Equity Clock

Stock Market Outlook for September 16, 2020

Industrial Production in the US is still showing the weakest year-to-date performance since 1945 as businesses struggle to play catch-up to the consumer.

 

 

 

*** 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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Autozone Inc. Nevada (NYSE:AZO) Seasonal Chart

Tricon Capital Group Inc. (TSE:TCN.TO) Seasonal Chart

Cervus Equipment Corp. (TSE:CERV.TO) Seasonal Chart

Enterprise Bancorp Inc. (NASD:EBTC) Seasonal Chart

1st Constitution Bancorp (NASD:FCCY) Seasonal Chart

Oil Dri Corp. Of America (NYSE:ODC) Seasonal Chart

iShares Global Water Index ETF (TSE:CWW.TO) Seasonal Chart

iShares India Index ETF (TSE:XID.TO) Seasonal Chart

DB Crude Oil Double Short ETN (NYSE:DTO) Seasonal Chart

 

 

The Markets

Stocks closed higher on Tuesday as investors continue to use recent weakness to buy into favoured positions in the technology sector.  The S&P 500 Index gained just over half of one percent, remaining supported by its rising 50-day moving average.  Resistance at the 20-day moving average continues to be observed overhead, ongoing reaction to which could cap the intermediate-term advance.  Technology, communications services, and consumer discretionary were among the areas that topped the leaderboard, however, interest rate sensitive names in the utilities and REIT sectors amounted a healthy rally of their own, a potential response to the FOMC announcement slated for Wednesday afternoon.  Bank stocks traded lower given the anticipation that the Fed will keep its accommodative monetary policy intact.  Despite the more noticeable reaction in the stocks, bond prices were little changed on the session.  While stocks have pulled back rather notably since peaking on September 2nd, bonds have been little changed, suggesting no flight to safety, yet, amidst the renewed equity market uneasiness.

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On the economic front, a report on industrial production in the US was released before Tuesday’s opening bell.  The headline print of August’s report indicates that activity increased by 0.4% last month, which was a significant miss versus the consensus analyst estimate that called for a gain of 1.2%.  The manufacturing component reported an increase of 1.0%, which was about half of the 1.9% increase that was forecast.  Stripping out the seasonal adjustments, industrial production in the US actually increased by 2.7% in August, which is slightly weaker than the 3.0% increase that is average for the month.  The year-to-date change is now down by 5.4%, which is still firmly below the 3.4% increase that is average by this point in the year.  The last time the year-to-date change through the end of August was weaker was in 1945, at the tail end of the Second World War.  We sent out further insight to subscribers intraday.  Signup now to receive these timely insights.

Sentiment on Tuesday ,as gauged by the put-call ratio, ended bullish at 0.69.  After seven sessions of investors showing a slight bias towards protective put options, they are once again seen binging on calls as signs of complacency re-emerge.  Levels below 0.70 always raise alarm bells as it suggests that investors are leaning too far in one direction, which poses risks of an abrupt right-siding as investors correct the imbalance.

 

 

 

Seasonal charts of companies reporting earnings today:

 

 

S&P 500 Index

 

 

TSE Composite

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