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Stock Market Outlook for June 16, 2020


General Business Conditions Index of the Empire State Manufacturing survey rebounds to +5.0 in June, returning to levels that are more normal for this time of year.

 

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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LKQ Corp. (NASD:LKQ) Seasonal Chart

LKQ Corp. (NASD:LKQ) Seasonal Chart

iShares S&P-TSX Capped Financials Index ETF  (TSE:XFN.TO) Seasonal Chart

iShares S&P-TSX Capped Financials Index ETF (TSE:XFN.TO) Seasonal Chart

Astronics Corp. (NASD:ATRO) Seasonal Chart

Astronics Corp. (NASD:ATRO) Seasonal Chart

Booz Allen Hamilton Holding Corp. (NYSE:BAH) Seasonal Chart

Booz Allen Hamilton Holding Corp. (NYSE:BAH) Seasonal Chart

Bank Of Montreal (NYSE:BMO) Seasonal Chart

Bank Of Montreal (NYSE:BMO) Seasonal Chart

iShares U.S. Financial Services ETF (NYSE:IYG) Seasonal Chart

iShares U.S. Financial Services ETF (NYSE:IYG) Seasonal Chart

 

 

The Markets

Stocks gained on Monday after the US Fed announced that it would start buying individual corporate bonds, on top of the corporate bond ETFs that it had already been buying.  The S&P 500 Index gained around eight-tenths of one percent, recouping levels above last week’s broken 20-day moving average.  The benchmark continued to hold support around its 200-day moving average, a pivotal point to the long-term direction of the broad market.  Momentum indicators remain on sell signals that were triggered last week.  The session saw a mix of defensive and cyclical sectors top the leaderboard with Communication Services, REITs, Financials, and Consumer Staples each posting gains in excess of one percent.  Energy and Health Care were the laggards.

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On the economic front, the New York Fed released its look at manufacturing conditions in its region.  The General Business Conditions Index of the Empire State Manufacturing Survey came in at –0.2 for June, which is much stronger than the –30.0 result that analysts had been forecasting.  Stripping out the seasonal adjustments, the result was actually positive at +5.0, which is higher than the level that was realized last year at this time of –2.3.  The average level for this time of year is +11.99.  Readings above 0 are indicative of improving conditions.  This is a solid result that just adds to the better than expected data that has been digested in recent weeks.  On average, manufacturing metrics tend to decline in the month of July as factories shutdown briefly for the summer, so it will be interesting to see how the dynamic of the reopening of the economy conflicts with this average closure period.  We’ll obtain more insight on the state of the consumer and business with reports on retail trade and industrial production to be released before Tuesday’s opening bell.  We’ll break it all down for subscribers in reports to be released intraday. Subscribe now.

Empire State General Business Conditions Index Seasonal Chart

North of the border, Statscan released manufacturing data of their own.  The statistics agency indicated that manufacturing sales in Canada collapsed by 28.5% in April, much weaker than the 20.0% decline that was expected.  The year-over-year change now sits at –37.1%, down from the –12.7% reported in the month prior.  Stripping out the seasonal adjustments, the sales of goods manufactured actually fell by 31.8% in April, which is, quite obviously, weaker than the 5.1% decline that is average for this time of year.  The year-to-date change now sits lower by 32.4% through the end of April, which is 38.8% below the average change through this point in the year.  The trends in Canada are similar to that in the US: areas where the goods are essential, such as food, are seeing manufacturing activity that is above seasonal norms, while more discretionary items have seen drawdowns that are a significant disconnected from average trends.  They include clothing, petroleum, and transportation equipment manufacturing.   Subscribers can login to the database to view the seasonal charts for this report at https://charts.equityclock.com/canada-manufacturing-sales.

Sales of goods manufactured (shipments) Seasonal Chart 

Sentiment on Monday, as gauged by the put-call ratio, ended bullish at 0.88.

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Seasonal charts of companies reporting earnings today:

Oracle Corporation Seasonal Chart Lennar Corporation Seasonal Chart H&R Block, Inc. Seasonal Chart MFA Financial, Inc. Seasonal Chart Groupon, Inc. Seasonal Chart InnerWorkings, Inc. Seasonal Chart Vince Holding Corp. Seasonal Chart Volt Information Sciences, Inc. Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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