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Stock Market Outlook for December 4, 2018

S&P 500 may have gapped above 50 and 200-day moving averages, but changing the perspective shows that a major hurdle remains.

 

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:

Acxiom Corp. (NASD:ACXM) Seasonal Chart

Acxiom Corp. (NASD:ACXM) Seasonal Chart

Stornoway Diamond (TSE:SWY) Seasonal Chart

Stornoway Diamond (TSE:SWY) Seasonal Chart

Helmerich & Payne Inc. (NYSE:HP) Seasonal Chart

Helmerich & Payne Inc. (NYSE:HP) Seasonal Chart

Transocean, Inc. (NYSE:RIG) Seasonal Chart

Transocean, Inc. (NYSE:RIG) Seasonal Chart

Toromont Industries Ltd.  (TSE:TIH) Seasonal Chart

Toromont Industries Ltd. (TSE:TIH) Seasonal Chart

Gildan Activewear Inc.  (TSE:GIL) Seasonal Chart

Gildan Activewear Inc. (TSE:GIL) Seasonal Chart

Sony Corporation (ADR) (NYSE:SNE) Seasonal Chart

Sony Corporation (ADR) (NYSE:SNE) Seasonal Chart

General Electric Company  (NYSE:GE) Seasonal Chart

General Electric Company (NYSE:GE) Seasonal Chart

Welltower, Inc.  (NYSE:HCN) Seasonal Chart

Welltower, Inc. (NYSE:HCN) Seasonal Chart

 

 

The Markets

Stocks rallied on Monday as investors cheered the trade truce agreed to by US and Chinese leaders.  The S&P 500 Index closed higher by 1.09%, charting a doji indecision candlestick as investors debated whether the news was in fact a bullish catalyst for stocks.  The move on the day saw the large-cap benchmark gap above its 50 and 200-day moving averages, two important hurdles that the market had been watching since the breakdown in the benchmark closer to the beginning of October.  But while the daily chart is suggesting that the benchmark may be free of the hurdles presented by major moving averages, changing the perspective to a weekly look suggests that an important hurdle by way of the 20-week moving average is directly overhead.  Two previous weekly candlesticks over the past couple of month show the hesitation of investors to push the benchmark beyond this point.  Short-covering following weeks of very negative sentiment may have gotten the benchmark to where it is, but now the bulls will have to step up to take the benchmark beyond November’s high and make a run at the all-time highs.  Seasonally, the month of December is the strongest time of year for stocks, but return in the month is not distributed evenly.  Subscribers to the chart database were provided with analysis showing the tendencies during this final month of the year and what to look out for.  You can subscribe to receive our research at the following link: https://charts.equityclock.com/subscribe

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Performance numbers for the Seasonal Advantage Portfolio in the month of November are out and investors in our portfolio are up by 2.95% in the month, adding to the gains achieved this past summer.  Recall that the portfolio benefitted from the rising tide in stocks between May and August then went into a defensive posture in the month of October to mitigate much of the market weakness.  The portfolio used October’s weakness to load up on seasonally favoured sectors and industries of the market allowing us to outperform all of our suggested benchmarks.  And now that December is upon us, we continue to see strong results from this portfolio with portfolio values at all-time highs.  We will be sending out performance statistics to all who have expressed interest in the portfolio in the coming days.  If you would like to be added to this list or are interested in gaining exposure to the portfolio that we manage in partnership with CastleMoore, email us at seasonalportfolio@equityclock.com.

On the economic front, a report on construction activity in the US emphasized the impact that the slowdown in home building is having on the aggregate result. The headline print indicated that spending on construction projects fell by 0.1% in October, missing analyst estimates that called for a gain of 0.3%. The year-over-year pace now sits at +4.9%, which is down from the +7.2% pace reported previously. Stripping out the seasonal adjustments, total construction was actually lower by 0.5% in the month, which is stronger than the 1.3% decline that is average for October. The year-to-date change is now trending below the seasonal norm by 3.1%, but this is still better than the 5.4% below average pace seen by this time last year. As alluded to, residential spending is the laggard, trending 12.0% below average through the end of October. Private non-residential spending is trending 0.9% below average, while public construction is trending 9.8% above average.  Seasonally, consecution activity typically declines into the month of January as projects slow amidst the colder winter weather.  The link to the seasonal charts for construction spending is available at https://charts.equityclock.com/u-s-construction-spending

Total Construction Spending  Seasonal Chart

Monthly Total Construction Spending  Data

Sentiment on Monday, as gauged by the put-call ratio, ended bullish at 0.76.

 

 

Sectors and Industries entering their period of seasonal strength:

S&P/TSX Smallcap Index Seasonality

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

Monthly Seasonal S&P/TSX Smallcap Index

 

Seasonal charts of companies reporting earnings today:

AutoZone, Inc. (AZO) Seasonal Chart  Bank Of Montreal (BMO) Seasonal Chart  Christopher & Banks Corporation (CBK) Seasonal Chart Conn's, Inc. (CONN) Seasonal Chart Dollar General Corporation (DG) Seasonal Chart Donaldson Company, Inc. (DCI) Seasonal Chart EMCORE Corporation (EMKR) Seasonal Chart  Guidewire Software, Inc. (GWRE) Seasonal Chart HD Supply Holdings, Inc. (HDS) Seasonal Chart HealthEquity, Inc. (HQY) Seasonal Chart  Marvell Technology Group Ltd. (MRVL) Seasonal Chart  Movado Group Inc. (MOV) Seasonal Chart  RH (RH) Seasonal Chart  Toll Brothers, Inc. (TOL) Seasonal Chart 

 

 

 

S&P 500 Index

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TSE Composite

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Seasonal Advantage Portfolio by CastleMoore

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