Equity Clock

Stock Market Outlook for August 20, 2020

The increase in prices of passenger vehicles this year in Canada is the strongest in decades as demand for personal modes of transportation surges.

 

 

 

*** 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:

Subscribers – Click on the relevant link to view the full profile. Not a subscriber? Signup here.

Meredith Corp. (NYSE:MDP) Seasonal Chart

Harte Gold Corp (TSE:HRT.TO) Seasonal Chart

Matrix Service Co. (NASD:MTRX) Seasonal Chart

Infinity Pharmaceuticals, Inc. (NASD:INFI) Seasonal Chart

iShares MSCI Spain Capped ETF (NYSE:EWP) Seasonal Chart

 

 

The Markets

Stocks dipped on Wednesday as the US Dollar jumped higher following the release of the latest FOMC minutes.  The S&P 500 Index shed just over four-tenths of one percent, pulling back from a fresh all-time intraday high charted just below 3400;  the benchmark got to a high of 3399.54 charted before the Fed notes were released. 

On the hourly chart, the shorter-term look more precisely portrays the damage to the trend that the Fed event instilled.  The large-cap benchmark broke below its rising 50-hour moving average, which has supported the benchmark since the month began.  Momentum indicators have been negatively diverging from price for the past couple of weeks, indicating waning buying demand.  Near-term downside risks are to the rising 20 and 50-day moving averages at 3314 and 3209, respectively.

On schedule for the Wednesday session, the Energy Information Administration (EIA) released its tally of petroleum inventories for the week just past.  The EIA reported that oil inventories declined by 1.6 million barrels last week, which is weaker than the drawdown that analysts were expecting of 2.7 million. Gasoline stockpiles, meanwhile, declined by 3.3 million barrels. The result saw the days of supply of oil fall by three-tenths of a day to 35.1, while gasoline days of supply ticked lower by half of a day to 27.9. The average days of supply for each at the end of July is 21.8 and 23.2, respectively.  We sent out further insight to subscribers intraday.  Subscribe now.

On the economic front, Statscan released consumer prices for the month just past.  The headline print of the Canadian Consumer Price Index indicated prices were unchanged, on aggregate, in July, which is weaker than the 0.1% increase that is average for the month.  Analysts were expecting an increase of 0.4%.  The results below the surface were largely mixed.  Strength in gasoline, home furnishings, and health/personal care items helped to offset weakness in the shelter category, which has been impacted by declining mortgage interest costs and rent.  In general, the trends for consumer prices are below seasonal norms through the first seven months of the year, but the purchase of passenger vehicles is the notable exception.  The category is trending 5.2% above the seasonal average trend, year-to-date, the strongest pace since 1986.  Demand to purchase automobiles has been strong this year as consumers look for alternatives to public transportation.  Automobile stocks have responded accordingly with the Auto Index fund (CARZ) moving well beyond its pre-pandemic high.  Subscribers can login to the database to view other seasonal charts for this report at https://charts.equityclock.com/canada-consumer-price-index-cpi

Sentiment on Wednesday, as gauged by the put-call ratio, ended bullish at 0.76.

 

 

 

Seasonal charts of companies reporting earnings today:

 

 

S&P 500 Index

 

 

TSE Composite

Sponsored By...