Stock Market Outlook for January 13, 2020
Last year saw the weakest payroll growth of this economic recovery.
*** 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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Total Energy Services Inc. (TSE:TOT.TO) Seasonal Chart
Vanguard FTSE Canada All Cap Index ETF (TSE:VCN.TO) Seasonal Chart
Cimarex Energy Co. (NYSE:XEC) Seasonal Chart
iShares S&P GSCI Commodity-Indexed Trust (NYSE:GSG) Seasonal Chart
Atco Ltd. (TSE:ACO/X.TO) Seasonal Chart
iShares S&P/TSX Capped Energy Index ETF (TSE:XEG.to) Seasonal Chart
Wajax Corp. (TSE:WJX.TO) Seasonal Chart
Crescent Point Energy Corp. (TSE:CPG.TO) Seasonal Chart
Ascena Retail Group, Inc. (NASD:ASNA) Seasonal Chart
TMX Group Inc. (TSE:X.TO) Seasonal Chart
Pembina Pipeline Corp. (TSE:PPL.TO) Seasonal Chart
Marsh and Mclennan Co. (NYSE:MMC) Seasonal Chart
Tourmaline Oil Corp. (TSE:TOU.TO) Seasonal Chart
Suncor Energy, Inc. (TSE:SU.TO) Seasonal Chart
Energy Select Sector SPDR Fund (NYSE:XLE) Seasonal Chart
EOG Resources, Inc. (NYSE:EOG) Seasonal Chart
BMO Low Volatility Canadian Equity ETF (TSE:ZLB.TO) Seasonal Chart
Phillips 66 (NYSE:PSX) Seasonal Chart
L Brands, Inc. (NYSE:LB) Seasonal Chart
Equifax, Inc. (NYSE:EFX) Seasonal Chart
Paramount Resources Ltd. (TSE:POU.TO) Seasonal Chart
Imperial Oil Ltd. (TSE:IMO.TO) Seasonal Chart
Sanderson Farms, Inc. (NASD:SAFM) Seasonal Chart
The Markets
Stocks drifted lower on Friday following the release of a weaker than expected payroll report for December. The Bureau of Labor Statistics indicates that 145,000 payrolls were added last month, which is down significantly from the 256,000 payrolls that were added in November and a miss versus the consensus estimate that called for a rise of 158,000. The unemployment rate remained unchanged at 3.5% and average hourly earnings were higher by a mere 0.1%, a miss versus the consensus analyst estimate that called for a 0.3% gain. Stripping out the seasonal adjustments, payrolls actually declined by 278,000, or 0.2%, in December, which is inline with the average change for this time of year. We broke down the results in a report released to subscribers intraday. Signup now and we’ll send it to you.
The S&P 500 Index shed just less than three-tenths of one percent led by financials and industrials as investors position ahead earnings that start to roll in full force next week. Momentum indicators continue to show signs of rolling over given recent jitters that fuelled volatility in equity markets in recent days. The benchmark remains supported by major moving averages in the short, intermediate, and long-term timeframes, however, downside risks are present in the short term as investors digest the gains from the past few months.
For the week, the large-cap benchmark added 0.94%, charting a new all-time weekly close. The benchmark continues to hover above rising trend channel resistance that kept the benchmark constrained through the middle of 2019. The upper hurdle of this previous span even acted as a point of support at the lows of the week. Momentum indicators on this weekly look remain firmly embedded in overbought territory, although early signs of rolling over have become apparent. The significant level of support on this chart has proven to be the 20-week moving average, approximately equivalent to the 100-day, which continues to point higher. This hurdle remains the most appealing level to buy should the benchmark dip into the proximity of this zone.
The US wasn’t alone in releasing their December employment report. North of the border, Statscan released an employment report of its own. The headline print of December’s report indicates that employment in Canada increased by 35,200, which is better than the consensus estimate that called for a gain of 20,000. The unemployment rate fell by three-tenths of one percent to 5.6%, which is also better than the estimate of 5.8%. Stripping out the seasonal adjustments, employment actually declined by 6,900, essentially unchanged on a percentage basis, which is better than the 0.3% decline that is average for this time of year. The calendar-year change in 2019 was higher by 1.75%, which is stronger than the 1.51% increase that has been the average over the past 20 years. We sent out further insight to subscribers on Friday. Want a copy of our report? Signup now and we’ll send it to you.
The Canadian dollar saw little movement following the result. The currency remains supported around its rising 20-day moving average, a level that helped to propel the Canadian dollar index to a new 52-week high at the end of last year. Major moving averages are pointing higher, suggesting positive trends across short, intermediate and long-term timeframes. The 200-day moving average has been gyrating around 75 through much of the past four years as the currency attempts to forge a bottom following the pronounced decline during the first half of the last decade.
Sentiment on Friday, as gauged by the put-call ratio, ended bullish at 0.86.
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Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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