Stock Market Outlook for January 14, 2019
The fundamentals will be in the drivers seat in the weeks ahead, while the technicals remain on the radar.
*** 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:
Independence Holding Co. (NYSE:IHC) Seasonal Chart
HFF Inc. (NYSE:HF) Seasonal Chart
Weatherford International Plc (NYSE:WFT) Seasonal Chart
Canadian Natural Resources Limited (TSE:CNQ) Seasonal Chart
Urban Outfitters, Inc. (NASD:URBN) Seasonal Chart
ENSCO International PLC (NYSE:ESV) Seasonal Chart
L Brands, Inc. (NYSE:LB) Seasonal Chart
Equifax Inc. (NYSE:EFX) Seasonal Chart
Canadian Energy Svcs & Tech (TSE:CEU) Seasonal Chart
Tesla Inc. (NASD:TSLA) Seasonal Chart
Peyto Exploration (TSE:PEY) Seasonal Chart
Trinidad Drilling (TSE:TDG) Seasonal Chart
Ball Corporation (NYSE:BLL) Seasonal Chart
Netflix, Inc. (NASDAQ:NFLX) Seasonal Chart
O’Reilly Automotive, Inc. (NASDAQ:ORLY) Seasonal Chart
Pioneer Natural Resources (NYSE:PXD) Seasonal Chart
CCL Industries Inc. (TSE:CCL.B) Seasonal Chart
Occidental Petroleum Corporation (NYSE:OXY) Seasonal Chart
Canadian Imperial Bank of Commerce (TSE:CM) Seasonal Chart
Black Diamond Group Ltd. (TSE:BDI) Seasonal Chart
Canadian Pacific Railway Seasonal Chart
The Markets
Stocks ended close to unchanged on Friday with the S&P 500 Index remaining pinned to resistance around 2600. For the week, the large-cap benchmark was higher by 2.54%, marking the third straight week of strong gains for this widely followed index. The move recoups the large downdraft in stocks recorded in the week prior to Christmas when the benchmark shed 7.05% amid the panic and lack of buying demand that led to the lows of the year on Christmas Eve. While certainly comforting that the benchmark has recouped the losses, the fact that the benchmark has taken three weeks to regain the loss recorded in one is hardly a characteristic of a bullish trend. The index bounced, almost precisely, from its 200-week moving average in the session following Christmas Day, resulting in the present rebound attempt. And now the difficult part is upon us. Resistance presented by the October and November lows at 2600 is directly overhead, presenting a pivot point that everyone is watching closely. Momentum indicators on the weekly look continue to curl higher, rebounding from some of the most oversold levels since the last recession. A retest of the December lows cannot be ruled out, a move that would likely present greater confidence that a bottom is in. For now, the lower-lows and lower-highs on market benchmarks are keeping many to the sidelines, but this could change should a catalyst present itself. Seasonally, tendencies for the market through earnings season are mixed, suggesting little bias from a historical perspective. The fundamentals will be in the drivers seat in the weeks ahead, while the technicals remain on the radar.
On the economic front, the Consumer Price Index (CPI) for December was released before Friday’s opening bell. The headline print indicated that CPI fell by 0.1% 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 last month of the year. The calendar year change sits at +1.9%, which is firmly below the seasonal average trend that calls for a 2.1% rise for the calendar year. Core CPI (excluding food and energy) remains above average through the last month of the year, higher by 2.2% versus the 2.0% norm. Excluding the impacts of the commodity fluctuations in the month, the trend in inflation continues to normalize following years of below average price increases. Last year saw the third largest CPI increase since the last recession. A breakdown of the results was sent out to subscribers during Friday’s session. To receive our analysis directly to your inbox, subscribe via the following link: https://charts.equityclock.com/subscribe.
Sentiment on Friday, as gauged by the put-call ratio, ended bearish at 1.08. A surge in protective bets placed in the 12 o’clock hour when the S&P 500 Index was a stone’s throw away from 2600 emphasized the caution that investors are expressing at this level of resistance overhead.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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