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Stock Market Outlook for June 18, 2020


Housing starts rebounded last month, but we remain well off of levels that would be considered 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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Southwest Airlines Co. (NYSE:LUV) Seasonal Chart

Southwest Airlines Co. (NYSE:LUV) Seasonal Chart

TC PipeLines Partners LP (NYSE:TCP) Seasonal Chart

TC PipeLines Partners LP (NYSE:TCP) Seasonal Chart

Carmax Inc. (NYSE:KMX) Seasonal Chart

Carmax Inc. (NYSE:KMX) Seasonal Chart

RLI Corp. (NYSE:RLI) Seasonal Chart

RLI Corp. (NYSE:RLI) Seasonal Chart

Arch Capt. Grp. Ltd. (NASD:ACGL) Seasonal Chart

Arch Capt. Grp. Ltd. (NASD:ACGL) Seasonal Chart

Monmouth Real Estate Investment Corp. (NYSE:MNR) Seasonal Chart

Monmouth Real Estate Investment Corp. (NYSE:MNR) Seasonal Chart

The Bank of Nova Scotia (NYSE:BNS) Seasonal Chart

The Bank of Nova Scotia (NYSE:BNS) Seasonal Chart

iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSE:LQD) Seasonal Chart

iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSE:LQD) Seasonal Chart

Western Asset Income Fund (NYSE:PAI) Seasonal Chart

Western Asset Income Fund (NYSE:PAI) Seasonal Chart

 

 

The Markets

Stocks closed lower on Wednesday, giving up earlier gains, as the recent buying binge on the back of favourable comments from the Fed became exhausted.  The S&P 500 Index shed just over a third of one percent, continuing to hold levels above its rising 20-day moving average.  Momentum indicators remain on sell signals following last week’s decline.  Energy and financials were the dominant drags on the day, while technology and communication services closed essentially flat on the session.

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On schedule for the Wednesday session, the Energy Information Administration (EIA) released its tally of petroleum inventories for the week just past.  The administration reported that oil inventories increased by 1.2 million barrels last week, which is a divergence compared to the 152,000 barrel decline that was expected by analysts. Gasoline and distillate stockpiles, meanwhile, declined by 1.7 million barrels and 1.4 million barrels, respectively. The result saw the days of supply of oil fall by half of a day to 40.4, while gasoline days of supply dipped by one and a half days to 33.6. The average days of supply for each at the start of June is 22.8 and 24.4, respectively.  We sent out further insight to subscribers detailing the dynamics of supply and demand and what it means for the price of oil.  Subscribe now.

Weekly U.S. Days of Supply of Crude Oil excluding SPR  (Number of Days) Seasonal Chart

On the economic front, a report on housing starts in the US was released before Wednesday’s opening bell. The headline print of May’s report indicated that activity increased by 4.3% last month to a seasonally adjusted annualized rate of 974,000. Analysts were expecting an increase of 17.8% to a rate of 1.1 million. Stripping out the adjustments, starts actually increased by 5.3% in May, which is approximately inline with the 4.9% increase that is average for this time of year. The year-to-date change is now down by 17.5% through the first five months of the year, significantly weaker than the 40.2% increase that is average during this timeframe.  We sent out further insight to subscribers intraday.  Subscribe now.

Housing Starts Seasonal Chart

North of the border, the Consumer Price Index (CPI) in Canada continues to be depressed, but it did rebound slightly in May.  The headline and non-seasonally adjusted print indicated that prices in Canada increased by 0.3% last month, which is weaker than the consensus analyst estimate that called for a rise of 0.7%.  On average, the price index increases by 0.4% in this fifth month of the year.  The year-to-date change still remains in negative territory at -0.2%, which is a full two percent below the seasonal norm through this point in the year.  While food prices in this country are holding up, trending above seasonal norms, a number of areas are weighing on the headline result.  These include rent, communications, child care, clothing, transportation, and fuel prices, all of which are falling at a time when they seasonally tend to rise.  Subscribers can login to the database to view various seasonal charts from the report at https://charts.equityclock.com/canada-consumer-price-index-cpi

Canada CPI - All-items Seasonal Chart

Sentiment on Wednesday, as gauged by the put-call ratio, ended bullish at 0.77.

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Seasonal charts of companies reporting earnings today:

Kroger Company (The) Seasonal Chart Commercial Metals Company Seasonal Chart American Software, Inc. Seasonal Chart Designer Brands Inc. Seasonal Chart Regis Corporation Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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