Stock Market Outlook for September 9, 2019
Investors show little reaction to employment reports released on both sides of the border.
*** 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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Altaba Inc. (NASD:AABA) Seasonal Chart
Sterling Bancorp (NYSE:STL) Seasonal Chart
Alphabet Inc. (NASD:GOOGL) Seasonal Chart
VSE Corp. (NASD:VSEC) Seasonal Chart
Mastercard (NYSE:MA) Seasonal Chart
The Markets
Stocks traded mixed on Friday as investors attempted to gauge the potential implications of the non-farm payroll report for August. The S&P 500 Index added just less than a tenth of a percent, holding the gap that was opened in the previous session around 2950. The benchmark remains short-term overbought and a check-back of the previous level of short-term resistance around the 50-day moving average is a reasonable probability.
For the week, the large-cap benchmark was higher by 1.79%, remaining supported around the 50-week moving average, now at 2805. Momentum indicators on the weekly look remain in bullish territory, but they have flat-lined in recent months as investors express their hesitation of buying the highs amidst the trade uncertainties. Until proven otherwise, this continues to be a market that responds well to levels of support and breaks down levels of resistance, indicative of a bull market trend. Major weekly moving averages continue to point higher and a trend of higher-highs and higher-lows from the December bottom continues to be observed. The market has one week left until the weakest two week stretch of the year; the back half of September is typically a volatile and weak period for stocks as investors rebalance portfolios ahead of the end of the quarter.
Providing the food for thought on Friday was the employment situation report for August. The headline print indicated that payrolls expanded by 130,000 in August, which was weaker than the 163,000 increase that was forecasted by analysts. The unemployment rate remained unchanged at 3.7%, while average hourly earnings expanded by 0.4%, slightly better than the 0.3% increase that was expected. Stripping out the seasonal adjustments, non-farm payrolls actually expanded by 348,000, or 0.2%, which is stronger than the 0.1% increase that is average for the summer month. The year-to-date change is now higher by 0.2%, which is four-tenths of one percent better than the seasonal average trend through the first two-thirds of the year. We sent out further analysis to subscribers, including details of a big driver in the report that is expected to further inflate the results early in the new year. Subscribe now and we’ll send you this insight.
North of the border, Statscan released an employment report of its own. The headline print was that employment in Canada increased by 81,100 in August, far surpassing the consensus analyst estimate that called for a rise of 15,000. The unemployment rate remained unchanged at 5.7%. Stripping out the seasonal adjustments, employment in Canada actually increased by 34,100, or 0.2%, which is stronger than the 0.1% decline that is average for the summer month. The year-to-date change is now higher by 2.9%, which is three-tenths of one percent below the seasonal average trend. Find out why the underlying details are not nearly as euphoric as the headline print in our report released to subscribers on Friday. Subscribe now.
Sentiment on Friday, as gauged by the put-call ratio, ended slightly bullish at 0.92.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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