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Stock Market Outlook for January 16, 2019


Resurgence in FANG stocks suggesting that investors are willing to take on risk again.

 

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:

Canadian Natural Resources (NYSE:CNQ) Seasonal Chart

Canadian Natural Resources (NYSE:CNQ) Seasonal Chart

Saputo Inc.  (TSE:SAP) Seasonal Chart

Saputo Inc. (TSE:SAP) Seasonal Chart

Obsidian Energy (TSE:OBE) Seasonal Chart

Obsidian Energy (TSE:OBE) Seasonal Chart

National-Oilwell Varco, Inc.  (NYSE:NOV) Seasonal Chart

National-Oilwell Varco, Inc. (NYSE:NOV) Seasonal Chart

 

 

The Markets

Stocks gained on Tuesday as a resurgence in FANG stocks led a tech fuelled rally on the day.  The S&P 500 Index added 1.07%, closing above the much scrutinized 2600 level.  The key hurdle to watch is 2630, which represents previous horizontal support and the current level of the 50-day moving average.  A range of resistance between 2685 and 2700 is the next major barrier overhead.  Ultra-short-term momentum indicators remain bullish, however, a rising wedge pattern hints of a bearish move ahead.

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Following a rough last few months of 2018 for Facebook, Amazon, Netflix, and Google (Alphabet), momentum is showing signs of bottoming.  Positive momentum divergences have led to a break out for many of the stocks above declining trendline resistance, suggesting the conclusion to the intermediate trend of lower-lows and lower-highs.  This segment of the market has become indicative of the risk sentiment of investors, underperforming the market ahead of the fourth quarter weakness in the broader equity market and now leading the charge out of the low charted in the month of December.  Watch the performance of these risk-on areas of the market as they will often foretell the strength of the broader equity market.

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On the economic front, the first gauge of manufacturer sentiment for 2019 was not encouraging.  The headline print of the Empire State Manufacturing Survey came in at +3.9, down from the +11.5 reported previous.  Analysts were expecting a print of +12.0.  Stripping out the seasonal adjustments, the actual level of the business conditions index came in at +7.6, which is below the +12.3 that is average for the first month of the year.  This is the first below average print in 20 months and is suggestive of a cooling in manufacturing conditions in the US.  The gap between the actual and average trend has been narrowing through the back half of the year, perhaps reflecting the strain that tariffs are placing on this segment of the economy.  March represents the high for the year for the index as conditions heat up into the spring, but with the tariff war and now the government shutdown weighing on economic activity, a weak manufacturing season is becoming increasingly likely.  We’ll be watching the Philadelphia Manufacturing Survey on Thursday for confirmation of the signals that this report is sending.

Empire State General Business Conditions Index Seasonal Chart

Sentiment on Tuesday, as gauged by the put-call ratio, ended bearish at 1.03.

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Seasonal charts of companies reporting earnings today:

Alcoa Corporation (AA) Seasonal Chart Bank of America Corporation (BAC) Seasonal Chart Bank Of New York Mellon Corporation (The) (BK) Seasonal Chart BlackRock, Inc. (BLK) Seasonal Chart Comerica Incorporated (CMA) Seasonal Chart CSX Corporation (CSX) Seasonal Chart Eagle Bancorp, Inc. (EGBN) Seasonal Chart Goldman Sachs Group, Inc. (The) (GS) Seasonal Chart H. B. Fuller Company (FUL) Seasonal Chart Hancock Whitney Corporation (HWC) Seasonal Chart Kinder Morgan, Inc. (KMI) Seasonal Chart Plexus Corp. (PLXS) Seasonal Chart PNC Financial Services Group, Inc. (The) (PNC) Seasonal Chart U.S. Bancorp (USB) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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