Stock Market Outlook for July 11, 2019
Commodity benchmark testing the upper limit to a triangle consolidation pattern as the price of Oil surges.
*** 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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Automatic Data Processing, Inc. (NASD:ADP) Seasonal Chart
Preferred Bank (NASD:PFBC) Seasonal Chart
Nemaska Lithium, Inc. (TSE:NMX.TO) Seasonal Chart
The Markets
Stocks gained on Wednesday as investors were comforted by comments from Fed Chair Jerome Powell, who indicated that the Fed is ready to provide further accommodation in order to keep the economic expansion intact. The S&P 500 Index added just over four-tenths of one percent, remaining in the recent short-term consolidation range below 3000, an important psychological level. At the highs of the session, the large-cap benchmark surpassed this line in the sand, but weakness in industrials, financials, and materials prevented a significant milestone from being achived. Energy, technology, and communication services topped the leaderboard as the momentum trade continues to grow legs.
More impressive than the strength in equities was the move in commodities as the US Dollar took a leg lower following the dovish comments from the Fed Chief. The price of gold added over one percent; platinum, palladium, and copper were higher by around two percent; and the energy commodities (oil and gasoline) were higher by four percent, supported as well by a bullish inventory report. The CRB commodity index bounced firmly from support around its 50-day moving average, a level it consolidated above over the past couple of weeks. Declining trendline resistance remains the critical hurdle overhead. Appearances suggest that the June low in the benchmark was a significant low from a higher level than the one that preceded it, providing a pronounced bottoming pattern for commodities to move higher over the intermediate-term This fits well with seasonal norms, which call for higher prices across a number of commodities through the third quarter. In the Seasonal Advantage Portfolio that we manage in partnership with Castlemoore, we have exposure to energy and metal commodities. Interested in gaining exposure to our strategy? Email us at seasonalportfolio@equityclock.com.
On schedule for the Wednesday session, the weekly petroleum status was released. The Energy Information Administration reported that oil stockpiles fell by a pronounced 9.5 million barrels last week, while gasoline inventories declined by a more moderate 1.5 million barrels. The result stripped seven-tenths of a day of supply of oil from the market, which now sits at 26.5; gasoline shed a tenth of a day to 23.7. The average for each at this time of year is 22.3 and 24.0, respectively. We sent out further analysis to subscribers, including where we see the price of oil headed in the intermediate-term. Subscribe now and we’ll send you this important insight on the energy market.
Sentiment on Wednesday, as gauged by the put-call ratio, ended bullish at 0.87.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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