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Stock Market Outlook for December 20, 2018


Grasping at straws with the technicals as we now look to minor levels of support.

 

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:

GoGold Resources (TSE:GGD) Seasonal Chart

GoGold Resources (TSE:GGD) Seasonal Chart

Transcontinental Inc. (TSE:TCL.A) Seasonal Chart

Transcontinental Inc. (TSE:TCL.A) Seasonal Chart

Russel Metals Incorporated  (TSE:RUS) Seasonal Chart

Russel Metals Incorporated (TSE:RUS) Seasonal Chart

Universal Display Corp. (NASD:OLED) Seasonal Chart

Universal Display Corp. (NASD:OLED) Seasonal Chart

Apple Inc.  (NASDAQ:AAPL) Seasonal Chart

Apple Inc. (NASDAQ:AAPL) Seasonal Chart

Dick's Sporting Goods Inc. (NYSE:DKS) Seasonal Chart

Dick’s Sporting Goods Inc. (NYSE:DKS) Seasonal Chart

Ross Stores, Inc. (NASD:ROST) Seasonal Chart

Ross Stores, Inc. (NASD:ROST) Seasonal Chart

Rio Novo Gold Inc. (TSE:RN.TO) Seasonal Chart

Rio Novo Gold Inc. (TSE:RN.TO) Seasonal Chart

Corning Incorporated  (NYSE:GLW) Seasonal Chart

Corning Incorporated (NYSE:GLW) Seasonal Chart

 

 

The Markets

Stocks sold off sharply on Wednesday as investors reacted to comments from Fed Chair Jerome Powell, who was perceived to be less dovish than hoped.  The S&P 500 Index shed 1.54%, reversing solid gains realized just prior to the Fed event.  The decline now breaks the February low on the benchmark, removing the last level of support that the bull camp was looking for to maintain a positive bias.  Support levels beneath this market are minor in nature with one level at 2486, effectively the low on Wednesday, and the level below that around 2420.  Momentum indicators, according to RSI and Stochastics, are back in oversold territory, suggesting that the benchmark is stretched to the downside.  As of present, the large-cap benchmark is on track to realize the worst December return in over 50 years, dethroning the 6.0% decline that was realized in December of 2002.  Sentiment indicators continue to suggest that now is a good buying opportunity, however, that also entails that a catalyst comes along to fuel a short-covering rally.  With headlines that the bears are increasingly sinking their teeth into, it is difficult to foresee what that catalyst could be or when it will come.

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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 497,000 barrels, while gasoline stockpiles increased by 1.8 million barrels. The result did little to change the days of supply of both oil and gas with oil falling by two-tenths to 25.3 and gasoline rising by one-tenth to 25.3. The average days of supply for each at this time of year is 22.1 and 24.3, respectively.Production of oil was unchanged last week, remaining very close to the all-time high levels charted in the month of November. Domestic production has been showing gains that are above average for the past couple of years, limiting the reliance on imports, which are running well below average. Whether looking at the days of supply or the change in the level of oil inventories, the oil market is well supplied following the sharp injections to storage in the past couple of months, but the pressures to supplies are showing signs of waning as refiners come back online following their Fall maintenance period.  Subscribers to our service were provided with insight on where we think the appropriate level that the price of oil should be given the risks of an ongoing supply glut.  Want a copy of this report?  Simply subscribe to our service via the following link and we’ll email it to you: https://charts.equityclock.com/subscribe

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

Housing is perhaps one of the most important arguments for the bear case for equities as of present. Weakness has been spilling into the results for the past six months as the pace of sales wane, inventories rise, and prices start to languish. While November’s result does little to alter the course of these trends, it may provide some reprieve from the growing bearish rhetoric pertaining to the largest asset of most Americans. The headline print of November’s existing home sales report indicated that activity increased by 1.9% to a seasonally adjusted annual rate of 5.32 million. Analysts were actually expecting a decline of six-tenths of a percent to 5.19 million. The year-over-year change in home sales now stands at -7.0%. Stripping out the seasonal adjustments, sales of existing homes actually fell by 9.0% in November, which is better than the 9.7% decline that is average for the second to last month of the year. The result places the year-to-date change lower by 4.9%, or 2.1% below the seasonal average trend.  Subscribers to our service were provided with further analysis of this report, which has historically acted as a leading indicator to broader economic activity.

Existing Home Sales Seasonal Chart

Monthly Existing Home Sales Data

North of the border, the Consumer Price Index showed the largest monthly decline in almost three years. The headline print, which is also the non-seasonally adjusted result, indicated that the Consumer Price Index (CPI) for all items declined by 0.4% in November, which was inline with analyst forecasts. CPI has been unchanged, on average, in this second to last month of the year. The year-over-year rate on the headline read stands at +1.7%, which is below the 2% target rate that the central bank desires. Looking at the seasonal chart, the year-to-date change of +2.1% is about inline with the seasonal average trend. CPI had been running above average through much of the year as consumers paid more for a wide variety of goods.  We provided subscribers with further insight and analysis of this report on Wednesday morning.

Canada CPI - All-items Seasonal Chart

Monthly Canada CPI - All-items Data

Sentiment on Wednesday, as gauged by the put-call ratio, ended bearish at 1.25.

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Seasonal charts of companies reporting earnings today:

Accenture plc (ACN) Seasonal Chart Actuant Corporation (ATU) Seasonal Chart Apogee Enterprises, Inc. (APOG) Seasonal Chart BlackBerry Limited (BB) Seasonal Chart CalAmp Corp. (CAMP) Seasonal Chart Carnival Corporation (CCL) Seasonal Chart Carnival Corporation (CUK) Seasonal Chart Cintas Corporation (CTAS) Seasonal Chart ConAgra Brands, Inc. (CAG) Seasonal Chart Neogen Corporation (NEOG) Seasonal Chart Nike, Inc. (NKE) Seasonal Chart Sanderson Farms, Inc. (SAFM) Seasonal Chart Scholastic Corporation (SCHL) Seasonal Chart Walgreens Boots Alliance, Inc. (WBA) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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