Equity Clock

Stock Market Outlook for August 17, 2020

US retail sales increased by 2.6% (NSA) in July, much stronger than the 0.2% increase that is average for this typically slower summer month.

 

 

 

*** 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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The Descartes Systems Group, Inc. (TSE:DSG.TO) Seasonal Chart

Wesdome Gold Mines Ltd. (TSE:WDO.TO) Seasonal Chart

Dick’s Sporting Goods Inc. (NYSE:DKS) Seasonal Chart

Healthcare Services Group, Inc. (NASD:HCSG) Seasonal Chart

Six Flags Entertainment Corp. (NYSE:SIX) Seasonal Chart

Banco Macro SA (NYSE:BMA) Seasonal Chart

Grupo Financiero Galicia S.A. ADS (NASD:GGAL) Seasonal Chart

California Amplifier, Inc. (NASD:CAMP) Seasonal Chart

Nexstar Media Group, Inc. (NASD:NXST) Seasonal Chart

First Asset Energy Giants Covered Call ETF (CAD Hedged) (TSE:NXF.TO) Seasonal Chart

iShares MSCI Emerging Markets Index ETF (TSE:XEM.TO) Seasonal Chart

WisdomTree Germany Hedged Equity Fund (NASD:DXGE) Seasonal Chart

Global X Lithium ETF (NYSE:LIT) Seasonal Chart

 

 

The Markets

Stocks closed little changed on Friday following a slightly weaker than expected (at least on the headline print) retail sales report for July. The headline print of July’s report on retail trade in the US indicated that activity increased by 1.2% last month, which was weaker (in our report to subscribers we erroneously indicated the result as being “stronger”) than the 2.0% increase that was expected by analysts. Less gas and autos, the increase was even better, rising by 1.5%, which is stronger than the 0.9% increase that was forecasted by analysts. Stripping out the adjustments, retail sales actually increased by 2.6% in July versus the month prior. The result is much stronger than the 0.2% increase that is average for this typically slower summer month. The year-to-date change is now hovering 6.2% above the seasonal average trend. Astoundingly, despite the tremendous adversity and employment data that is akin to a depression, retail sales are currently showing the strongest year-to-date performance on record.  We sent out further insight to subscribers intraday, including what is driving these record setting results.  Subscribe now to view this report.

Also released on Friday was a report on industrial production in the US. The headline print of July’s report on industrial production indicates that activity increased by 3.0% last month, which was inline with the consensus analyst estimate. The manufacturing component reported an increase of 3.4%, which beat the consensus analyst estimate that called for an increase of 3.0%. Stripping out the seasonal adjustments, industrial production in the US actually increased by 1.4% in July, which is a positive divergence compared to the 2.5% decline that is average for the month. The year-to-date change is now down by 8.6%, which is still firmly below the 0.3% increase that is average by this point in the year. The last time the year-to-date change through the end of July was weaker was in 1949.  We sent out further insight to subscribers intraday.  Subscribe now to view this report.

The S&P 500 Index ended little changed on Friday, down two basis points, closing again within reach of the all-time closing high charted in February.  Support at the 20 and 50-day moving averages are now 2.3% and 5.2%, respectively, below present levels.  Resistance at the all-time peak of 3393 is obvious overhead.  Volume has fallen off significantly over the past few days with activity on Friday, according to the S&P 500 Index, the lowest since Valentine’s Day (February 14th).  Welcome to the dog days of summer.  While lower volumes can be conducive to a mild upward bias for stocks, it can also create volatility should a catalyst sufficient enough to derail the market is realized.  With Congress leaving Washington until September, a deal on a new stimulus bill is unlikely in the near-term, leaving the market in limbo for the weeks ahead.  As the news-flow dries up, things that are not presently on our radar are likely to have an outsized influence on market performance.

Sentiment on Friday, as gauged by the put-call ratio, ended bullish at 0.78.

 

 

 

Seasonal charts of companies reporting earnings today:

 

 

S&P 500 Index

 

 

TSE Composite

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