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Stock Market Outlook for August 10, 2018

Wholesale sales of farm product raw materials well above average this year, possibly acting as the catalyst for the seasonal trade in agriculture.

 

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:

NetApp Inc.  (NASDAQ:NTAP) Seasonal Chart

NetApp Inc. (NASDAQ:NTAP) Seasonal Chart

Greenhill & Co. Inc. (NYSE:GHL) Seasonal Chart

Greenhill & Co. Inc. (NYSE:GHL) Seasonal Chart

Vishay Precision Group Inc. (NYSE:VPG) Seasonal Chart

Vishay Precision Group Inc. (NYSE:VPG) Seasonal Chart

Axis Capital Holdings Ltd. (NYSE:AXS) Seasonal Chart

Axis Capital Holdings Ltd. (NYSE:AXS) Seasonal Chart

 

 

The Markets

Stocks charted another flat session as traders held the tape steady ahead of a key gauge of inflation set to be released on Friday.  The S&P 500 Index shed just over a tenth of a percent, maintaining a close above 2850, a key pivot point just below the all-time high.  Investors are appear to be waiting for a catalyst, either to push the market to new highs or use the elevated levels to book profits.  The benchmark has been bumping up against trend channel resistance for the past few weeks; trend channel support currently hovers around 2770.

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On the economic front, a report on producer prices was released before the opening bell.  The headline print for July’s Producer Price Index – Final Demand showed no change versus the month prior, which is short of the consensus analyst estimate that called for a 0.3% rise.  Stripping out the seasonal adjustments, the Producer Price Index for All Commodities actually increased by 0.2%, double the average increase of 0.1% for the seventh month of the year.  The year-to-date change for this gauge of inflation now sits at +4.3%, the largest increase since 2011.  The average change by this point in the year is +2.9%.  For finished goods less food and energy, the year-to-date increase is +1.4%, which is well above the 0.5% increase that is average by the end of July.  Increasing prices for capital equipment is helping to “inflate” the aggregate result.  Seasonally, producer prices for all commodities tend to peak around this time of year, but as of yet there is no indication that the strength in prices will fade anytime soon.  A report on consumer prices will be released on Friday.

Producer Price Index for All Commodities Seasonal Chart

 Producer Price Index by Commodity for Final Demand: Finished Goods Seasonal Chart  Producer Price Index by Commodity for Final Demand: Finished Goods Less Foods and Energy Seasonal Chart

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In other economic news, wholesale trade is indicated to have declined in June, retracing some of the strength recorded in the month prior.  Wholesale sales declined by a seasonally adjusted 0.1% in this last month to the first half of the year, while inventories increased by 0.1%.  Stripping out the seasonal adjustments, sales actually declined by 3.4%, while inventories declined by 0.1%.  The average change for each in the month is +1.8% and +0.4%, respectively.  While the trend for each remains above average, the gap versus the seasonal norm has narrowed following June’s result.  Focussing on the sales side, computers and petroleum continue to show strong trends in 2018.  But perhaps the more notable trend is in the farm product raw materials category, which is trending an astounding 20.1% above average.  This is the best performance since 2008.  This industry group comprises establishments primarily engaged in the merchant wholesale distribution of agricultural products (except raw milk, live poultry, and fresh fruits and vegetables), such as grains, field beans, livestock, and other farm product raw materials (excluding seeds).  Seasonally, the ramp higher in sales in this category helps to support agriculture stocks through the end of the year.  Fertilizer stocks, as gauged by the Global X Fertilizers ETF (SOIL) has already shown a sharp jump in recent weeks.  For further seasonal charts on wholesale trade, they 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

http://charts.equityclock.com/seasonal_charts/economic_data/S4245SM144NCEN_seasonal_chart.PNGimage

Wholesale Inventories Seasonal Chart

Sentiment on Thursday, as gauged by the put-call ratio, ended bullish at 0.85.

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Sectors and Industries entering their period of seasonal strength:

Japanese Yen Futures (JY) Seasonal Chart
FUTURE_JY1 Relative to the S&P 500FUTURE_JY1 Relative to Gold

FUTURE_JY1 Monthly Averages

 

 

Seasonal charts of companies reporting earnings today:

Alio Gold Inc. (ALO) Seasonal Chart Ampco-Pittsburgh Corporation (AP) Seasonal Chart Applied Industrial Technologies, Inc. (AIT) Seasonal Chart China Yuchai International Limited (CYD) Seasonal Chart Enerplus Corporation (ERF) Seasonal Chart Great Elm Capital Corp. (GECC) Seasonal Chart GWG Holdings, Inc (GWGH) Seasonal Chart  Meredith Corporation (MDP) Seasonal Chart  Ruth's Hospitality Group, Inc. (RUTH) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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