Equity Clock

Stock Market Outlook for October 16, 2020

Following an earlier than average rise in the days of supply of oil in September, the gauge of the intersection of supply and demand is back on the decline, much earlier than average.

 

 

 

*** 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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Home Capital Group, Inc. (TSE:HCG.TO) Seasonal Chart

Nucor Corp. (NYSE:NUE) Seasonal Chart

Dorel Industries Inc. – Class B (TSE:DII/B.TO) Seasonal Chart

Northern Dynasty Minerals Ltd. (TSE:NDM.TO) Seasonal Chart

WSP Global Inc. (TSE:WSP.TO) Seasonal Chart

SPDR S&P Aerospace & Defense ETF (NYSE:XAR) Seasonal Chart

Fastenal Co. (NASD:FAST) Seasonal Chart

Textron, Inc. (NYSE:TXT) Seasonal Chart

National Bank of Canada (TSE:NA.TO) Seasonal Chart

Capstone Mining Corp. (TSE:CS.TO) Seasonal Chart

Synchrony Financial (NYSE:SYF) Seasonal Chart

Vanguard U.S. Dividend Appreciation Index ETF (TSE:VGG.TO) Seasonal Chart

ProShares UltraShort Euro (NYSE:EUO) Seasonal Chart

 

 

The Markets

Stocks declined for a third straight session on Thursday as investors continued to monitor developments pertaining stimulus negotiations between the Democrats and Republicans.  The S&P 500 Index slipped by just over a tenth of one percent, closing well off of the lows of the day.  Resistance continues to stand out at the previous peak of 3588, while support continues to be implied around 20 and 50-day moving averages.  A downside gap around 3480 was charted following the opening bell, a gap that was filled through the afternoon session.  For now, this gap that spans between 3453 and 3488 presents a point of short-term resistance, as is the declining 20-hour moving average.  Drawing a line beneath the lows of the past few weeks shows that a rising short-term trend remains intact and the recent decline over the past few sessions was merely a pause of the parabolic rise.  With rising short-term support below and horizontal resistance overhead, we will know soon enough whether the bulls or the bears are in charge of the tape.

Not helping investor sentiment to start Thursday’s session was the latest read of initial jobless claims, which spiked to the highest level since the middle of August.  The initial claimant count came in at 898,000, a significant miss versus the consensus analyst estimate that called for 825,000.  Stripping out the adjustments, which are irrelevant in this environment, the initial claimant count jumped by 76,670 to 885,885, placing the year-to-date change at 183%.  The result is, obviously, still significantly elevated above the seasonal average trend, but the shift in direction from flat to positive is consistent with seasonal norms through the last quarter of the year.  Initial claims tend to rise following the end of summer as seasonal hires are let go.  Given that summer hiring for the leisure/hospitality industry may not have been as robust as years past, the increase in the claimant count as a result of this seasonal phenomenon may actually be muted compared to years past.  We’ll continue to monitor accordingly.

With Columbus Day on Monday, the weekly release of petroleum inventories was delayed by a day. The Energy Information Administration (EIA) reported on Thursday that oil inventories declined by 3.8 million barrels last week, which is a larger drawdown than the 2.8 million barrel withdrawal that was expected by analysts.  Gasoline stockpiles, meanwhile, declined by 1.6 million barrels, while distillates were down by 7.2 million barrels.  The result saw the days of supply of oil fall by four-tenths to 35.9, while gasoline days of supply ticked lower by three-tenths to 26.1.  The average days of supply for each at this point in October is 22.1 and 23.9, respectively.  We sent out further insight to subscribers intraday, including our view of whether caution in the price of oil is still warranted with the commodity flirting with resistance around $40 – $41 in recent days.  Subscribe now.

Sentiment on Thursday, as gauged by the put-call ratio, ended bullish at 0.75.

 

 

Seasonal charts of companies reporting earnings today:

 

 

S&P 500 Index

 

 

TSE Composite

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