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Stock Market Outlook for August 16, 2019


Dow Jones Transportation Average back to the lower limit of its 10-month old trading range, but the head-and-shoulders patterns within threatens a break of this span.

 

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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Sierra Metals Inc.. (TSE:SMT.TO) Seasonal Chart

Sierra Metals Inc.. (TSE:SMT.TO) Seasonal Chart

BSQUARE Corp. (NASD:BSQR) Seasonal Chart

BSQUARE Corp. (NASD:BSQR) Seasonal Chart

Titan Medical Inc. (TSE:TMD.TO) Seasonal Chart

Titan Medical Inc. (TSE:TMD.TO) Seasonal Chart

Six Flags Entertainment Corp. (NYSE:SIX) Seasonal Chart

Six Flags Entertainment Corp. (NYSE:SIX) Seasonal Chart

Otelco Inc. (NASD:OTEL) Seasonal Chart

Otelco Inc. (NASD:OTEL) Seasonal Chart

Banco Macro SA (NYSE:BMA) Seasonal Chart

Banco Macro SA (NYSE:BMA) Seasonal Chart

Heritage Commerce Corp. (NASD:HTBK) Seasonal Chart

Heritage Commerce Corp. (NASD:HTBK) Seasonal Chart

Internet Gold-Golden Lines Ltd. (NASD:IGLD) Seasonal Chart

Internet Gold-Golden Lines Ltd. (NASD:IGLD) Seasonal Chart

Grand Canyon Education Inc. (NASD:LOPE) Seasonal Chart

Grand Canyon Education Inc. (NASD:LOPE) Seasonal Chart

Chemung Financial Corp. (NASD:CHMG) Seasonal Chart

Chemung Financial Corp. (NASD:CHMG) Seasonal Chart

 

 

The Markets

Stocks showed mixed results on Thursday as equity investors continued to watch the activity in the bond market as yields maintained their parabolic trend lower.  The S&P 500 Index was higher by a mere quarter of one percent, supported by strength in defensive sectors (consumer staples, utilities, and REITs).  The benchmark was little changed from where it open, resulting in a doji (indecision) candlestick as the bulls and bears battle for control.  Support at 2825 has been tested during three separate sessions, providing a short-term level to shoot off of.  Horizontal support, now approximately equivalent to the 200-day moving average, at 2800 remains an important line in the sand.

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Cyclical sectors, for the most part, sat out of Thursday’s rally attempt; the transports were among the areas that traded lower on the day.  The Dow Jones Transportation Average has broken below horizontal support at 10,000, arguably representing the neckline of a head-and-shoulders pattern.  The bearish setup projects downside potential towards the December low around 8900.  Horizontal support around 9700 is the hurdle presently being contended with.  Momentum indicators on the transportation benchmark have been trending lower since February, as has been performance relative to the market, indicating the lack of buying demand.  We expressed our concerns about investing in the sector back in July with our report on the CASS Freight Index; the benchmark was attempting to push towards the 2019 highs at that point, but our three-pronged approach incorporating fundamental, technical, and seasonal analysis suggested an alternate path.  Seasonally, the Dow Jones Transportation Average hits a low around the start of October, on average.  Don’t be left out of these important updates.  Subscribe now.

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Dow Jones Transportation Average Seasonality

On the economic front, a report on retail sales in the US was released before Thursday’s opening bell.  The headline print of July’s report indicates that activity increased by 0.7% last month, beating the consensus estimate that called for a rise of 0.3%. Less the more volatile components of autos and gas, the increase was even better at 0.9%, surpassing estimates that called for a 0.5% increase. Stripping out the seasonal adjustments, total retail trade actually increased by 3.0% in July, which is much stronger than the unchanged result that is average for this time of year. The result places the year-to-date change 4.8% above the seasonal average trend. This is the best pace through the first seven months of the year that we have on record with data spanning the past 27 years.  Subscribe now and we’ll send you our full analysis of this important gauge of the consumer.

Retail Trade: Total Seasonal Chart

Also released was July’s look at industrial production in the US.  The headline print indicated that production declined by 0.2% in July, which is weaker than the 0.1% increase that was forecasted by analysts. The manufacturing component was particularly weak, falling by 0.4%, also a miss versus the -0.1% consensus estimate. Stripping out the seasonal adjustments, industrial production in the US actually fell by 1.8%, which is better than the 2.7% decline that is average for the summer month. The year-to-date change is back in negative territory, down by 0.9%, or 1.0% below the seasonal average trend. Subscribe now and we’ll send you our report, including details of what indicator in the results that has been 100% reliable over the past 80 years in predicting whether the incumbent presidential party will retain control when Americans head to the polls next November. 

Industrial Production: Total Seasonal Chart

Sentiment on Thursday, as gauged by the put-call ratio, ended bearish at 1.17.

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Seasonal charts of companies reporting earnings today:

Deere & Company (DE) Seasonal Chart MSG Networks Inc. (MSGN) Seasonal Chart Nordic American Tankers Limited (NAT) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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