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Stock Market Outlook for September 6, 2018

Investors booking profits in this summer’s winners as the typical September tendency takes hold.

 

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:

EMC Insurance Group Inc. (NASDAQ:EMCI) Seasonal Chart

EMC Insurance Group Inc. (NASDAQ:EMCI) Seasonal Chart

Sierra Wireless, Inc. (TSE:SW) Seasonal Chart

Sierra Wireless, Inc. (TSE:SW) Seasonal Chart

Calavo Growers, Inc. (NASD:CVGW) Seasonal Chart

Calavo Growers, Inc. (NASD:CVGW) Seasonal Chart

Callidus Software Inc. (NASD:CALD) Seasonal Chart

Callidus Software Inc. (NASD:CALD) Seasonal Chart

China Life Insurance Co. Ltd. (NYSE:LFC) Seasonal Chart

China Life Insurance Co. Ltd. (NYSE:LFC) Seasonal Chart

 

 

The Markets

Stocks continued to slide on Tuesday as weakness in the technology sector acted as a drag on the broader market.  The S&P 500 Index shed just less than three-tenths of one percent, reaching back to the open gap charted at the end of August around 2875.  Technology, as gauged by the S&P 500 Technology Sector Index, was lower by 1.50%, falling back to short-term support around its 20-day moving average.  Quickly, investors are booking profits in this summer’s winners.  On Tuesday it was health care leading the market lower and now on Wednesday the tech stocks are acting as the drag.  While typical in the month of September, this type of rotation more frequently occurs in the back half of the month as portfolios are rebalanced ahead of the end of the quarter.

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Technology Sector Seasonal Chart

TECHNOLOGY Relative to the S&P 500
TECHNOLOGY Relative to the S&P 500

TECHNOLOGY Monthly Averages

Investors were seen rotating back towards consumer staples and utilities, which are bouncing from support around 20 and 50-day moving averages.  This defensive shift provides indication that investor sentiment has soured on risk, perhaps amidst concerns that trade talks will fail to produce any positive results.  Seasonally, stocks in these sectors remain in a period of strength through September.

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On the economic front, Statscan released Canadian trade data for the month of July.  The headline print indicated that the trade deficit narrowed to $114 million from a previously revised $743 million in June.  The consensus estimate was for a deficit of $1.2 billion.  Exports are indicated to have increased by 0.8% in the month, while imports declined by 0.4%.  Stripping out the seasonal adjustments, exports actually fell by 6.9%, while imports were lower by 5.9%.  The average change for each is –8.2% and –9.2%, respectively.  Both exports and imports are trending well above average this year by 7.7% and 6.7%, respectively.  On the export side, the two dominant categories are energy and forestry products, arguably the areas most at risk given some of the recent headlines pertaining to pipelines and NAFTA.  For the most part, categories outside of these two segments are trending below average.  Total exports are vulnerable should pipeline construction continue to be restricted and a trade deal fail to be met.  Imports are more mixed with strength seen coming from computers, tires, electronics, packaging materials, pulp, plastic, and non-metallic minerals.  Seasonally, both exports and imports rebound from their July lows into the month of October as goods are produced and shipped ahead of the important end-of-year spending season.  For a complete breakdown of the results, from a seasonal perspective, the charts can be accessed via the chart database at the following link: https://charts.equityclock.com/canadian-international-merchandise-trade-exports-imports.

Total Exports of all merchandise Seasonal Chart

Monthly Total Exports of all merchandise Data

Total Imports of all merchandise Seasonal Chart

Monthly Total Imports of all merchandise Data

Sentiment on Wednesday, as gauged by the put-call ratio, ended neutral at 0.99.

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Seasonal charts of companies reporting earnings today:

ABM Industries Incorporated (ABM) Seasonal Chart Barnes & Noble, Inc. (BKS) Seasonal Chart Broadcom Inc. (AVGO) Seasonal Chart  Donaldson Company, Inc. (DCI) Seasonal Chart Finisar Corporation (FNSR) Seasonal Chart Five Below, Inc. (FIVE) Seasonal Chart FuelCell Energy, Inc. (FCEL) Seasonal Chart Gamestop Corporation (GME) Seasonal Chart G-III Apparel Group, LTD. (GIII) Seasonal Chart John Wiley & Sons, Inc. (JW.A) Seasonal Chart Korn/Ferry International (KFY) Seasonal Chart Lands' End, Inc. (LE) Seasonal Chart Marvell Technology Group Ltd. (MRVL) Seasonal Chart Navistar International Corporation (NAV) Seasonal Chart Palo Alto Networks, Inc. (PANW) Seasonal Chart Quanex Building Products Corporation (NX) Seasonal Chart Renesola Ltd. (SOL) Seasonal Chart Zumiez Inc. (ZUMZ) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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