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Stock Market Outlook for November 22 & 23, 2018

Stocks fail to close gap resistance in the Thanksgiving-eve session.

 

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:

Talon Metals (TSE:TLO) Seasonal Chart

Talon Metals (TSE:TLO) Seasonal Chart

Major Drilling Group Int'l Inc.  (TSE:MDI) Seasonal Chart

Major Drilling Group Int’l Inc. (TSE:MDI) Seasonal Chart

JPMorgan Chase & Co.  (NYSE:JPM) Seasonal Chart

JPMorgan Chase & Co. (NYSE:JPM) Seasonal Chart

Telephone and Data Systems, Inc. (NYSE:TDI) Seasonal Chart

Telephone and Data Systems, Inc. (NYSE:TDI) Seasonal Chart

Cemex SAB de CV (ADR) (NYSE:CX) Seasonal Chart

Cemex SAB de CV (ADR) (NYSE:CX) Seasonal Chart

Lennar Corporation  (NYSE:LEN) Seasonal Chart

Lennar Corporation (NYSE:LEN) Seasonal Chart

KB Home  (NYSE:KBH) Seasonal Chart

KB Home (NYSE:KBH) Seasonal Chart

Interfor (TSE:IFP) Seasonal Chart

Interfor (TSE:IFP) Seasonal Chart

Valeant Pharmaceuticals Intl Inc (TSE:VRX) Seasonal Chart

Valeant Pharmaceuticals Intl Inc (TSE:VRX) Seasonal Chart

Acadian Timber Corp. (TSE:ADN) Seasonal Chart

Acadian Timber Corp. (TSE:ADN) Seasonal Chart

Zimmer Biomet Holdings, Inc. (NYSE:ZBH) Seasonal Chart

Zimmer Biomet Holdings, Inc. (NYSE:ZBH) Seasonal Chart

Oracle Corporation  (NASDAQ:ORCL) Seasonal Chart

Oracle Corporation (NASDAQ:ORCL) Seasonal Chart

Micron Technology, Inc.  (NASDAQ:MU) Seasonal Chart

Micron Technology, Inc. (NASDAQ:MU) Seasonal Chart

United States Steel Corporation  (NYSE:X) Seasonal Chart

United States Steel Corporation (NYSE:X) Seasonal Chart

Sealed Air Corp.  (NYSE:SEE) Seasonal Chart

Sealed Air Corp. (NYSE:SEE) Seasonal Chart

Applied Materials, Inc.  (NASDAQ:AMAT) Seasonal Chart

Applied Materials, Inc. (NASDAQ:AMAT) Seasonal Chart

 

Upcoming BNN Appearance:

I will be on BNN’s Market Call Tonight at 6:00pm ET this Friday, November 23rd taking your calls on Technical Analysis and Seasonal Investing.  CALL TOLL-FREE 1-855-326-6266,  EMAIL marketcall@bnnbloomberg.ca,  or TWEET @MarketCall.

 

 

The Markets

Stocks showed gains in the US Thanksgiving-eve session as the bears loosened their grip ahead of the holiday.  The S&P 500 Index added three-tenths of once percent, led by cyclical sectors that had been beaten up in previous sessions.   But while there was green on the screen, the action was anything but encouraging.  The large-cap benchmark traded up to the highs charted in the previous session, just below the gap that was opened on the same day.  This level of gap resistance overhead presents a difficult hurdle for the benchmark to overcome in the near-term.  Support is apparent at 2630, leaving the benchmark with little room to navigate before a break, one way or the other, is realized.  Seasonally, stocks remain in this period of strength that typically provides higher equity values in the last two months of the year.

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On schedule for this time of week was the petroleum status report released by the Energy Information Administration.  The EIA indicated that oil stockpiles increased by 4.9 million barrels last week, while gasoline inventories fell by 1.3 million barrels.  The result left the days of supply for each commodity relatively unchanged at 27.0 and 24.5, respectively.  For oil, this is 4.3 days above average for this time of year, pushing back into the glut territory that we saw back in 2017.  Seasonally, oil stockpiles typically decline between the middle of November and the beginning of the new year, but this trend has yet to become apparent.  Domestic production of oil remains at record highs, showing growth on the year that is well above average.  As for the product side, some progress has been made in alleviating the supply glut that overhung the end of the summer driving season.  The change in stockpiles of gasoline has almost converged with its seasonal average trend after holding well above it over the past couple of months.  Seasonally, gasoline inventories typically rise from the middle of November into the month of February, but this trend also has yet to be seen.  Overall, the report continues to lean bearish for the price of oil, but given that we are at a seasonal turning point for inventories of oil and gas, the situation may improve in the near-term.  Seasonally, oil prices remain in a period of weakness 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

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Crude Oil Futures (CL) Seasonal Chart

On the economic front, a report on durable goods came in weaker than expectations.  The headline print indicated that durable orders declined by 4.4% in October, much weaker than the 2.5% decline that was forecast by analysts.  Excluding the volatile transportation component, orders were higher by 0.1%, which was still a miss versus estimates for a 0.4% gain.  Stripping out the seasonal adjustments, durable goods orders were actually lower by 4.9%, which is weaker than the 4.1% decline that is average for this time of year.  Year-to-date, durable goods orders are running 4.1% above the seasonal average trend, which is approximately inline with last year’s pace.  The results are among the best performance in the past decade, persevering despite the threat of tariffs.  Parsing the categories, strength in orders of Computers remains prominent, trending 19.7% above the seasonal average trend.  Electrical equipment and machinery both show positive divergences in October, up 4.3% and 2.6%, respectively, in what has historically been a negative period for each category.  The area of struggle in the report is non-defense aircraft and parts, which is trending 26.1% below average through the end of October.  As for inventories, they continue to be an issue.  Total inventories of durable goods are running 1.9% above average through the end of October, suggesting a supply/demand mis-match.  Overall, looking past the lofty inventory levels, this was a healthy result, but as we know from other reports on the economy, the risks to future manufacturing activity are growing.  Seasonally, durable goods orders tend to decline into the colder winter months, then bounce back in the spring.  For a complete breakdown of the results, the charts are available in the database at https://charts.equityclock.com/u-s-durable-goods-orders.

Value of Manufacturers' New Orders for Durable Goods Industries Seasonal Chart

Monthly Value of Manufacturers' New Orders for Durable Goods Industries Data

In other economic news, a bit of relief on the housing front was present by way of the existing home sales report for October.  The headline print indicated that sales increased by 1.4% last month to a seasonally adjusted annual rate of 5.22 million.  Analysts were expecting a rate of 5.21 million.  Stripping out the seasonal adjustments, existing home sales were actually higher by 5.9% in October, bucking the 1.3% decline that is average for the month.  The year-to-date change remains below the average trend, now by 3.6%, but this is much improved from the 10.9% below average pace seen in our last look.  Parsing the details, the south appears to be the drag on the aggregate result, now running 8.4% below the seasonal average trend through the month of October.  Perhaps this is no surprise given the hurricanes that hit the region in recent months.  The mid-west is the lone region showing an above average pace on the year.  As for inventories, they remain elevated, rising 26.4% through October, double the growth rate that is average by this point in the year.  This inventory overhang is helping to alleviate the strength in prices, which are now running a mere 1.0% above the seasonal norm.  This is the weakest pace since 2011 when the housing market was still trying to heal from the recession in the years prior.  Seasonally, home sales continue to weaken into January.  To access the seasonal charts for this important economic indicator, they are available in the chart database at https://charts.equityclock.com/u-s-existing-home-sales

Existing Home Sales Seasonal Chart

Monthly Existing Home Sales Data

Inventory of Existing Homes for Sale Seasonal Chart

Sentiment on Wednesday, as gauged by the put-call ratio, ended bearish at 1.08.

 

 

 

 

 

 

Seasonal charts of companies reporting earnings today:

StealthGas, Inc. (GASS) Seasonal Chart 

 

 

S&P 500 Index

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TSE Composite

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