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Stock Market Outlook for August 20, 2018

S&P 500 Index closes at the 2850 pivot point as bulls push back on the bears.

 

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:

CME Group Inc. (NASD:CME) Seasonal Chart

CME Group Inc. (NASD:CME) Seasonal Chart

Asure Software (NASD:ASUR) Seasonal Chart

Asure Software (NASD:ASUR) Seasonal Chart

Investor Bancorp Inc. (NASD:ISBC) Seasonal Chart

Investor Bancorp Inc. (NASD:ISBC) Seasonal Chart

Piper Jaffray Cos. (NYSE:PJC) Seasonal Chart

Piper Jaffray Cos. (NYSE:PJC) Seasonal Chart

The Dun & Bradstreet Corporation  (NYSE:DNB) Seasonal Chart

The Dun & Bradstreet Corporation (NYSE:DNB) Seasonal Chart

TFS Financial Corp. (NASD:TFSL) Seasonal Chart

TFS Financial Corp. (NASD:TFSL) Seasonal Chart

SJW Group Inc. (NYSE:SJW) Seasonal Chart

SJW Group Inc. (NYSE:SJW) Seasonal Chart

Village Super Market, Inc. (NASD:VLGEA) Seasonal Chart

Village Super Market, Inc. (NASD:VLGEA) Seasonal Chart

Acxiom Corp. (NASD:ACXM) Seasonal Chart

Acxiom Corp. (NASD:ACXM) Seasonal Chart

Andeavor (NYSE:ANDV) Seasonal Chart

Andeavor (NYSE:ANDV) Seasonal Chart

Cree, Inc. (NASD:CREE) Seasonal Chart

Cree, Inc. (NASD:CREE) Seasonal Chart

Quarterhill (TSE:QTRH) Seasonal Chart

Quarterhill (TSE:QTRH) Seasonal Chart

Comcast Corporation  (NASDAQ:CMCSA) Seasonal Chart

Comcast Corporation (NASDAQ:CMCSA) Seasonal Chart

Meredith Corporation  (NYSE:MDP) Seasonal Chart

Meredith Corporation (NYSE:MDP) Seasonal Chart

 

 

The Markets

Stocks closed higher on Friday as investors digested news that the US and China as plotting a roadmap to resolve the current trade dispute.  The S&P 500 Index added a third of one percent, pushing into the gap around 2850 that we have been highlighting for the past week.  Consumer staples and REITs topped the leaderboard as investors maintain a risk-off bias.  The iShares US Real Estate ETF (IYR) added nine-tenths of one percent breaking out to a new all-time high.  Seasonally, REITs remain strong through to the middle of September.

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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

For the week, the S&P 500 Index added almost six-tenths of one percent, charting a long-wick lower candlestick.  The bullish candlestick pattern is a tit-for-tat response to the bearish weekly candlestick recorded in the week prior, when the benchmark opened up the gap around 2850 on the daily chart.  Horizontal support at previous resistance at 2800 remains apparent whether observing the daily or weekly chart.  Investors are remaining very headline dependent, which is fuelling the aforementioned shift to defensive sectors.  This is allowing investors to stay invested while attempting to limit the downside risks, as implied by portfolio beta.  Seasonally, tendencies for the broad equity market in the remaining two weeks of August are neutral as investors take their last summer holidays before back-to-school season.

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On the economic front, a report on consumer prices in Canada came in a little hot for the month of July.  Statscan reported that the Consumer Price Index (CPI) rose 0.5% in July, far ahead of the consensus estimate that called for no change.  The average gain for this summer month is 0.1%.  The result puts the year-over-year change at 3.0%, also far ahead of the consensus estimate calling for a 2.5% increase.  CPI is up 2.7% in just the first seven months of the year, firmly above the 1.9% increase that is average by this point.  Excluding food and energy, the pace is 1.1% above the seasonal average trend, which is the strongest rate since 2002.  Transportation factored prominently behind the strong July result.  The transportation category was higher by 1.1% in the month, which is a significant divergence compared to the 0.3% decline that is average for this time of year.  Inter-city and air transportation prices were up 15.4% and 16.4%, respectively, in July.  The average increase in air transportation prices for July is 2.5%.  The year-to-date increase in the cost of transportation is the highest in a decade, certainly weighing on the budgets of Canadians.  Other categories showing an above average pace include mortgage interest, communications, child care, household appliances, gasoline, health and personal care, and recreation/education.  The results cover a broad swath of consumer lives, which is likely to continue to keep the Bank of Canada positioned to enact further rate hikes.  Seasonally, the consumer price index typically rises through the month of September, then pulling back through the last quarter of the year as energy commodity prices decline.  For more seasonal charts from the report, they can be accessed via the chart database at https://charts.equityclock.com/canada-consumer-price-index-cpi.

Canada CPI - All-items Seasonal Chart

Monthly Canada CPI - All-items Data

Canada CPI - Transportation Seasonal ChartCanada CPI - Public transportation Seasonal ChartCanada CPI - Air transportation Seasonal Chart

The Canadian Dollar was firmly higher following the result, clawing back some of the losses recorded in the week prior.  The currency is battling with a convergence of resistance around its 20-day moving average and support around the 50-day as short-term gyrations interact with longer-term influences.  Seasonally, the Canadian dollar tends to rise between the end of August and the middle of September.

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Canadian Dollar Futures (CD) Seasonal Chart

FUTURE_CD1 Monthly Averages

Sentiment on Friday, as gauged by the put-call ratio, ended slightly bearish at 1.04.

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Seasonal charts of companies reporting earnings today:

AngloGold Ashanti Limited (AU) Seasonal Chart Digital Ally, Inc. (DGLY) Seasonal Chart Estee Lauder Companies, Inc. (The) (EL) Seasonal Chart Fabrinet (FN) Seasonal Chart LATAM Airlines Group S.A. (LTM) Seasonal Chart Nordson Corporation (NDSN) Seasonal Chart Sasol Ltd. (SSL) Seasonal Chart SITO Mobile, Ltd. (SITO) Seasonal Chart Tarena International, Inc. (TEDU) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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