Equity Clock

Stock Market Outlook for September 11, 2020

The decline in wholesale inventories this year has been the second weakest on record, placing pressure on manufacturers to get back up to speed for the inventory replenishment period that is now upon us.

 

 

 

*** 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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FedNat Holding Co. (NASD:FNHC) Seasonal Chart

Brand Leaders Plus Income ETF (TSE:HBF.TO) Seasonal Chart

Paychex, Inc. (NASD:PAYX) Seasonal Chart

US Bancorp (NYSE:USB) Seasonal Chart

Monro, Inc. (NASD:MNRO) Seasonal Chart

Prudential Financial Inc. (NYSE:PRU) Seasonal Chart

Mesa Laboratories, Inc. (NASD:MLAB) Seasonal Chart

BMO US Dividend ETF (TSE:ZDY.TO) Seasonal Chart

BMO MSCI USA High Quality Index ETF (TSE:ZUQ.TO) Seasonal Chart

BMO US High Dividend Covered Call ETF (TSE:ZWH.TO) Seasonal Chart

Invesco DWA Financial Momentum ETF (NASD:PFI) Seasonal Chart

 

 

 

The Markets

Stocks dipped on Thursday as energy and tech stocks once again pushed investors to the sidelines.  The S&P 500 Index dipped by 1.76%, giving up much of Wednesday’s gain and trading back to around the lows set on Tuesday.  Resistance at the 20-day moving average has just become apparent, which threatens the health of the intermediate-term trend that has been supported by the rising 50-day moving average.  The intermediate hurdle comes in around 3317, or just two-thirds of one percent below present levels.  This is the first time in this recovery rally that resistance at the short-term moving average has become apparent.  Potential levels of support below the 50-day include previous horizontal resistance at 3250 and the 100-day moving average around 3150.  The month of September is notorious for mean reversion, so it is not much of a surprise to see the present shift away from the winners, which is pulling down the broader market.  This phenomenon typically persists through the end of the quarter, but, ultimately, it will last as long as investment portfolios remain unbalanced towards some of the technology focussed areas that have excelled in recent months.

A day delayed due to the Labor Day holiday, the Energy Information Administration (EIA) released its tally of petroleum inventories for the week just past.  The EIA reported that oil inventories increased by 2.0 million barrels last week, which is a divergence compared to analyst estimates that called for a drawdown of 1.3 million barrels.  Gasoline stockpiles, meanwhile, declined by 3.0 million barrels and distillates were lower by 1.7 million barrels.  The result saw the days of supply of oil increase by the most since April, rising by 1.3 days to 35.8.  Gasoline days of supply, meanwhile, was unchanged at 26.5.  The average days of supply for each at the start of September is 21.7 and 22.8, respectively.  We sent out further insight to subscribers intraday.  Signup now to receive this timely analysis directly to your inbox.

On the economic front, a report on wholesale trade was released during Thursday’s session.  For the month of July, wholesale sales are indicated to have increased by 0.9%, while inventories remained unchanged (0.0%).  The average change for each for the month of July is –3.3% and +0.7%, respectively.  Year-to-date, wholesale sales are down 3.5% through the first seven months of the year, which is 5.7% below the seasonal average trend, while inventories are down by 6.0%, or 7.6% below the seasonal average trend.  For inventories, this is the second weakest performance on record, lagging only behind the 10.3% drawdown realized through the first seven months of 2009 amidst the Great Recession overhang.   Subscribers can login to the database to view all of the seasonal charts that we have on file for this report at the following link: https://charts.equityclock.com/u-s-wholesale-trade-sales-and-inventories

Sentiment on Thursday, as gauged by the put-call ratio, ended bullish at 0.81.

 

 

 

Seasonal charts of companies reporting earnings today:

 

 

S&P 500 Index

 

 

TSE Composite

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