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Stock Market Outlook for July 16, 2019


Empire State Manufacturing Index remained below average into July.

 

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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The Markets

Stocks closed at a fresh set of record highs on Monday as investors supported the tape amidst the start of the second quarter earnings season.  The S&P 500 Index added a mere two basis points, holding ground above the psychologically important 3000 level.  Technology was once again dominant during the session as investors keep the growth trade alive given the improved valuations that have resulted from the decline in the discount rate.

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Outside of the equity market, the price action of silver is increasingly enticing.  The price of the commodity has found support around the mid-$13 level and major moving averages, including the 20, 50, and 200-day, are starting to curl higher for the first time since 2016.  A move above resistance around $16 could see a swift move higher towards $18, thereby completing a double bottom pattern.  Seasonally, the precious metal tends to show strength in the month of July and support often remains intact through the period of strength for gold in August and September.  Confirmation of a peak in the US Dollar would be conducive for strength in the precious metal.  Seasonally, the US Dollar tends to weaken through the third quarter.  In the Seasonal Advantage Portfolio that we manage in partnership with Castlemoore, we have exposure to precious metals, including Silver.

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Silver Futures (SI) Seasonal Chart

On the economic front, a report on manufacturer sentiment rebounded somewhat in July.  The Empire State Manufacturer Survey emerged from negative territory, moving from –8.6 for June to +4.3 for July.  The consensus was for a print of +0.8.  Stripping out the seasonal adjustments, the actual level for July was –6.6, which is still weaker than the –4.4 that is average for this time of year.  The indicator tends to hit a low in the month of July amidst factory shutdowns that cap activity in this early summer period; the indicator tends to bounce back in the month of August as factories come back online.

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While investors fret about the strength of the global economy, one important gauge of the health of the economy just moved to multi-year highs.  The Baltic Dry Index, which measures the cost of moving major raw materials by sea, has been moving higher ever since hitting a low in February.  It is now at the highest level since 2013.  The indicator suggests that the demand to ship goods is on the rise, particularly over the past month given the almost 80% gain since June 13th.  The indicator will often move ahead of the broader economic data.  The result bodes well for commodity prices given the demand implications involved.

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Sentiment on Monday, as gauged by the put-call ratio, ended close to neutral at 0.96.

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Seasonal charts of companies reporting earnings today:

Canadian Pacific Railway Limited (CP) Seasonal Chart Cintas Corporation (CTAS) Seasonal Chart Commerce Bancshares, Inc. (CBSH) Seasonal Chart CSX Corporation (CSX) Seasonal Chart Domino's Pizza Inc (DPZ) Seasonal Chart Fidelity National Financial, Inc. (FNF) Seasonal Chart First Horizon National Corporation (FHN) Seasonal Chart FIRST REPUBLIC BANK (FRC) Seasonal Chart Fulton Financial Corporation (FULT) Seasonal Chart Goldman Sachs Group, Inc. (The) (GS) Seasonal Chart Hancock Whitney Corporation (HWC) Seasonal Chart Hope Bancorp, Inc. (HOPE) Seasonal Chart Interactive Brokers Group, Inc. (IBKR) Seasonal Chart J P Morgan Chase & Co (JPM) Seasonal Chart Johnson & Johnson (JNJ) Seasonal Chart Mercantile Bank Corporation (MBWM) Seasonal Chart Pinnacle Financial Partners, Inc. (PNFP) Seasonal Chart Prologis, Inc. (PLD) Seasonal Chart Seattle Genetics, Inc. (SGEN) Seasonal Chart Synovus Financial Corp. (SNV) Seasonal Chart United Airlines Holdings, Inc. (UAL) Seasonal Chart United Financial Bancorp, Inc. (UBNK) Seasonal Chart Wells Fargo & Company (WFC) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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