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Stock Market Outlook for April 22, 2019


The underperforming trend of the industrial sector looks to have concluded.

 

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:

Subscribers – Click on the relevant link to view the full profile. Not a subscriber? Signup here.

Bristol Myers Squibb Co. (NYSE:BMY) Seasonal Chart

Bristol Myers Squibb Co. (NYSE:BMY) Seasonal Chart

Andrew Peller Ltd. (TSE:ADW/A.TO) Seasonal Chart

Andrew Peller Ltd. (TSE:ADW/A.TO) Seasonal Chart

Sypris Solutions, Inc. (NASD:SYPR) Seasonal Chart

Sypris Solutions, Inc. (NASD:SYPR) Seasonal Chart

Mondelez International, Inc. (NASD:MDLZ) Seasonal Chart

Mondelez International, Inc. (NASD:MDLZ) Seasonal Chart

Sirius XM Holdings Inc. (NASD:SIRI) Seasonal Chart

Sirius XM Holdings Inc. (NASD:SIRI) Seasonal Chart

Northern Technologies Intl Corp. (NASD:NTIC) Seasonal Chart

Northern Technologies Intl Corp. (NASD:NTIC) Seasonal Chart

AT&T, Inc. (NYSE:T) Seasonal Chart

AT&T, Inc. (NYSE:T) Seasonal Chart

Ameren Corp. (NYSE:AEE) Seasonal Chart

Ameren Corp. (NYSE:AEE) Seasonal Chart

 

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The Markets

Stocks closed mildly higher on Thursday as earnings season rolls on.  The S&P 500 Index added just less than two-tenths of one percent, continuing to consolidate above previous short-term resistance at 2895.  The industrial sector led the advance following better than expected earnings from Union Pacific and Honeywell.  The S&P 500 Industrial sector index inched closer to resistance presented by its all-time highs, but signs of renewed strength in this market segment suggest a breakout is increasingly likely.  The performance of the industrial sector relative to the broader market has been declining for the past couple of years, underperforming alongside other core cyclical sectors (materials and energy).  But despite calls that we are in a late-cycle economy, the tide for these stocks may be turning.  The trend of the industrial sector benchmark relative to the S&P 500 Index broke above a declining trendline at the start of the year, suggesting the conclusion to the trend of lower-lows and lower-highs with respect to the relative performance.  A check-back of the previous level of resistance was realized in the past month amidst the overhang of weakness in shares of Boeing, but the breakout remained intact.  Seasonally, industrial stocks tend to perform well into the beginning of May with some industry constituents outperforming well into the summer.  In the Seasonal Advantage Portfolio that we manage in partnership with CastleMoore, we have been taking advantage of the weakness imposed by the Boeing overhang and adding to the sector, both in Canada and the US.  Want to gain exposure to our strategy, email us at seasonalportfolio@equityclock.com.

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Industrials Sector Seasonal Chart

On the economic front, a report on US retail trade was released before Thursday’s opening bell.  The headline print indicated that retail sales expanded by 1.6% in March, which is double the consensus analyst estimate that called for a 0.8% rise. Less gas and autos, the gain was equally impressive, up 0.9% versus the 0.4% forecast. Stripping out the seasonal adjustments, total retail sales actually increased by 16.2% in March, which is firmly above the 13.7% increase that is average for the month. The result is just short of the 17.1% increase that was recorded in March of last year, which was the best increase for the month since 2010. The year-to-date change is now running 3.0% above average, which is the best first quarter performance in over two decades.  We’ve sent out our full analysis of the report to subscribers.  You can now subscribe to our service via the following link: https://charts.equityclock.com/subscribe

http://charts.equityclock.com/seasonal_charts/economic_data/RSXFSN_seasonal_chart.PNG

North of the border, a strong headline print pertaining to retail sales in Canada suggests that consumer spending remained solid through the month of February. Statscan indicates that retail sales increased by 0.8% in the second month of the year, which is double the consensus analyst estimate that called for a 0.4% change. The year-over-year change now sits at 1.8%, up from the previously revised 0.9% for the 12-month period ending in January. Stripping out the seasonal adjustments, Canadian Retail Trade actually fell by 5.1% in February, which is weaker than the 4.3% decline that is average for the winter month. But despite the weak month-over-month change, the year-to-date trend remains solid, hovering 5.0% above the seasonal norm. This remains the best start to the year for the change in retail trade in over two decades.  Subscribers received further insight in a report sent out intraday on Thursday.

http://charts.equityclock.com/seasonal_charts/economic_data/v52367096_seasonal_chart.PNG

On the business front, a weaker than expected report on manufacturing conditions in the Philadelphia region is indicative of waning moment that has been apparent in this segment of the economy for the past couple of quarters.  The headline print of the Philadelphia Fed Business Outlook Survey indicates that the Business Conditions Index fell to 8.5 from 13.7 previous.  The consensus estimate was for a print of 10.2.  Stripping out the seasonal adjustments, the manufacturing business outlook index actually came in at +15.8, which is slightly below the +19.7 that is average for the month of April.  Last year at this time, the print was +31.4.  These indicators are still strongly embedded in growth territory, but they do suggest a cooling of this once hot segment of the economy.  Seasonally, this gauge of manufacturer sentiment tends to drift lower from a peak in March, eventually bottoming in July amidst the factory shutdown period.

http://charts.equityclock.com/seasonal_charts/economic_data/Philly_Fed_Index_seasonal_chart.PNG 

Sentiment on Thursday, as gauged by the put-call ratio, ended bullish at 0.88.

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Seasonal charts of companies reporting earnings today:

Agree Realty Corporation (ADC) Seasonal Chart Allison Transmission Holdings, Inc. (ALSN) Seasonal Chart American Campus Communities Inc (ACC) Seasonal Chart Bank of Hawaii Corporation (BOH) Seasonal Chart Brown & Brown, Inc. (BRO) Seasonal Chart Celanese Corporation (CE) Seasonal Chart Halliburton Company (HAL) Seasonal Chart Helix Energy Solutions Group, Inc. (HLX) Seasonal Chart Kimberly-Clark Corporation (KMB) Seasonal Chart Lennox International, Inc. (LII) Seasonal Chart Lincoln Electric Holdings, Inc. (LECO) Seasonal Chart Range Resources Corporation (RRC) Seasonal Chart Steel Dynamics, Inc. (STLD) Seasonal Chart W.W. Grainger, Inc. (GWW) Seasonal Chart Whirlpool Corporation (WHR) Seasonal Chart Zions Bancorporation N.A. (ZION) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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