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Stock Market Outlook for December 13, 2018

Treasury Bond ETFs trading lower from the upper limit of descending triangle patterns.

 

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:

Liquor Stores N.A. (TSE:LIQ) Seasonal Chart

Liquor Stores N.A. (TSE:LIQ) Seasonal Chart

Canadian Life Companies Split (TSE:LFE) Seasonal Chart

Canadian Life Companies Split (TSE:LFE) Seasonal Chart

Canaccord Financial (TSE:CF) Seasonal Chart

Canaccord Financial (TSE:CF) Seasonal Chart

Allied Properties REIT (TSE:AP-UN) Seasonal Chart

Allied Properties REIT (TSE:AP-UN) Seasonal Chart

Mohawk Inds, Inc. (NYSE:MHK) Seasonal Chart

Mohawk Inds, Inc. (NYSE:MHK) Seasonal Chart

BorgWarner, Inc. (NYSE:BWA) Seasonal Chart

BorgWarner, Inc. (NYSE:BWA) Seasonal Chart

Boyd Gaming Corporation  (NYSE:BYD) Seasonal Chart

Boyd Gaming Corporation (NYSE:BYD) Seasonal Chart

Jones Lang Lasalle, Inc. (NYSE:JLL) Seasonal Chart

Jones Lang Lasalle, Inc. (NYSE:JLL) Seasonal Chart

Rayonier, Inc. (NYSE:RYN) Seasonal Chart

Rayonier, Inc. (NYSE:RYN) Seasonal Chart

LyondellBasell Industries NV (NYSE:LYB) Seasonal Chart

LyondellBasell Industries NV (NYSE:LYB) Seasonal Chart

 

 

The Markets

Stocks attempted another rally on Wednesday amid further trade hopes, but as the session progressed it became apparent that investors were not willing to maintain the strength into the close.  The S&P 500 Index closed higher by 0.54%, which is well off of the highs of the day that saw a gain of 1.84%.  The benchmark once again intersected with the pivot point between 2685 and 2700.  The highs of the day also came close to touching the benchmark’s declining 20-day moving average, emphasizing the resistance characteristics that these major moving averages are showing.  As highlighted yesterday, the bulls need a close above 2700, while the bears need a close below 2630; a catalyst may be required to fuel the break.

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The gains in stocks on the day came as widely followed treasury bond ETFs traded lower on the day, providing fuel to other asset classes.  The long-term treasury ETF (TLT) declined from trendline resistance that stretches back to 2016.  The same can be seen on the intermediate treasury ETF (IEF).  This declining level of resistance across the charts forms the basis of a descending triangle, a bearish setup that would be fulfilled by a break of the lower limit of the span.  For each, a completion of the bearish setup projects a move down to the 2013/2014 lows, which would be pronounced if achieved.  For TLT, the lower limit of the setup can be seen around $112, while on IEF the equivalent level is $99.  Seasonally, treasury bonds tend to decline between January and May.

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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 declined by 1.2 million barrels, while gasoline stockpiles increased by 2.1 million barrels. The result continued to alleviate the days of supply of oil, which as of a few weeks ago had climbed back into the glut levels seen over the past few years. At 25.5, the days of supply of oil is still 3.3 days above average for this time of year. A jump in the level of gasoline production, a slight downtick in domestic production, and subdued import activity helped to drain supplies of the energy commodity in the week, following seasonal norms for this time of year.

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

As for gasoline, the injection to inventories takes the days of supply to 25.2 from 24.8 previous. The average level for this time of year is 24.3. The trend in the days of supply of gasoline started to diverge from its seasonal average trend in August when weak driving demand prevented inventory withdrawals at the end of the summer season. Production had since pulled back, but in the latest week jumped as refiners got back online following Fall maintenance. A commensurate increase in demand of gasoline, as gauged by the level of gasoline product supplied, has yet to be realized. Gasoline product supplied remains around levels seen last winter, a period attributed to weak demand. Gasoline inventories are set to increase in the weeks ahead, as per seasonal norms, which may allow for further oil draws through year-end.

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, the Consumer Price Index (CPI) for November was released before Tuesday’s opening bell. The headline print indicated that CPI was unchanged last month, inline with the consensus analyst estimate. Excluding the more volatile elements of food and energy, CPI was higher by 0.2%, also inline with forecasts. Stripping out the seasonal adjustments, the consumer price index – all items actually declined by 0.3% in the month, which is weaker than the 0.2% decrease that is average for the second to last month of the year. The year-to-date change now sits at +2.2%, which is marginally below the seasonal average trend that calls for a 2.3% rise by this point in the year. Core CPI (excluding food and energy) remains above average through the second to last month of the year, higher by 2.2% versus the 2.1% norm. The trends in inflation appear to be normalizing following a number of years since the end of the last recession when subdued inflationary pressures were realized amidst the low interest rate policy.  Seasonally, the consumer price index tends to fall during the final months of the year.  Subscribers to our service received further insight on the details behind this report.  To be included on this intraday distribution, simply subscribe via the following link: https://charts.equityclock.com/subscribe

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

Monthly Consumer Price Index for All Urban Consumers: All Items Data

Sentiment on Wednesday, as gauged by the put-call ratio, ended neutral at 1.00.

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Seasonal charts of companies reporting earnings today:

Adobe Inc. (ADBE) Seasonal Chart Cherokee Inc. (CHKE) Seasonal Chart Ciena Corporation (CIEN) Seasonal Chart Civitas Solutions, Inc. (CIVI) Seasonal Chart Costco Wholesale Corporation (COST) Seasonal Chart DLH Holdings Corp. (DLHC) Seasonal Chart Good Times Restaurants Inc. (GTIM) Seasonal Chart Veru Inc. (VERU) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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