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Stock Market Outlook for November 15, 2018

Areas of risk in the market close positive in a negative tape.

 

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:

Yamana Gold Inc.  (TSE:YRI) Seasonal Chart

Yamana Gold Inc. (TSE:YRI) Seasonal Chart

Streamline Health Solutions Inc. (NASD:STRM) Seasonal Chart

Streamline Health Solutions Inc. (NASD:STRM) Seasonal Chart

Harte Hanks, Inc. (NYSE:HHS) Seasonal Chart

Harte Hanks, Inc. (NYSE:HHS) Seasonal Chart

High Liner Foods Inc. (TSE:HLF) Seasonal Chart

High Liner Foods Inc. (TSE:HLF) Seasonal Chart

Hudson Pacific Properties Inc. (NYSE:HPP) Seasonal Chart

Hudson Pacific Properties Inc. (NYSE:HPP) Seasonal Chart

 

 

The Markets

Stocks continued to weaken on Wednesday as investors monitored headlines pertaining to Brexit and comments made by democratic representative Maxine Waters pertaining to the Trump administration’s push to loosen regulations in the financial industry.  The S&P 500 Index shed around three-quarters of one percent, weighed down by financials, which fell by over 2% at the lows of the session.  The lows of the day also saw the large-cap benchmark trade down to and bounce from gap support between 2685 and 2700, suggesting the benchmark has some support in this range that was formed following the late October low.  The benchmark closed just above this zone.  Momentum indicators on the hourly chart are holding just above oversold levels and a positive divergence with respect to the 14,13 full stochastic oscillator suggests a tradable low may be materializing.  In the Seasonal Advantage Portfolio that we manage in partnership with CastleMoore, we held back some cash following the late  October bounce to put to work on a potential re-test of the lows.  The risk-reward of the market has become much more appealing at present levels.  To learn more about our proprietary three-pronged approach incorporating seasonal, technical, and fundamental analysis, email us at seasonalportfolio@equityclock.com.

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Encouraging in the price action on Wednesday was the outperformance in some key cyclical sectors.  Materials, industrials, energy, and communication services each outperformed the broad market return on the day, suggesting that investors may be starting to nibble at risk.  Consumer staples and utilities were either market perform to underperform on the session.  Some of the riskiest areas of the market that had been sold off hard in the market rout over the past month and a half actually finished higher on the day, including the Semiconductor ETF (SMH), the Emerging Market ETF (EEM), and the Transportation ETF (IYT).  Evidence that investors are less risk-averse and finding opportunities in beaten down names is becoming apparent.  Transportation, semiconductor, and emerging market stocks each see positive seasonal tendencies through the end of the year.

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On the economic front, a report on US consumer prices came in as expected for October.  The headline print indicated that the Consumer Price Index (CPI) increased by 0.3%, inline with the consensus analyst estimate.  The year-over-year increase now sits at 2.5%, which is down slightly from the 2.9% increase seen at the high in July.  Stripping out the seasonal adjustments, the Consumer Price Index for All Urban Consumers actually increased by 0.2%, which is stronger than the unchanged result that is average for this time of year.  The year-to-date change is now higher by 2.6%, which is about inline with the seasonal average trend.  Parsing the details, there were a number of rare positive divergences in the report, including housing, transportation, and motor fuel, each of which gained in October when declines are the norm.  Motor fuel is expected to retrace this gain when the November tally is reported given the downfall in energy commodity prices in recent weeks.  Household furnishings and operations continue to show gains that are well above average this year, suggesting a strain on the household budgets of Americans.  Overall, the report provided little that could deter the Fed from its tightening path, even though the areas that are showing strength in this report are not likely to be cooled by additional rate hikes.  Capacity constraints are increasing the cost of transporting a wide variety of goods, which will be passed on to the consumer via higher prices.  As well, housing costs are rising above average as a result of higher mortgage rates, which is positively correlated to the direction of the overnight rate.  The areas that the Fed may have more influence on, such as the more commodity sensitive areas, have and already are showing signs of cooling, including below average food inflation and the rollover in energy commodity prices (excluding natural gas) in the past month.  Seasonally, consumer prices tend to fall through the remaining months of the year, dragged lower by some of those more commodity sensitive categories in the report.  For a complete breakdown of the results, the charts are available in the database at https://charts.equityclock.com/u-s-consumer-price-index-cpi-producer-price-index-ppi.

Consumer Price Index for All Urban Consumers: All Items Seasonal Chart

Consumer Price Index for All Urban Consumers: All Items Less Food and Energy Seasonal ChartCPI - Housing Seasonal ChartCPI - Motor fuel Seasonal ChartCPI - Transportation Seasonal Chart

Sentiment on Wednesday, as gauged by the put-call ratio, ended bearish at 1.22.

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Seasonal charts of companies reporting earnings today:

Applied Materials Inc Seasonal Chart Wesco Aircraft Holdings Inc Seasonal Chart Shoe Carnival Inc Seasonal Chart Teekay Corp Seasonal Chart Canadian Solar Inc Seasonal Chart NVIDIA Corp Seasonal Chart Euroseas Ltd Seasonal Chart Nordstrom Inc Seasonal Chart Walmart Inc Seasonal Chart Williams-Sonoma Inc Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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