corporation (NYSE:RL) Seasonal Chart

Parex Resources (TSE:PXT) Seasonal Chart

Parex Resources (TSE:PXT) Seasonal Chart

Booz Allen Hamilton Holding Corp. (NYSE:BAH) Seasonal Chart

Booz Allen Hamilton Holding Corp. (NYSE:BAH) Seasonal Chart

Lear Corp. (NYSE:LEA) Seasonal Chart

Lear Corp. (NYSE:LEA) Seasonal Chart

Qorvo, Inc. (NASD:QRVO) Seasonal Chart

Qorvo, Inc. (NASD:QRVO) Seasonal Chart

QUALCOMM, Inc.  (NASDAQ:QCOM) Seasonal Chart

QUALCOMM, Inc. (NASDAQ:QCOM) Seasonal Chart

 

 

The Markets

Stocks drifted higher on Thursday as investors looked past the prospect of an escalating trade war.  The US is expected to enact tariffs on $34 billion of Chinese goods on Friday, a move that is expected to see an equal response by Chinese authorities.  The S&P 500 gained just less than nine-tenths of one percent, continuing to hold within the short-term range between 2700 and 2743.  Reports on the labour market to be released on Friday could be the catalyst to put the limits of this span to the test.  Analysts are expecting Friday’s non-farm payroll report to show a gain of 190,000, down from the 223,000 reported in the month prior.  Non-seasonally adjusted, payrolls increase by 0.6%, on average, in the month of June, which would imply the actual addition of around 895,000 payrolls in the month.  Non-farm payrolls are trending two-tenths of a percent above average through the month of May, in part due to significant strength in Manufacturing employment as activity is repatriated back to the US following the imposition of the US tax cuts.

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Total Nonfarm Seasonal Chart

Monthly Total Nonfarm Data

While the broad market gave the suggestion that investors were back in risk-taking mode, the sector performance on the day suggests otherwise.  Consumer staples, REITs, and health care topped the leaderboard as investors look for some defense in this uncertain market.  The iShares US Real Estate ETF (IYR) charted a new all-time high during the Thursday’s session.  Technology, a growth sector, rounded off the outperformers on the day.  The market is portraying a signal of caution as trade concerns deter investors from cyclical assets, which should otherwise benefit from the strength in the economy.  Seasonally, REITs recently entered their second period of seasonal strength that spans the remainder of the summer season.

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MSCI US REIT Index Seasonality

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

Monthly Seasonal MSCI US REIT Index

On the economic front, the weekly EIA petroleum status report was one day delayed due to the independence day holiday on Wednesday.  The administration reported that oil stockpiles increased in the last week of June by 1.2 million barrels, while gasoline inventories declined by 1.5 million barrels. The result kept the days of supply of oil unchanged at 23.7, while the days of supply of gasoline fell by seven-tenths to 24.7.  The average for each at this time of year is 22.2 and 24.3, respectively.  Strong demand for energy products and domestic production of oil that has been capped at 10.9 million bpd over the past few weeks has narrowed the spread between the actual and average days of supply of oil, conducive to supporting prices around the highs of the year.  At the mid-point of the year, oil inventories are lower than what they were at the end of last year, the first time that this has happened since 1995.  Seasonally, oil inventories continue to decline, on average, through the remainder of summer.

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 traded firmly lower following the result, showing early signs of reacting to long-term horizontal resistance around $76.

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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:

  • No significant earnings reports scheduled

 

 

S&P 500 Index

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TSE Composite

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