Equity Clock

Stock Market Outlook for August 10, 2020

The market is attempting to rotate again as technology is sold off in favour of the epicentre stocks.

 

 

 

*** 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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Cheesecake Factory Inc. (NASD:CAKE) Seasonal Chart

iShares Equal Weight Banc & Lifeco ETF (TSE:CEW.TO) Seasonal Chart

ASGN Inc. (NYSE:ASGN) Seasonal Chart

Innospec, Inc. (NASD:IOSP) Seasonal Chart

CECO Environmental Corp. (NASD:CECE) Seasonal Chart

Iron Mountain, Inc. (NYSE:IRM) Seasonal Chart

Network Appliance, Inc. (NASD:NTAP) Seasonal Chart

ViaSat, Inc. (NASD:VSAT) Seasonal Chart

Hillenbrand Inc. (NYSE:HI) Seasonal Chart

 

 

The Markets

Stocks close mixed on Friday following the release of the nonfarm payroll report for July.  The headline print indicated that 1.763 million payrolls were added last month, which edged out the consensus analyst estimate, as it existed right before the print, of an increase of 1.675 million.  The unemployment rate ticked lower from 11.1% to 10.2%, which still represents one of the highest jobless rates since the Depression era.  Average hourly earnings, meanwhile, increased by 0.2%, which is a positive divergence compared to estimates of a decline of 0.7%.  Stripping out the seasonal adjustments, payrolls actually increased by 591,000, or 0.4%, in July, which is a positive divergence compared to seasonal norms.  The average change for this time of year is a decline of 0.9%.  The year-to-date change is now down by 9.0%, or 8.7% below the seasonal average trend through the first seven months of the year.  This remains the sharpest drop through this timeframe on record. We sent out further insight to subscribers intraday.  Signup now to access our report.

The S&P 500 Index closed essentially unchanged, holding above the previous range of resistance between 3250 and 3325.  The rising 20 and 50-day moving averages remain in positions of support, warranting a positive bias in equity market until broken.  The benchmark has been flirting with overbought territory now that levels close to the all-time high have been regained.  The February peak at 3393 is the obvious level of resistance overhead.

North of the border, Statscan released an employment report of its own.  The headline print of July’s Labour Force Survey in Canada indicates that employment increased by 418,500, which is stronger than the consensus estimate that called for a rise of 400,000.  The unemployment rate ticked lower from 12.3% in June to 10.9% last month.  Analysts had expected the unemployment rate to come in at 11.0%.  Stripping out the seasonal adjustments, which are irrelevant in this environment, employment actually increased by 291,800, or 1.6%, in July.  The average change for the month is a decline of 0.1%.  Year-to-date, employment is down by 5.4%, a drawdown not matched by any time in at least the past four decades of data that we have on record; never before has employment declined through the first seven months of the year.  The average change through the end of July is an increase of 3.2%.  We sent out further insight to subscribers intraday. Signup now.

Sentiment on Friday, as gauged by the put-call ratio, ended bullish at 0.73.

 

 

Seasonal charts of companies reporting earnings today:

 

 

S&P 500 Index

 

 

TSE Composite

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