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Stock Market Outlook for November 29, 2018

S&P 500 breaks above gap resistance, on its way to test previous resistance around 2760.

 

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:

WABCO Holdings Inc. (NYSE:WBC) Seasonal Chart

WABCO Holdings Inc. (NYSE:WBC) Seasonal Chart

Hovnanian Enterprises, Inc. (NYSE:HOV) Seasonal Chart

Hovnanian Enterprises, Inc. (NYSE:HOV) Seasonal Chart

Navigant Consulting (NYSE:NCI) Seasonal Chart

Navigant Consulting (NYSE:NCI) Seasonal Chart

Trevali Resources (TSE:TV) Seasonal Chart

Trevali Resources (TSE:TV) Seasonal Chart

St Joe Corp. (NYSE:JOE) Seasonal Chart

St Joe Corp. (NYSE:JOE) Seasonal Chart

Village Farms International (TSE:VFF) Seasonal Chart

Village Farms International (TSE:VFF) Seasonal Chart

Atlas Air Worlwide Hldgs (NASD:AAWW) Seasonal Chart

Atlas Air Worlwide Hldgs (NASD:AAWW) Seasonal Chart

GMP Capital Inc. (TSE:GMP) Seasonal Chart

GMP Capital Inc. (TSE:GMP) Seasonal Chart

Stryker Corporation  (NYSE:SYK) Seasonal Chart

Stryker Corporation (NYSE:SYK) Seasonal Chart

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

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

Eastmain Resources (TSE:ER) Seasonal Chart

Eastmain Resources (TSE:ER) Seasonal Chart

United Technologies Corporation  (NYSE:UTX) Seasonal Chart

United Technologies Corporation (NYSE:UTX) Seasonal Chart

Precision Drilling Corporation (NYSE:PDS) Seasonal Chart

Precision Drilling Corporation (NYSE:PDS) Seasonal Chart

 

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The Markets

Big rally on Wall Street saw major benchmark in the US chart their best one day return since the end of March.  The S&P 500 index added 2.3% following comments from Jerome Powel, who indicated that rates were just below levels that the Fed considers to be neutral, implying a more dovish stance as it pertains to future rate hikes.  The comments acted as the catalyst to fuel a breakout in the large-cap benchmark back above the open gap that spanned between 2685 and 2700.  A double-bottom pattern is apparent on the chart of the equity benchmark around 2630, a bullish setup that would be fulfilled by a break above the November high at 2815.  Momentum indicators are showing positive divergences when compared with price, which, quite obvious now, suggests waning selling pressures, typically a setup for a rebound attempt.  Short-term resistance at 2746 is directly overhead, followed by the more formidable level at the previous gap and the 200-day moving average at 2761.  Reaction to these levels of resistance will be critical to determine if this move has legs as investors cover negative bets ahead of the end of the year, or whether this move is merely a bull trap.  Seasonally, December is typically the best month of the year for stocks, but returns are not typically even throughout the period.  To learn more of the tendencies for the month ahead, we will be releasing our monthly outlook in the days ahead.  Want a copy?  Simply subscribe to the chart database at https://charts.equityclock.com/subscribe and we will send this insightful report directly to your inbox.

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On schedule for the Wednesday session, the Energy Information Administration (EIA) released the petroleum inventory status for the week just past. The EIA indicated that oil inventories increased by 3.6 million barrels, while gasoline stockpiles were drawn down by 800,000 barrels. The result did little to alter the days of supply of each with oil falling by two-tenths to 26.8 and gasoline remaining unchanged at 24.5. The average for each at this time of year is 22.6 and 23.4, respectively. Hints of the seasonal peak in the days of supply in oil may be implied, but the actual change in inventory levels still has much to prove given that this is the tenth consecutive week of injections to inventories. Domestic production of Crude in the US remains at record highs and not helping the supply situation was an uptick in imports to the highest level since the summer.  On the product side, with no change in the days of supply of gasoline, the actual and average trends are gradually narrowing. The year-to-date change in gasoline inventories is approximately inline with its average trend, correcting the glut that was apparent at the end of the summer driving season. Lower gasoline prices appear to be having some impact on demand, keeping the level of product supplied above the seasonal average trend for this time of year. Production is showing signs of ramping up following the Fall maintenance season, which should help alleviate the supply pressures on the oil side. Still, whether the energy commodity is refined or left in its crude form, there remains ample supply in the market, which could keep energy investors skittish until a sustained decline in inventory levels is realized. Seasonally, oil inventories typically decline in the month of December while gasoline stockpiles rise.

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

On the economic front, a report on new homes sales once again reiterated the concerns that pertain to the housing market. The headline print indicated that sales of new homes sold fell 8.9% last month to a seasonally adjusted annual rate of 544,000. Analysts had been expecting a rate of 575,000, a slight improvement from what was reported previously. Stripping out the seasonal adjustments, sales actually fell by 6.7%, which is a negative divergence compared to the 1.9% increase that is average for October. Despite the downbeat result, the year-to-date change compared to what was originally reported last month is little changed given the sizeable upward revisions to prior months. The year-to-date change is lower 6.7%, which is well below the 13.5% increase that is average by this point in the year. This is the weakest performance for this end of the housing market since 2010 when the market was still in the midst of a recession.  New homes account for approximately 10% of the sales in the US with the bulk still represented by existing home sales. As we noted last week, existing home sales are still showing gains year to date, albeit at a below average pace. Seasonally, new home sales continue their downward slide into the end of the year as American focus on the end of year holidays.  The seasonal charts for this report can be accessed via the following link: https://charts.equityclock.com/u-s-new-home-sales

New Home Sales Seasonal Chart

Monthly New Home Sales Data

Also released on Wednesday was the advanced report on International Trade in the US.  Focussing on the year-to-date trends, imports are running 2.3% above average through the month of October, while exports are running 2.9% below the seasonal average pace.  Businesses continue to push as many imports into the US before the US President enacts another round of tariffs, which could include areas that were seemingly off limits previously, such as iPhones.  Drilling through the details on the export side, the weakness is stemming from autos and food/feeds/beverages, both of which are trending well below average through the end of October.  Consumer goods and industrial supplies exports are the only categories to show above average strength on the year as businesses sell their manufactured wares to a global audience.  Seasonally both exports and imports typically decline in the last two months of the year.  The charts are accessible via the database at https://charts.equityclock.com/u-s-international-trade-data

US International Trade - Imports Seasonal Chart

Monthly US International Trade - Imports Data

US International Trade – Imports Seasonal Chart

US International Trade - Exports Seasonal Chart

Monthly US International Trade - Exports Data

Sentiment on Wednesday, as gauged by the put-call ratio, ended bullish at 0.84.

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Seasonal charts of companies reporting earnings today:

Abercrombie & Fitch Company (ANF) Seasonal Chart AeroVironment, Inc. (AVAV) Seasonal Chart Ambarella, Inc. (AMBA) Seasonal Chart American Software, Inc. (AMSWA) Seasonal Chart American Woodmark Corporation (AMWD) Seasonal Chart Amtech Systems, Inc. (ASYS) Seasonal Chart Build-A-Bear Workshop, Inc. (BBW) Seasonal Chart Canadian Imperial Bank of Commerce (CM) Seasonal Chart Cantel Medical Corp. (CMD) Seasonal Chart Culp, Inc. (CULP) Seasonal Chart  Dollar Tree, Inc. (DLTR) Seasonal Chart  Express, Inc. (EXPR) Seasonal Chart Gamestop Corporation (GME) Seasonal Chart Hoegh LNG Partners LP (HMLP) Seasonal Chart HP Inc. (HPQ) Seasonal Chart Kirkland's, Inc. (KIRK) Seasonal Chart Oaktree Specialty Lending Corporation (OCSL) Seasonal Chart   Palo Alto Networks, Inc. (PANW) Seasonal Chart Patterson Companies, Inc. (PDCO) Seasonal Chart  PVH Corp. (PVH) Seasonal Chart   Splunk Inc. (SPLK) Seasonal Chart Tech Data Corporation (TECD) Seasonal Chart Titan Machinery Inc. (TITN) Seasonal Chart Toronto Dominion Bank (The) (TD) Seasonal Chart Universal Technical Institute Inc (UTI) Seasonal Chart Vmware, Inc. (VMW) Seasonal Chart Workday, Inc. (WDAY) Seasonal Chart   

 

 

S&P 500 Index

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TSE Composite

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