Stock Market Outlook for September 13, 2019
Despite all of the headwinds, the TSX Composite just broke out to a new all-time intraday high.
*** 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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FRP Holdings, Inc. (NASD:FRPH) Seasonal Chart
Quarterhill Inc. (TSE:QTRH.TO) Seasonal Chart
Kronos Worldwide Inc. (NYSE:KRO) Seasonal Chart
IRSA Propiedades Comerciales SA (NASD:IRCP) Seasonal Chart
Maximus, Inc. (NYSE:MMS) Seasonal Chart
Molson Coors Canada Inc. (TSE:TPX/B.TO) Seasonal Chart
Luna Innovations Inc. (NASD:LUNA) Seasonal Chart
Marcus Corp. (NYSE:MCS) Seasonal Chart
General Mills Inc. (NYSE:GIS) Seasonal Chart
The Markets
Stocks ended higher on Thursday as the Trump Administration extended an olive branch in trade negotiations by deferring increased tariffs by a couple of weeks in October. The S&P 500 Index closed higher by three-tenths of one percent, maintaining levels above the psychologically important 3000 level. Investors are perceiving recent actions as increasing the probability that a trade deal or truce will be achieved as we enter the critical presidential election window. Momentum indicators continue to point higher on the large-cap benchmark following the buy signals that were generated close to the end of August. The doji candlestick charted for the session could be argued as a reaction to the previous all-time high around 3025, suggesting that there remains hesitation amongst investors to buy around the all-time peak.
North of the border the Canadian benchmark charted a new all-time high intraday. The benchmark moved beyond April’s high of 16,672, punching a hole in this level of overhead resistance that has been in place for the past year. The recent five month consolidation could be argued as forming the flag portion of a bull flag pattern, where the flag pole was derived by the sharp move higher between December and March. Theory has it that the next move is higher once this consolidation pattern is complete. The market has recently been rotating into depressed stocks in the financial and energy sectors, two areas with a substantial weight in the Canadian benchmark. The iShares Capped Financials Index ETF (XFN) managed to stick the all-time high close once the dust settled on the day. Both the financial ETF (XFN) and the TSX Composite continue to be supported by their rising 200-day moving averages, which bodes well for the longer-term trend of each. Seasonally, the Canadian benchmark tends to show the same tendencies as equity benchmarks south of the border, gaining between October and May, however, Canadian stocks tend to underperform US constituents through much of the fourth quarter. A larger weight attributed to the consumer tends to be a benefit for US benchmarks during the always important end of year holiday season.
Just released, an update on the seasonal trade in Natural Gas that was recently profiled in our monthly report for September. Subscribe now and we’ll send you what you need to know for the seasonal trade that is underway.
Next week we’ll be presenting at the Toronto Money Show on the topic of "Improving Investment Returns by Combining Seasonal, Fundamental, and Technical Analysis." Our audience can attend FREE by navigating to the Money Show website at https://conferences.moneyshow.com/moneyshow-toronto/workshop/991d533c1252427eba49b134bd6d6009/improving-investment-returns-by-combining-seasonal-fundamental-and-technical-analysis/?scode=048217. Looking forward to seeing everyone there!
On the economic front, consumer inflation figures for the month just past were released before Thursday’s opening bell. The headline print indicated that the consumer price index (CPI) increased by 0.1% in August, matching the consensus analyst estimate. Excluding food and energy, CPI was higher by 0.3% in the month, edging past forecasts that called for a 0.2% rise. The result places the year-over-year change for this core inflation metric at 2.4%, moving beyond the Fed’s target of 2.0%. Stripping out the seasonal adjustments, aggregate CPI was unchanged in August, which is below the 0.1% increase that is average for this time of year. However, it is food and energy that have been sluggish. Excluding these categories, the increase was 0.2%, which is inline with the seasonal norm. The year-to-date change is now higher by 2.0%, which is just over three-tenths of a percent higher than the average change through this point in the year. This is the strongest increase in core inflation through the first two-thirds of the year since 2006. Subscribers can login and view the seasonal charts of this report via the following link: https://charts.equityclock.com/u-s-consumer-price-index-cpi-producer-price-index-ppi
Sentiment on Thursday, as gauged by the put-call ratio, ended bullish at 0.84.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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