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Stock Market Outlook for September 19, 2018

Japan’s Nikkei breaks above an ascending triangle pattern ahead of its period of seasonal strength.

 

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:

Genuine Parts Company  (NYSE:GPC) Seasonal Chart

Genuine Parts Company (NYSE:GPC) Seasonal Chart

Park Lawn (TSE:PLC) Seasonal Chart

Park Lawn (TSE:PLC) Seasonal Chart

Logitech International SA (USA) (NASDAQ:LOGI) Seasonal Chart

Logitech International SA (USA) (NASDAQ:LOGI) Seasonal Chart

Autodesk, Inc.  (NASDAQ:ADSK) Seasonal Chart

Autodesk, Inc. (NASDAQ:ADSK) Seasonal Chart

Artesian Resources Corp. (NASD:ARTNA) Seasonal Chart

Artesian Resources Corp. (NASD:ARTNA) Seasonal Chart

 

 

The Markets

Stocks closed firmly higher on Tuesday in typical turnaround Tuesday fashion as investors shook off concerns pertaining to additional tariffs imposed by the US on China.  The S&P 500 Index closed higher by over half of a percent, bouncing from its 20-day moving average and trendline support highlighted in yesterday’s report.  The levels beneath still remain vulnerable as the market enters the weakest period of the entire year.  The benchmark is showing very short-term resistance around 2908, a level that could form the basis of a short-term double-top pattern should weakness re-materialize.

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The positive session in the US followed a strong hand-off from stocks overseas as benchmarks rallied on the consensus that the tariffs to be enacted by the Trump administration were less than feared.  The Shanghai Stock Exchange Composite was higher by 1.82%; Japan’s Nikkei was higher by 1.44%, breaking above significant resistance around 23,000.  Resistance on the Nikkei formed the basis of an ascending triangle continuation pattern, which projects upside towards 25,500.  Seasonally, the benchmark tends to move higher starting from the beginning of October, running through the month of April, although its period of outperformance versus US stocks spans between mid-November and the end of March.

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NIKKEI 225 Index Seasonal Chart

$NIKK Relative to the S&P 500
$NIKK Relative to the S&P 500

$NIKK Monthly Averages

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SSE Composite Index Seasonal Chart

$SSEC Relative to the S&P 500
$SSEC Relative to the S&P 500

$SSEC Monthly Averages

On the economic front, Statscan released manufacturing sales data for the month of July.  The headline print indicated that manufacturing sales increased by 0.9% for the summer month, missing estimates calling for a 1.0% rise.  Stripping out the seasonal adjustments, the sales of goods manufactured (shipments) actually declined by 7.1%, which is much better than the 10.7% decline that is average for the seventh month of the year.  The year-to-date change now sits 6.8% above the seasonal average trend, the best performance since 2014.  Parsing the categories on the sales side, non-durable goods are trending 6.9% above average year-to-date, while durable goods are running 6.2% above average through this summer period.  Petroleum, wood product, steel mills, machinery, computer, and transportation equipment manufacturing are driving the above average result on the aggregate level.  But while manufacturing activity remains robust, the increase to inventories remains a concern as a supply/demand mismatch becomes apparent.  Total inventory is running 6.4% above average so far this year, on track for the strongest calendar increase since 1995.  Inventories increased by 11.3% that year, well above the 24-year average increase of 3.1%.   This presents risks to future activity unless manufacturers can bring supply back inline with demand.  Seasonally, manufacturing activity rebounds from its summer slump in August and September as production is ramped up for the important end of year buying period.

Sales of goods manufactured (shipments) Seasonal Chart

Monthly Sales of goods manufactured (shipments) Data

http://charts.equityclock.com/seasonal_charts/economic_data/v802764_seasonal_chart.PNG

Sentiment on Tuesday, as gauged by the put-call ratio, ended bullish at 0.83.

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Seasonal charts of companies reporting earnings today:

Copart, Inc. (CPRT) Seasonal Chart Herman Miller, Inc. (MLHR) Seasonal Chart Red Hat, Inc. (RHT) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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