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Stock Market Outlook for January 17, 2019

Days of supply of gasoline showing the highest level for this time of year in over two decades.


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*** 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:

Russel Metals Incorporated  (TSE:RUS) Seasonal Chart

Russel Metals Incorporated (TSE:RUS) Seasonal Chart

J.C. Penney Company, Inc.  (NYSE:JCP) Seasonal Chart

J.C. Penney Company, Inc. (NYSE:JCP) Seasonal Chart

Anadarko Petroleum Corporation  (NYSE:APC) Seasonal Chart

Anadarko Petroleum Corporation (NYSE:APC) Seasonal Chart

Canadian Pacific Railway Limited (USA) (NYSE:CP) Seasonal Chart

Canadian Pacific Railway Limited (USA) (NYSE:CP) Seasonal Chart

CONSOL Energy Inc.  (NYSE:CNX) Seasonal Chart

CONSOL Energy Inc. (NYSE:CNX) Seasonal Chart



The Markets

Another positive session for stocks, this one on the back of strength in the financial sector as investors cheered earnings from Bank of America and Goldman Sachs.  The S&P 500 Financial Sector Index gained 2.20% on the day, pushing the benchmark above its 50-day moving average.  The sector has been outperforming the market since mid-December, reversing a trend of underperformance that dominated the past year.  The benchmark easily fulfilled the downside target of a massive topping pattern that was derived between January and October highs, which suggested a downside target of 375.  The benchmark hit a closing low of 370.49 on Christmas Eve.  Major momentum indicators continue to point lower, suggesting negative trends on an intermediate and long-term basis.  Seasonally, the sector tends to move higher into mid-April, rising alongside lending rates.


Financial Sector Seasonal Chart

FINANCIAL Relative to the S&P 500
FINANCIAL Relative to the S&P 500

FINANCIAL Monthly Averages

The financial sector accounted for the vast majority of the broad market return during the session; most of the other sectors traded flat to negative.  The S&P 500 Index punched out a gain of 0.22%, trading further into this zone of widely scrutinized resistance between 2600 and 2630.  The benchmark hit a high of 2625.76 intraday before pulling back, showing reaction to the declining 50-day moving average that is now at 2628.  Response to earnings in the days ahead will be critical, either cementing this level overhead as the ceiling to the short-term rebound or enticing those that have remained on the sidelines back into equity positions.  Betting on the outcome, even with the obvious technical hurdle, is a fools errand.  Investors have been cautious and sceptical of this rebound attempt, keeping many on the sidelines throughout the over 11% rebound since the session prior to the Christmas holiday.  Over the past two sessions, investors have been seen accumulating protective put options in order to mitigate the impact of a rollover in prices from present levels.  It has been about a year since the last time options activity has been overwhelmingly bullish, and of course that coincided with the peak in equity markets around the same time.  The market still has a lot of work to do to shake off the bearish sentiment that titled sentiment toward bearish extremes just a few weeks ago; it is difficult to fuel a sustained leg lower in equities without investors being in a vulnerable position.  Around the December lows we proposed that, given the oversold extremes, a rebound spanning 28 to 30 sessions was likely, based on historical precedent.  As of Wednesday’s close, the market is 15 sessions into this rebound.  Timing the market to this precision is just as much a fools errand as speculating levels from which the market will turn, but the stats put the move in context of previous rebound attempts.


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 decreased by 2.7 million barrels last week, while gasoline recorded an injection of 7.5 million barrels. Distillates increased by 3.0 million barrels following the second highest weekly injection on record in the week prior. The result places the days of supply of gasoline for the middle of January at 29.0, the highest level for this time of year since January of 1994. The average level of days of supply of gasoline for January 11th is 25.7.  Oil, meanwhile, is sitting at 25 days of supply, still over three days above normal for this time of year.  It has now been exactly four years since this gauge of the intersection between supply and demand was at normal levels. Further analysis of the state of petroleum supplies in the US was sent out to subscribers intraday on Wednesday.  Sign up now to receive this distribution and to be included on future reports:

Weekly U.S. Days of Supply of Crude Oil excluding SPR  (Number of Days) Seasonal Chart

Weekly U.S. Days of Supply of Total Gasoline  (Number of Days) Seasonal Chart

Sentiment on Wednesday, as gauged by the put-call ratio, ended bearish at 1.08.





Seasonal charts of companies reporting earnings today:

American Express Company (AXP) Seasonal Chart  Bank OZK (OZK) Seasonal Chart BB&T Corporation (BBT) Seasonal Chart  Commerce Bancshares, Inc. (CBSH) Seasonal Chart Entegra Financial Corp. (ENFC) Seasonal Chart Fastenal Company (FAST) Seasonal Chart Home BancShares, Inc. (HOMB) Seasonal Chart Independent Bank Corp. (INDB) Seasonal Chart J.B. Hunt Transport Services, Inc. (JBHT) Seasonal Chart KeyCorp (KEY) Seasonal Chart M&T Bank Corporation (MTB) Seasonal Chart MGIC Investment Corporation (MTG) Seasonal Chart Morgan Stanley (MS) Seasonal Chart Netflix, Inc. (NFLX) Seasonal Chart People's United Financial, Inc. (PBCT) Seasonal Chart PPG Industries, Inc. (PPG) Seasonal Chart Preferred Bank (PFBC) Seasonal Chart Progress Software Corporation (PRGS) Seasonal Chart Sandy Spring Bancorp, Inc. (SASR) Seasonal Chart Signature Bank (SBNY) Seasonal Chart Taiwan Semiconductor Manufacturing Company Ltd. (TSM) Seasonal Chart WNS (Holdings) Limited (WNS) Seasonal Chart



S&P 500 Index





TSE Composite




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