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Stock Market Outlook for January 22, 2019


S&P 500 Index testing the upper limit to a short-term rising wedge pattern.

 

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:

Hexcel Corp. (NYSE:HXL) Seasonal Chart

Hexcel Corp. (NYSE:HXL) Seasonal Chart

Meritage Homes Corp. (NYSE:MTH) Seasonal Chart

Meritage Homes Corp. (NYSE:MTH) Seasonal Chart

The Home Depot, Inc.  (NYSE:HD) Seasonal Chart

The Home Depot, Inc. (NYSE:HD) Seasonal Chart

People's United Financial, Inc.  (NASDAQ:PBCT) Seasonal Chart

People’s United Financial, Inc. (NASDAQ:PBCT) Seasonal Chart

Wells Fargo & Company  (NYSE:WFC) Seasonal Chart

Wells Fargo & Company (NYSE:WFC) Seasonal Chart

Zumiez Inc. (NASD:ZUMZ) Seasonal Chart

Zumiez Inc. (NASD:ZUMZ) Seasonal Chart

Bank of America Corporation (NYSE:BAC) Seasonal Chart

Bank of America Corporation (NYSE:BAC) Seasonal Chart

Columbia Sportswear Co. (NASD:COLM) Seasonal Chart

Columbia Sportswear Co. (NASD:COLM) Seasonal Chart

Phillips-Van Heusen Corporation  (NYSE:PVH) Seasonal Chart

Phillips-Van Heusen Corporation (NYSE:PVH) Seasonal Chart

Toronto Dominion Bank (NYSE:TD) Seasonal Chart

Toronto Dominion Bank (NYSE:TD) Seasonal Chart

Revlon Inc Cl A (NYSE:REV) Seasonal Chart

Revlon Inc Cl A (NYSE:REV) Seasonal Chart

Stanley Black & Decker, Inc.  (NYSE:SWK) Seasonal Chart

Stanley Black & Decker, Inc. (NYSE:SWK) Seasonal Chart

Ingersoll-Rand Plc (NYSE:IR) Seasonal Chart

Ingersoll-Rand Plc (NYSE:IR) Seasonal Chart

 

 

The Markets

Stocks jumped on Friday amidst ongoing optimism that a trade deal between the US and China will be reached.  The S&P 500 Index added 1.32%, gapping higher above its 50-day moving average.  Hourly charts show that the benchmark is firmly overbought according to the Relative Strength Index and Stochastics, potentially capping the advance in the near-term. The benchmark moved to the upper limit of the short-term rising wedge pattern that we have been referencing in recent days, keeping the potentially bearish setup intact.  A move blow the lower limit of the pattern, now around 2650, would likely trigger the widely anticipated retracement attempt.

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On the weekly chart, the 2.87% return for the S&P 500 places the benchmark within arms reach of resistance at the declining 50-week moving average around 2730.  This pivotal level that had once supported the benchmark throughout its rally from the 2016 lows is a logical level for investors to react; what once was support is now expected to act as resistance.  Momentum indicators continue to show a trend of lower-lows and lower-highs, providing a negative bias over the intermediate-term.  Long-term support at the rising 200-week moving average is expected to remain intact, unless economic fundamentals deteriorate significantly.

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On the economic front, a report on industrial production in the US showed a solid finish to a strong year overall for this segment of the economy. The headline print indicated that industrial production increased by 0.3% in December, inline with the consensus analyst estimate. The manufacturing component was higher by 1.1%, far surpassing the 0.1% increase that was expected. Stripping out the seasonal adjustments, industrial production actually increased by 0.2% in the last month of the year, which edges past the average increase of 0.1% for the period. For the year overall, industrial production was higher by 3.6%, the best calendar year performance since 2010 when the economy was emerging from the recession. The average calendar year increase is 1.4%.  For more insight on what is driving the aggregate result, simply subscribe to our service via the following link: http://charts.equityclock.com/subscribe

Industrial Production: Total Seasonal Chart

Monthly Industrial Production: Total Data

North of the border, the Consumer Price Index (CPI) in Canada for the month of December remained relatively strong in the midst of plunging fuel prices. The headline, non-seasonally adjusted, print indicated that CPI fell by 0.1% in the last month of 2018, which is stronger than the 0.3% decline that analysts were forecasting. The average decline for the last month of the year is 0.2%. The result places the calendar year change at +2.0%, which is solidly above the 1.8% increase that is average. This is the strongest calendar year performance for the inflation gauge in seven years.  We provided a breakdown of the results and the trends that we are seeing in a report that went out to subscribers on Friday.  To receive a copy, subscribe at http://charts.equityclock.com/subscribe

Canada CPI - All-items Seasonal Chart

Monthly Canada CPI - All-items Data

Sentiment on Friday, as gauged by the put-call ratio, ended bullish at 0.84.  Gradually, we are starting to see signs of complacency entering the market with the put-call ratio touching a session low of around 0.68.  On a closing basis, the ratio has maintained a lower band of support around 0.75 for the past year; levels below this would be indicative of bullish extremes that would likely precede a short-term peak in equity prices.  The market has had a phenomenal run since the ratio hit a bearish extreme on December 20, preceding the low in stocks two sessions later.  The S&P 500 Index is up over 200 points since that contrarian sentiment indicator was triggered.

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Sectors and Industries entering their period of seasonal strength:

Energy Sector Seasonal Chart

ENERGY Relative to the S&P 500
ENERGY Relative to the S&P 500

ENERGY Monthly Averages

Retail Industry Seasonal Chart
S5RETL Index Relative to the S&P 500S5RETL Index Relative to the Sector

S5RETL Index Monthly Averages

 

 

Seasonal charts of companies reporting earnings today:

Logitech International S.A. (LOGI) Seasonal Chart Accuray Incorporated (ARAY) Seasonal Chart Allegheny Technologies Incorporated (ATI) Seasonal Chart Capital One Financial Corporation (COF) Seasonal Chart CONMED Corporation (CNMD) Seasonal Chart F.N.B. Corporation (FNB) Seasonal Chart  Fifth Third Bancorp (FITB) Seasonal Chart First Midwest Bancorp, Inc. (FMBI) Seasonal Chart GATX Corporation (GATX) Seasonal Chart Halliburton Company (HAL) Seasonal Chart HomeStreet, Inc. (HMST) Seasonal Chart Interactive Brokers Group, Inc. (IBKR) Seasonal Chart International Business Machines Corporation (IBM) Seasonal Chart Johnson & Johnson (JNJ) Seasonal Chart MB Financial Inc. (MBFI) Seasonal Chart Mercantile Bank Corporation (MBWM) Seasonal Chart Navient Corporation (NAVI) Seasonal Chart Old National Bancorp (ONB) Seasonal Chart Peoples Bancorp Inc. (PEBO) Seasonal Chart Prologis, Inc. (PLD) Seasonal Chart Renasant Corporation (RNST) Seasonal Chart Stanley Black & Decker, Inc. (SWK) Seasonal Chart Steel Dynamics, Inc. (STLD) Seasonal Chart TD Ameritrade Holding Corporation (AMTD) Seasonal Chart The Travelers Companies, Inc. (TRV) Seasonal Chart UBS AG (UBS) Seasonal Chart Union Bankshares Corporation (UBSH) Seasonal Chart United Community Banks, Inc. (UCBI) Seasonal Chart United Community Financial Corp. (UCFC) Seasonal Chart Wintrust Financial Corporation (WTFC) Seasonal Chart Zions Bancorporation N.A. (ZION) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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