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Stock Market Outlook for December 24, 2018


S&P 500 Index closes the week at a minor level of support as it continues its parabolic trend lower.

 

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:

DATA Communications Management (TSE:DCM) Seasonal Chart

DATA Communications Management (TSE:DCM) Seasonal Chart

New Gold Inc.  (TSE:NGD) Seasonal Chart

New Gold Inc. (TSE:NGD) Seasonal Chart

Tahoe Resources (TSE:THO) Seasonal Chart

Tahoe Resources (TSE:THO) Seasonal Chart

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

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

Martinrea International (TSE:MRE) Seasonal Chart

Martinrea International (TSE:MRE) Seasonal Chart

Dundee Precious Metals (TSE:DPM) Seasonal Chart

Dundee Precious Metals (TSE:DPM) Seasonal Chart

Skechers USA Inc (NYSE:SKX) Seasonal Chart

Skechers USA Inc (NYSE:SKX) Seasonal Chart

Electrovaya (TSE:EFL) Seasonal Chart

Electrovaya (TSE:EFL) Seasonal Chart

 

 

The Markets

Another day of selling pushed stocks further into oversold territory on Friday.  Reaction to a looming government shutdown in the US, in addition to the last trading day for many, had investors shedding risk ahead of the holidays.  The S&P 500 Index closed lower by 2.06%, continuing a parabolic trend lower.  As we frequently emphasize as it pertains to parabolic trends, such as this, they are unsustainable, suggesting a snap-back, at some point, should be expected.  The benchmark has now taken out the first level of minor support highlighted earlier in the week, and is now testing the second around 2420.  Looking at other minor levels of support, 2400 is obvious given its psychological significance, and then 2320. 

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On the economic front, a report on Durable Goods Orders confirms the ongoing strength in the US manufacturing economy. The headline print indicated that new orders of durable goods increased by 0.8% in November, which was much less than the 1.4% increase forecasted by analysts. Excluding the more volatile transportation category, orders showed a decline of 0.3%, diverging from expectations calling for an increase of the same margin. Stripping out the seasonal adjustments, US durable goods orders actually declined by 4.3%, which is slightly better than the 4.5% decline that is average for this time of year. The year-to-date change now sits 4.3% above the seasonal average trend, which, albeit off from the pace set this time last year, remains quite an impressive result nonetheless. Excluding last year, this is the best pace since 2011. Subscribers to our service received further insight on this important read of the manufacturing economy in the US.  You too can receive further commentary from us intraday by subscribing via the following link: https://charts.equityclock.com/subscribe

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

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

North of the border, Statscan was busy this morning releasing a set of reports that give indication as to the health of the Canadian economy. First up, Gross Domestic Product (GDP) for October. The headline print indicated that GDP increased by 0.3% in October, beating the consensus analyst estimate that called for a 0.1% rise. The year-over-year rate now sits at +2.2%, a slight improvement versus the +2.1% reported previous. Stripping out the seasonal adjustments, GDP was actually lower by 3.3% in the month, which is weaker than the 2.5% decline that is average for October. The year-to-date change now sits 0.5% below the seasonal average trend, certainly a shift from the above average pace realized throughout 2017.

Canada GDP - All industries Seasonal Chart

Monthly Canada GDP - All industries Data

If you want to point to an area of strength in the Canadian economy, it has to be with the consumer. Retail sales in Canada were higher by 0.3% in October, which is weaker than the consensus analyst estimate that called for a 0.4% rise. Stripping out the seasonal adjustments, total retail trade in this country actually increased by 1.9%, which is much stronger than the 0.6% increase that is average for this time of year. The result places the year-to-date change 6.2% above the seasonal average trend, down slightly from last year’s stellar rate.  Subscribers received commentary pertaining to Canada GDP and Retail Sales during Friday’s session.  Subscribe now to be included in our distribution.  Makes a great Christmas gift!

Retail trade Seasonal Chart

Monthly Retail trade Data

Sentiment on Friday, as gauged by the put-call ratio, ended bearish at 1.43.  On Thursday, the ratio hit the highest level on record at 1.82.  These are typically contrarian signals to buy.

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Seasonal charts of companies reporting earnings today:

  • No significant earnings scheduled for today

 

S&P 500 Index

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TSE Composite

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