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Stock Market Outlook for September 4, 2018

September the weakest month for equities: S&P 500 Index has averaged a return of –0.6%.

 

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:

NIKE, Inc.  (NYSE:NKE) Seasonal Chart

NIKE, Inc. (NYSE:NKE) Seasonal Chart

Descartes Systems Group Inc (TSE:DSG) Seasonal Chart

Descartes Systems Group Inc (TSE:DSG) Seasonal Chart

Motorcar Parts of America Inc. (NASD:MPAA) Seasonal Chart

Motorcar Parts of America Inc. (NASD:MPAA) Seasonal Chart

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

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

Carnival Corporation  (NYSE:CCL) Seasonal Chart

Carnival Corporation (NYSE:CCL) Seasonal Chart

 

 

The Markets

Stocks closed out the month of August on a flattish note as investors waited for details of a possible trade agreement between the US and Canada.  The S&P 500 Index added a mere basis point, clinging to the psychologically significant 2900 level.  Momentum indicators on the daily look are showing very early signs of rolling over, perhaps setting up for a check-back with levels of support in the month ahead.  The benchmark has moved back within its defined rising trend channel that stems for the lows charted in April.  The lower limit of this rising span sits around 2800.

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For the month, the large-cap benchmark is up 3.03%, which is the best return for the month of August in four years.  The average return for the month is a mere 0.1%.  Following two weekly closes above the previous all-time high charted in January, the monthly close above this previous peak further reiterates the positive trend of higher-highs and higher-lows.  The benchmark remains overbought on its monthly chart, but there are no indications as of present that a significant top is at play.

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Looking ahead, September has been the weakest month for equities, on average, over the past 50 years. The S&P 500 Index has shed an average of 0.6% with 56% of Septembers showing a negative result. Returns have ranged from a loss of 11.9% in September of 1974 to a gain of 8.8% in September of 2010. Losses tend to be dominated by the last two weeks of the month as investment managers reallocate portfolios ahead of the end of the quarter. Between September 19th and the last day of the month on September 30th, the S&P 500 Index has lost an average of 0.91% with 31 of the past 50 (62%) periods showing a decline. The period has typically been the ideal reset to reduce elevated equity prices, allowing investors to add to positions for the strength that is common through the fourth quarter.

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From a sector point of view, materials has been the weakest performer, on average, over the past 20 years in the month of September.  The S&P 500 Materials Sector Index has shed an average of 2.3% in this last month of the third quarter with only 45% of periods showing a gain.  Conversely, energy and health care have been the best performing segments of the market, returning an average of 0.3%.  As for commodities, natural gas enters its seasonally strong period ahead of the winter heating/withdrawal season with positive tendencies for price spanning through to December.

Materials Sector Seasonal Chart

MATERIALS Relative to the S&P 500
MATERIALS Relative to the S&P 500

MATERIALS Monthly Averages

Sentiment on Friday, as gauged by the put-call ratio, ended bearish at 1.03.

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Sectors and Industries entering their period of seasonal strength:

Natural Gas Futures (NG) Seasonal Chart
FUTURE_NG1 Relative to the S&P 500FUTURE_NG1 Relative to Gold

FUTURE_NG1 Monthly Averages

 

 

Seasonal charts of companies reporting earnings today:

American Software, Inc. (AMSWA) Seasonal Chart Caleres, Inc. (CAL) Seasonal Chart Conn's, Inc. (CONN) Seasonal Chart  HealthEquity, Inc. (HQY) Seasonal Chart RH (RH) Seasonal Chart  Workday, Inc. (WDAY) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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