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Stock Market Outlook for December 16, 2019


Retail stocks fell sharply on Friday following a weak seasonally adjusted print on retail sales, however, the actual, non-adjusted, data provides an entirely different viewpoint.

 

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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Cedar Fair L P (NYSE:FUN) Seasonal Chart

Cedar Fair L P (NYSE:FUN) Seasonal Chart

B2Gold Corp. (NYSE:BTG) Seasonal Chart

B2Gold Corp. (NYSE:BTG) Seasonal Chart

Petroleo Brasileiro (Petrobras) (NYSE:PBR) Seasonal Chart

Petroleo Brasileiro (Petrobras) (NYSE:PBR) Seasonal Chart

Asanko Gold Inc. (TSE:AKG.TO) Seasonal Chart

Asanko Gold Inc. (TSE:AKG.TO) Seasonal Chart

Urban One, Inc. (NASD:UONE) Seasonal Chart

Urban One, Inc. (NASD:UONE) Seasonal Chart

Diamondback Energy, Inc. (NASD:FANG) Seasonal Chart

Diamondback Energy, Inc. (NASD:FANG) Seasonal Chart

TORC Oil & Gas Ltd. (TSE:TOG.TO) Seasonal Chart

TORC Oil & Gas Ltd. (TSE:TOG.TO) Seasonal Chart

Timken Co. (NYSE:TKR) Seasonal Chart

Timken Co. (NYSE:TKR) Seasonal Chart

Masonite Intl Corp. (NYSE:DOOR) Seasonal Chart

Masonite Intl Corp. (NYSE:DOOR) Seasonal Chart

Turquoise Hill Resources Ltd. (NYSE:TRQ) Seasonal Chart

Turquoise Hill Resources Ltd. (NYSE:TRQ) Seasonal Chart

Dynacor Gold Mines Inc. (TSE:DNG.TO) Seasonal Chart

Dynacor Gold Mines Inc. (TSE:DNG.TO) Seasonal Chart

Rio Tinto PLC (NYSE:RIO) Seasonal Chart

Rio Tinto PLC (NYSE:RIO) Seasonal Chart

Moneta Porcupine Mines, Inc. (TSE:ME.TO) Seasonal Chart

Moneta Porcupine Mines, Inc. (TSE:ME.TO) Seasonal Chart

CVR Energy Inc. (NYSE:CVI) Seasonal Chart

CVR Energy Inc. (NYSE:CVI) Seasonal Chart

Fidelity National Financial, Inc. (NYSE:FNF) Seasonal Chart

Fidelity National Financial, Inc. (NYSE:FNF) Seasonal Chart

MGM Resorts International (NYSE:MGM) Seasonal Chart

MGM Resorts International (NYSE:MGM) Seasonal Chart

Ametek, Inc. (NYSE:AME) Seasonal Chart

Ametek, Inc. (NYSE:AME) Seasonal Chart

Touchstone Exploration, Inc. (TSE:TXP.TO) Seasonal Chart

Touchstone Exploration, Inc. (TSE:TXP.TO) Seasonal Chart

SPX Corp. (NYSE:SPXC) Seasonal Chart

SPX Corp. (NYSE:SPXC) Seasonal Chart

Navistar Intl Corp. (NYSE:NAV) Seasonal Chart

Navistar Intl Corp. (NYSE:NAV) Seasonal Chart

Lithium Americas Corp. (NYSE:LAC) Seasonal Chart

Lithium Americas Corp. (NYSE:LAC) Seasonal Chart

Honda Motor Co. Ltd. (NYSE:HMC) Seasonal Chart

Honda Motor Co. Ltd. (NYSE:HMC) Seasonal Chart

Cheniere Energy, Inc. (AMEX:LNG) Seasonal Chart

Cheniere Energy, Inc. (AMEX:LNG) Seasonal Chart

Royal Bank of Canada (TSE:RY.TO) Seasonal Chart

Royal Bank of Canada (TSE:RY.TO) Seasonal Chart

 

 

The Markets

Stocks closed flat on Friday as investors digested the news pertaining to Phase 1 of the US – China trade deal.  The S&P 500 Index closed essentially unchanged, capping off a session that saw the large-cap benchmark swing on ether side of the flat line.  Cyclical sectors were the drag with materials, energy, and industrials the largest decliners on the day;  utilities and staples, meanwhile, topped the leaderboard.  A new buy signal was recorded with respect to MACD approximately two weeks following a sell signal from the same indicator.  Major moving averages continue to point higher and momentum indicators continue to show bullish characteristics, providing an upside bias to stocks until shown otherwise.

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For the week, the large-cap index was higher by just less than three-quarters of one percent, continuing to hug the upper limit of a rising trend channel that has been intact since April.  The benchmark made an attempt to move beyond the upper limit of the span early in Friday’s session, but the trade news, at least initially, doesn’t appear to be the catalyst for investors to fuel a breakout.  The lower limit of the span hovers around 2925, presenting a point of reference on the downside that may become relevant should investor sentiment sour.  The benchmark is reaching overbought levels, according to the weekly RSI, but momentum indicators have yet to show signs of peaking.  Seasonally, the back half of December is typically the strongest time of the best month of the year for stocks.  With the uncertainty surrounding recent events, such as tariffs and the UK election, it is possible that end of year portfolio reallocations, which typically cause stocks to drift lower, have been delayed, meaning that the upbeat period during the last couple of weeks of the year may also be postponed.  This is merely speculation at present, but the headlines over the past couple of weeks were surely a distraction at a time when fund managers are seeking to wind down activity and set portfolios on autopilot for the holiday period.

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On the economic front, a report on retail trade had investors concerned over the strength of this peak spending period.  The headline print indicated that sales increased by 0.2% in November, which is less than half of the 0.5% increase that was expected by analysts. Less gas and autos, retail trade was unchanged, which is well below the 0.4% increase that was expected. Stripping out the seasonal adjustments, retail sales actually increased by 3.2% in November, which is stronger than the 2.3% increase that is average for the month. The year-to-date change has now expanded to 6.3% above the seasonal average trend, which is still the best performance through this time of year in at least 27 years.  We sent out further insight to subscribers intraday, including our rant of why it is prudent to remain aware of the non-seasonally adjusted data in order to remain correctly positioned in risk assets.  Subscribe now to receive this timely analysis.

US Retail Sales

Retail stocks, according to the SPDR S&P Retail ETF (XRT), fell by 1.87% following the disappointing print pertaining to the consumer, giving back the gain achieved in the prior day’s session.  Major moving averages for the retail ETF are in a position of support and momentum indicators continue to show bullish characteristics.  However, the price action on the chart has been narrowing into an ascending wedge pattern, which could have bearish implications if broken.  Seasonally, retail stocks are out of favour in the weeks surrounding Christmas.

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http://charts.equityclock.com/seasonal_charts/S5RETL%20Index.PNG

Sentiment on Friday, as gauged by the put-call ratio, ended bearish at 1.10.

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Sectors and Industries entering their period of seasonal strength:

Silver Futures (SI) Seasonal Chart
FUTURE_SI1 Relative to the S&P 500FUTURE_SI1 Relative to Gold

FUTURE_SI1 Monthly Averages

Copper Futures (HG) Seasonal Chart
FUTURE_HG1 Relative to the S&P 500FUTURE_HG1 Relative to Gold

FUTURE_HG1 Monthly Averages

 

 

Seasonal charts of companies reporting earnings today:

Heico Corporation Seasonal Chart Anavex Life Sciences Corp. Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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