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Stock Market Outlook for September 13, 2018

S&P 500 Index managing to maintain its breakout above January highs.

 

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:

Emera Inc.  (TSE:EMA) Seasonal Chart

Emera Inc. (TSE:EMA) Seasonal Chart

Canadian Utilities Limited (TSE:CU) Seasonal Chart

Canadian Utilities Limited (TSE:CU) Seasonal Chart

CGI Group Inc. (TSE:GIB.A) Seasonal Chart

CGI Group Inc. (TSE:GIB.A) Seasonal Chart

Lawson Products, Inc. (NASD:LAWS) Seasonal Chart

Lawson Products, Inc. (NASD:LAWS) Seasonal Chart

Wipro Ltd. (NYSE:WIT) Seasonal Chart

Wipro Ltd. (NYSE:WIT) Seasonal Chart

 

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The Markets

Stocks traded mixed on Wednesday as investors reacted to trade headlines and the Apple product launch, the net result pushed and pulled on key market benchmarks throughout the session.  The S&P 500 Index added a tenth of a percent, remaining supported around its rising 20-day moving average.  Financials and technology were the weights as energy and staples ended firmly higher.  The argument has been made that the market has poor breadth, but the constant rotation in the market suggests that investors are finding places to put money to work, whether it be in defensives, such as staples and utilities, or the cyclicals, such as discretionary and industrials.  Calling the sector leadership in the short-term is becoming difficult, however, as the market battles with some of these overhanging headline risks. 

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On schedule for the Wednesday session, the EIA released the latest tally of petroleum inventories in the US.  The headline print indicated that oil stockpiles declined by 5.3 million barrels, however, this was offset by a 1.3 million barrel rise in gasoline and 6.2 million barrel rise in distillates.  The result saw the days of supply of oil decline by a third of a day to 22.3, while gasoline saw an uptick of a tenth of a day to 24.4.  Domestic production of oil in the latest week declined slightly from the highs of the year of 11.0 million barrels per day, remaining within a range that originated in the spring.  Oil and gas inventories are now moving in opposite directions, breaking out of the tight range seen over the past month and a half.  Oil stockpiles are on the decline, falling to the lowest level of the year and resuming a path that is inline with seasonal norms, while gasoline stockpiles are rising, contrary to the average trend for this time of year.  This is creating a trade-off going into the shoulder season where the industry is battling with either producing more product, thereby drawing down oil stockpiles, or winding down refining production, as per seasonal norms, which would pressure oil stockpiles higher.  Net-net, the end result is neutral, but this is a divergence from seasonal norms which call for declines in oil and gas inventories through to mid-September.  Stockpiles for both typically rise following this point.  Overall, the results present a rather neutral look at the state of the energy market, conducive for constraining the price of energy commodities to a range going into the fall.

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 shot higher following the report as investors put more weight on the drawdown of the crude commodity.  Price continues to show signs of deriving a range between $75 on the upside and $62 on the downside.  Seasonally, the price of oil typically declines through the fourth quarter.

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Crude Oil Futures (CL) Seasonal Chart

FUTURE_CL1 Monthly Averages

On the economic front, gauges of inflation for the month of August are starting to be disseminated, the results of which are suggesting pricing pressures are starting to abate.  The headline print for August’s Producer Price Index indicated that Final Demand declined by 0.1% in the month, a divergence from expectations of a 0.2% gain.  Less the more volatile components of food and energy, PPI showed a similar 0.1% decline, also a divergence compared to the forecast of a 0.2% rise.  Stripping out the seasonal adjustments, PPI by commodity for final demand actually fell by 0.3% in the month, a divergence from the unchanged result that is average for August.  PPI for All Commodities was lower by 0.8%, a sharp downtick versus the 0.1% decline that is average.  Both gauges are holding above seasonal average trends year-to-date, showing the strongest gains through the end of August since 2011.  Energy is a factor behind the year-to-date strength, but even excluding this category reveals that producer inflation is still running firmly above average in 2018.  Increases in the price of capital equipment and transportation, which are realizing the largest gains in years, are fuelling pricing pressures amongst manufacturers.  But some reprieve may be on the way.  Producer prices tend to fall in the last quarter of the year as energy prices come down following the high demand summer driving season.  We’ll receive further insight on the state of inflation in the economy on Thursday when August’s Consumer Price Index (CPI) is released.

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

Sentiment on Wednesday, as gauged by the put-call ratio, ended bullish at 0.82.

 

 

 

 

Seasonal charts of companies reporting earnings today:

Brady Corporation (BRC) Seasonal Chart Champions Oncology, Inc. (CSBR) Seasonal Chart Cherokee Inc. (CHKE) Seasonal Chart Kroger Company (The) (KR) Seasonal Chart Palatin Technologies, Inc. (PTN) Seasonal Chart Park City Group, Inc. (PCYG) Seasonal Chart Radiant Logistics, Inc. (RLGT) Seasonal Chart 

 

 

S&P 500 Index

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TSE Composite

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