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Stock Market Outlook for June 10, 2019


Stocks in the US rally following weaker than expected employment report.  In Canada, the exact opposite.

 

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:

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CBOE Holdings Inc. (NASD:CBOE) Seasonal Chart

CBOE Holdings Inc. (NASD:CBOE) Seasonal Chart

Idacorp, Inc. (NYSE:IDA) Seasonal Chart

Idacorp, Inc. (NYSE:IDA) Seasonal Chart

Ducommun, Inc. (NYSE:DCO) Seasonal Chart

Ducommun, Inc. (NYSE:DCO) Seasonal Chart

TransCanada PipeLines Ltd. (TSE:TRP.TO) Seasonal Chart

TransCanada PipeLines Ltd. (TSE:TRP.TO) Seasonal Chart

WEC Energy Group, Inc. (NYSE:WEC) Seasonal Chart

WEC Energy Group, Inc. (NYSE:WEC) Seasonal Chart

Health Insurance Innovations, Inc. (NASD:HIIQ) Seasonal Chart

Health Insurance Innovations, Inc. (NASD:HIIQ) Seasonal Chart

America Movil S.A. de CV (NYSE:AMX) Seasonal Chart

America Movil S.A. de CV (NYSE:AMX) Seasonal Chart

Eli Lilly & Co. (NYSE:LLY) Seasonal Chart

Eli Lilly & Co. (NYSE:LLY) Seasonal Chart

The Meet Group, Inc. (NASD:MEET) Seasonal Chart

The Meet Group, Inc. (NASD:MEET) Seasonal Chart

Expedia, Inc (NASD:EXPE) Seasonal Chart

Expedia, Inc (NASD:EXPE) Seasonal Chart

 

 

The Markets

Stocks surged on Friday following the release of a much weaker than expected employment report for May.  The headline print indicated that 75,000 payrolls were added in May, a significant miss versus expectations of a rise of 180,000. The result is one of the weakest of this economic expansion, triggering the belief that the Fed will be forced to cut rates to respect the slowing economic momentum. The unemployment rate ticked lower by one-tenth to 3.6%, as did average hourly earnings, which fell to 3.1%. Stripping out the seasonal adjustments, payrolls actually increased by 687,000, or 0.5%, which is weaker than the 0.7% increase that is average for the month of May. The year-to-date change is now inline with the seasonal average trend, higher by 0.3% through the first five months of the year.  We provided further insight and analysis to subscribers during Friday’s session.  Subscribe now and we’ll send you this insight and include you on future distributions to aid your seasonal investment decisions.

Total Nonfarm Seasonal Chart

The S&P 500 Index rallied to the tune of 1.05% following the lacklustre result, intersecting with its 50-day moving average at the highs of the session.  For the week, the large-cap benchmark realized one of its best weeks in years, rising by 4.41% to close back above its 20 and 50-week moving averages.  Materials, technology, and consumer staples were amongst the best gainers for the week, suggesting not only short-covering, but an ongoing defensive tilt as investors migrate towards defense.  Minor horizontal resistance on the large-cap benchmark can be derived at 2900.  As we have been reporting, market participants had become overly negative coming into the week, resulting in the swift snapback, but sentiment indicators have now swayed back in the other direction, which we will highlight at the end of this report.

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While employment data in the US certainly points to weakness, data out of Canada suggests strength. Statscan indicated that employment in Canada increased by 27,700 last month, which is significantly better than the 6,000 decline that was forecasted by analysts. Stripping out the seasonal adjustments, employment in this country actually increased by 385,500 in May, or 2.0%, which is slightly weaker than the 2.2% increase that is average for the spring month. The year-to-date change now sits higher by 2.5%, which is better than 2.0% increase that is average by this point in the year. Employment growth in Canada is showing the best performance through the first five months of the year since 2006.  In recent distributions to subscribers pertaining to Canadian economic data, we have highlighted the potential risks resulting from strengthening activity on the Canadian currency, something that came into fruition in a big way on Friday.  Subscribe now and we’ll send you our report highlighting what to watch for next as the Canadian dollar reaches a critical juncture.

Canada Labour force Seasonal Chart

Sentiment on Friday, as gauged by the put-call ratio, ended overly bullish at 0.79.  At high of the session for the equity market, the ratio of puts to calls hit a low of 0.69, which is one of the lowest levels since last January, just prior to the market peak.  The indicator suggests complacency, indicating that the favourable risk-to-reward for equities that we highlighted at the end of May has shifted and is no longer favourable.

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Seasonal charts of companies reporting earnings today:

Ascena Retail Group, Inc. (ASNA) Seasonal Chart Ferrellgas Partners, L.P. (FGP) Seasonal Chart Lakeland Industries, Inc. (LAKE) Seasonal Chart Shiloh Industries, Inc. (SHLO) Seasonal Chart SuperCom, Ltd. (SPCB) Seasonal Chart Thor Industries, Inc. (THO) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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