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Stock Market Outlook for November 8, 2018

Democratic House, Republican Senate and President typically nothing special for stocks. 

 

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:

MFA Financial Inc. (NYSE:MFA) Seasonal Chart

MFA Financial Inc. (NYSE:MFA) Seasonal Chart

Sonic Corp. (NASD:SONC) Seasonal Chart

Sonic Corp. (NASD:SONC) Seasonal Chart

Clean Harbors, Inc. (NYSE:CLH) Seasonal Chart

Clean Harbors, Inc. (NYSE:CLH) Seasonal Chart

Uni-Select (TSE:UNS) Seasonal Chart

Uni-Select (TSE:UNS) Seasonal Chart

Atlantic Power (TSE:ATP) Seasonal Chart

Atlantic Power (TSE:ATP) Seasonal Chart

Anthem, Inc. (NYSE:ANTM) Seasonal Chart

Anthem, Inc. (NYSE:ANTM) Seasonal Chart

Jack in the Box Inc.  (NASDAQ:JACK) Seasonal Chart

Jack in the Box Inc. (NASDAQ:JACK) Seasonal Chart

Super Micro Computer, Inc (NASD:SMCI) Seasonal Chart

Super Micro Computer, Inc (NASD:SMCI) Seasonal Chart

Teva Pharmaceutical Industries Ltd (ADR) (NASDAQ:TEVA) Seasonal Chart

Teva Pharmaceutical Industries Ltd (ADR) (NASDAQ:TEVA) Seasonal Chart

Icahn Enterprises L.P. (NASD:IEP) Seasonal Chart

Icahn Enterprises L.P. (NASD:IEP) Seasonal Chart

Bottomline Technologies, Inc. (NASD:EPAY) Seasonal Chart

Bottomline Technologies, Inc. (NASD:EPAY) Seasonal Chart

 

 

The Markets

Stocks surged on Wednesday in what was the best rally following a mid-term election since 1982.  The S&P 500 Index gain 2.12%, gapping above its 200-day moving and closing at minor short-term resistance around 2815.   This is the second major gap that has been charted since the end of October low, each providing a point of support should the benchmark retrace its gains at any point in the future.  The benchmark is now short-term overbought, suggesting a period of digestion is increasingly likely.  On the hourly chart, MACD is at the highest level since mid-February, while RSI is the most overbought since the end of August.  Neither is an indication of an imminent decline, but rather a sign of strength that could cause investors to hold off on buying until a slight pullback is realized.  In the Seasonal Advantage Portfolio, not only were we hedged against much of the market decline in the month of October, but we also used the weakness to load up on seasonally favoured sectors that continue to outperform the market.  We are now tacking on to gains accumulated in the May through September melt-up in stocks.  We’ve sent out a chart of the performance of the portfolio to all that expressed interest in the past couple of days.  Interested seeing our results?  Email us at seasonalportfolio@equityclock.com.

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Tuesday’s flip of the control of the House of Representatives to the Democrats potentially sets the stage for a period of gridlock in US politics.  But is this necessarily a bad thing for stocks?  The last point of reference that we have in the modern era where the House of Representatives was controlled by the Democrats while the Republicans controlled the Senate and the Oval Office was the period between 1981 and 1987, essentially encompassing the Ronald Reagan presidency.  Following the presidential election of 1980 that led to this split Congress era, stocks initially gained around 9% from election day through the middle of November, but then gave back all the post-election gain in the first half of December.  The benchmark went on to fall into a bear market, representing a loss of more than 20%, through the middle of 1982.  Ultimately, the benchmark almost doubled by the end of the split congress composition, but the early years certainly presented some scepticism whether the government could work together to  support the declining economic fundamentals.  The average return during the 2-year session of congress under a Democratic controlled House and a Republican controlled Senate and President is 22.44%, essentially the median return out of any congressional span.

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On schedule for the Wednesday session, the weekly petroleum status report indicated another substantial build in oil inventories in this lower demand period for the commodity.  The EIA indicated that oil stockpiles increased by 5.8 million barrels, while gasoline increased by 1.9 million barrels.  The result elevated the days of supply of oil to 26.4, matching the high seen this past spring.  This is almost four days above average for this time of year.  A substantial jump in the level of domestic production to 11.6 million barrels per day sets another record high as production pushes well beyond seasonal norms for this time of year.  On the demand side, the level of gasoline product supplied remains depressed and the level of production is reflecting the diminished demand for the product in this offseason for driving activity.  Seasonally, gasoline stockpiles start to ramp up between the middle of November and the end of the year, but last week’s injection suggests an earlier than average start to this trend, even before production starts to turn higher.  Overall, this was a bearish result that was quickly reflected in in the price of oil and gas commodities during Wednesday’s session. Seasonally, the period of weakness for oil continues into the start of December.

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 is holding firmly below previous support around $64, a level that would be expected to act as resistance on any rebound attempt.  Major moving averages are all rolling over, which does not bode well for the intermediate-term trend of the commodity.

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Crude Oil Futures (CL) Seasonal Chart

Sentiment on Wednesday, as gauged by the put-call ratio, ended around neutral at 0.96.

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Seasonal charts of companies reporting earnings today:

ACI Worldwide, Inc. (ACIW) Seasonal Chart Activision Blizzard, Inc (ATVI) Seasonal Chart Air Lease Corporation (AL) Seasonal Chart Algonquin Power & Utilities Corp. (AQN) Seasonal Chart AMC Entertainment Holdings, Inc. (AMC) Seasonal Chart Astrazeneca PLC (AZN) Seasonal Chart Cambrex Corporation (CBM) Seasonal Chart CenturyLink, Inc. (CTL) Seasonal Chart Choice Hotels International, Inc. (CHH) Seasonal Chart Cincinnati Bell Inc (CBB) Seasonal Chart Comstock Resources, Inc. (CRK) Seasonal Chart Consolidated Water Co. Ltd. (CWCO) Seasonal Chart Cott Corporation (COT) Seasonal Chart Crocs, Inc. (CROX) Seasonal Chart D.R. Horton, Inc. (DHI) Seasonal Chart Discovery, Inc. (DISCA) Seasonal Chart  Hecla Mining Company (HL) Seasonal Chart J & J Snack Foods Corp. (JJSF) Seasonal Chart Johnson Controls International plc (JCI) Seasonal Chart Magna International, Inc. (MGA) Seasonal Chart Norwegian Cruise Line Holdings Ltd. (NCLH) Seasonal Chart Perrigo Company (PRGO) Seasonal Chart Ritchie Bros. Auctioneers Incorporated (RBA) Seasonal Chart Skyworks Solutions, Inc. (SWKS) Seasonal Chart Stantec Inc (STN) Seasonal Chart Synaptics Incorporated (SYNA) Seasonal Chart TELUS Corporation (TU) Seasonal Chart Walt Disney Company (The) (DIS) Seasonal Chart Westport Fuel Systems Inc (WPRT) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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