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Stock Market Outlook for January 23, 2019


Existing home sales weakened significantly in December, capping a poor year for the housing market.

 

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:

Schlumberger Limited  (NYSE:SLB) Seasonal Chart

Schlumberger Limited (NYSE:SLB) Seasonal Chart

Genuine Parts Company  (NYSE:GPC) Seasonal Chart

Genuine Parts Company (NYSE:GPC) Seasonal Chart

V.F. Corporation  (NYSE:VFC) Seasonal Chart

V.F. Corporation (NYSE:VFC) Seasonal Chart

Flowserve Corporation  (NYSE:FLS) Seasonal Chart

Flowserve Corporation (NYSE:FLS) Seasonal Chart

CAI International Inc. (NYSE:CAI) Seasonal Chart

CAI International Inc. (NYSE:CAI) Seasonal Chart

Comerica Incorporated  (NYSE:CMA) Seasonal Chart

Comerica Incorporated (NYSE:CMA) Seasonal Chart

Tapestry, Inc. (NYSE:TPR) Seasonal Chart

Tapestry, Inc. (NYSE:TPR) Seasonal Chart

 

 

The Markets

Stocks dipped on Tuesday as economic growth concerns were reignited following a weak report on housing and a downgrade of growth estimates from the International Monetary Fund.  The S&P 500 Index fell by 1.42%, moving back towards its 50-day moving average at 2623.  On Friday, the benchmark tested a couple of resistance levels from which it seemed reaction was likely.  First was the upper limit to a short-term rising wedge pattern stemming from the December low.  In addition, trendline resistance spanning the peaks from the early October high seemed a probable candidate for a reactionary move.  The benchmark has been bound by a declining megaphone pattern throughout the past quarter, helping to define the trend of lower-lows and lower-highs.  Momentum indicators on the hourly chart are rolling over, alleviating the overbought conditions that were apparent at the end of  last week.  In the near-term, investors are likely to take their cues from headlines and earnings that continue to dominate the tape, but clearly market levels present more risk now than they did one month ago when values were significantly depressed.

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On the economic front, a weak report on existing home sales capped a rather concerning year for the housing market. The headline print indicated that sales of existing homes in the US fell by 6.4% in December to a seasonally adjusted annual rate of 4.99 million. Analysts had been expecting a rate of 5.225 million. The year-over-year change now stands at -10.3% from -6.8% reported previous. Stripping out the seasonal adjustments, existing home sales actually fell by 7.1%, which is a significant negative divergence compared to the 4.4% average gain for this last month of the year. This is the second weakest December result in the past two decades, rivaled only by the 12.2% decline in December 2009 as the industry continued to feel the strain of the Great Recession.  Housing tends to be a leading indicator of broader economic activity and therefore a good gauge of equity market performance ahead.  The signal that is sending certainly warrants caution.  To read more, sign up to our service at https://charts.equityclock.com/subscribe and we’ll send you our report that we sent out subscribers during Tuesday’s session.

Existing Home Sales Seasonal Chart

Monthly Existing Home Sales Data

North of the border, manufacturing sales in Canada missed analyst expectations by a wide margin. The headline print indicated that sales of manufactured goods fell by 1.4% in November, pulling the year-over-year change down to +2.7% from +7.8% previous. Analysts had expected a decline of a mere 0.5% for the month. Stripping out the seasonal adjustments, sales of goods manufactured actually declined by 2.8%, which is weaker than the 2.6% decline that is average for this second to last month of the calendar year. Year-to-date, the 12.6% rise through the end of November is still above the average increase by this point in the year of 11.0%.  Seasonally, sales of goods manufactured tend to decline through the winter months, then rebound in the spring.  To learn more about what is driving the manufacturing economy in Canada and the resulting investment implications, subscribe to the chart database at https://charts.equityclock.com/subscribe.

Sales of goods manufactured (shipments) Seasonal Chart

Monthly Sales of goods manufactured (shipments) Data

Sentiment on Tuesday, as gauged by the put-call ratio, ended bullish at 0.93.

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Seasonal charts of companies reporting earnings today:

Abbott Laboratories (ABT) Seasonal Chart ADTRAN, Inc. (ADTN) Seasonal Chart Amphenol Corporation (APH) Seasonal Chart ASML Holding N.V. (ASML) Seasonal Chart Aspen Technology, Inc. (AZPN) Seasonal Chart BancorpSouth Bank (BXS) Seasonal Chart BankUnited, Inc. (BKU) Seasonal Chart Briggs & Stratton Corporation (BGG) Seasonal Chart Canadian Pacific Railway Limited (CP) Seasonal Chart Cathay General Bancorp (CATY) Seasonal Chart Citrix Systems, Inc. (CTXS) Seasonal Chart Cohen & Steers Inc (CNS) Seasonal Chart Comcast Corporation (CMCSA) Seasonal Chart Crown Castle International Corporation (CCI) Seasonal Chart F5 Networks, Inc. (FFIV) Seasonal Chart Ford Motor Company (F) Seasonal Chart Kimberly-Clark Corporation (KMB) Seasonal Chart Las Vegas Sands Corp. (LVS) Seasonal Chart LSI Industries Inc. (LYTS) Seasonal Chart MarineMax, Inc. (HZO) Seasonal Chart Northern Trust Corporation (NTRS) Seasonal Chart Novagold Resources Inc. (NG) Seasonal Chart Procter & Gamble Company (The) (PG) Seasonal Chart Progressive Corporation (The) (PGR) Seasonal Chart Raymond James Financial, Inc. (RJF) Seasonal Chart Rollins, Inc. (ROL) Seasonal Chart SL Green Realty Corp (SLG) Seasonal Chart SLM Corporation (SLM) Seasonal Chart Synchrony Financial (SYF) Seasonal Chart TE Connectivity Ltd. (TEL) Seasonal Chart Texas Instruments Incorporated (TXN) Seasonal Chart Trustmark Corporation (TRMK) Seasonal Chart Umpqua Holdings Corporation (UMPQ) Seasonal Chart United Rentals, Inc. (URI) Seasonal Chart United Technologies Corporation (UTX) Seasonal Chart Varian Medical Systems, Inc. (VAR) Seasonal Chart Waters Corporation (WAT) Seasonal Chart Xilinx, Inc. (XLNX) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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