Stock Market Outlook for October 18, 2019
US Industrial Production fell by 1.7% (NSA) in September, weaker than the 1.1% decline that is average for this time of year.
*** 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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E*Trade Financial Corp. (NASD:ETFC) Seasonal Chart
DR Horton Inc. (NYSE:DHI) Seasonal Chart
Teradyne, Inc. (NASD:TER) Seasonal Chart
Autodesk, Inc. (NASD:ADSK) Seasonal Chart
Aware, Inc. (NASD:AWRE) Seasonal Chart
Landstar System, Inc. (NASD:LSTR) Seasonal Chart
Charles Schwab Corp. (NYSE:SCHW) Seasonal Chart
Unisys Corp. (NYSE:UIS) Seasonal Chart
Universal Forest Products, Inc. (NASD:UFPI) Seasonal Chart
The Markets
Stocks rose on Thursday in continued positive reaction to earnings and hopes that a Brexit deal can be reached before the imposed deadline of the end of the month. The S&P 500 Index was higher by just less than three-tenths of a percent, dancing around the psychologically important 3,000 level throughout the session. Activity above this key threshold has been tenuous as investors express their hesitation in purchasing stocks around all-time highs.
Part of the hesitation on Thursday can be attributed to scepticism as to whether a Brexit deal can be agreed upon when the UK parliament sits on Saturday. European benchmarks initially traded higher following news that the United Kingdom and European Union had struck a deal, but, as the session progressed, various parties indicated that they would not support the Brexit framework and stocks sold off. The German DAX was up by over one percent at the highs of the session, but ended negative on the day. A similar reversal was realized on the French CAC. European benchmarks have been flirting with 52-week high territory in recent days on optimism that a Brexit solution would be achieved, but, after many months of negotiations, it may be that the UK is no closer at achieving a successful separation. Seasonally, European stocks tend to gain between now and the middle of January, following the same risk-on trend as other developed markets around the globe.
On the economic front, US Industrial Production statistics were released before Thursday’s opening bell. The headline print of September’s report indicates that activity fell by 0.4% in the month, a significant shift from the 0.8% increase reported for August. Expectations were for a decline of 0.2%. The manufacturing component was lower by 0.5%, also a miss versus the consensus analyst estimate of -0.3%. Stripping out the seasonal adjustments, industrial production in the US actually declined by 1.7% in September, which is weaker than the 1.1% decline that is average for the month. The result places the year to change higher by a mere 0.2%, well below the 2.3% increase that is average through the first three quarters. This is the weakest pace since 2015 in the midst of a manufacturing recession. We sent out further insight to subscribers. Subscribe now to be added to our distribution list.
Sentiment on Thursday, as gauged by the put-call ratio, ended bullish at 0.91
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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