Equity Clock

Stock Market Outlook for January 11, 2021

The US Dollar Index has broken declining trendline resistance, threatening the strength in risk assets.

 

 

 

*** 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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Devon Energy Corp. (NYSE:DVN) Seasonal Chart

ONEX Corp. (TSE:ONEX.TO) Seasonal Chart

Power Corp. Of Canada (TSE:POW.TO) Seasonal Chart

Total Fina Elf SA (NYSE:TOT) Seasonal Chart

Leggett & Platt, Inc. (NYSE:LEG) Seasonal Chart

Cineplex Inc. (TSE:CGX.TO) Seasonal Chart

Dril Quip, Inc. (NYSE:DRQ) Seasonal Chart

United Community Banks, Inc. (NASD:UCBI) Seasonal Chart

ENI S.P.A. (NYSE:E) Seasonal Chart

Booking Holdings Inc. (NASD:BKNG) Seasonal Chart

Teucrium Soybean Fund (NYSE:SOYB) Seasonal Chart

Hershey Foods Corp. (NYSE:HSY) Seasonal Chart

Foot Locker, Inc. (NYSE:FL) Seasonal Chart

Birchcliff Energy Limited (TSE:BIR.TO) Seasonal Chart

BBQ Holdings Inc. (NASD:BBQ) Seasonal Chart

Global X Southeast Asia ETF (NYSE:ASEA) Seasonal Chart

iShares Global Energy ETF (NYSE:IXC) Seasonal Chart

 

 

The Markets

Stocks drifted around the flatline on Friday, eventually closing firmly higher on the day as investors reacted positively to President Elect Biden’s comments pertaining to future economic aid.  The S&P 500 Index added just over half of one percent, charting a fresh record closing high.  The benchmark continues to show support around its rising 20-day moving average, while downside risks remain to the rising 50-day moving average around 3620.  The gain was enough to trigger a renewed buy signal with respect to MACD as the signal line charted a bullish cross above the momentum indicator.  For months, our upside target for the large-cap benchmark has been to 3800, based on the calculated upside potential from the breakout of the 300-point range between 3200 and 3500.  Now that we are here, we see no incentive to adjust our target given where we are seasonally and fundamentally, but that doesn’t mean that there will not be gyrations on either side of this hurdle through the months and year ahead.

Today, in our Market Outlook to subscribers, we discuss the following:

• Our view of risk assets over the near-term
• US Non-Farm Payroll report
• The plunge in Gold and Silver
• US Dollar and the path for the currency
• Canadian Dollar and a simple strategy to reduce volatility within portfolios
• Seasonal tendency for the TSX Composite
• Canadian Labour Force Survey

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The gain on the day came despite a shocking decline in payrolls for the month of December.  The Bureau of Labor Statistics indicates that 140,000 payrolls were lost last month, which was much weaker than the most pessimistic forecast from the analyst community that called for a decline of 50,000.  The consensus was for an increase of 50,000 payrolls.  The unemployment rate remained unchanged at 6.7%, a level that is typical coming out of an economic recession.  Average hourly earnings, meanwhile, jumped by 0.8%, which is stronger than the 0.2% increase that was forecast.  Stripping out the seasonal adjustments, payrolls actually declined by 328,000, or 0.2%, in December, which is inline with the average change for this time of year.  For 2020, overall, payrolls fell by 6.0%, representing the weakest calendar-year performance since 1945, amidst the end of the Second World War.  The last time that we’ve seen a decline in payrolls for the full year was in 2009.  The average change for the year is an increase of 0.8%.  We sent out further insight to subscribers intraday.  Subscribe now.

North of the border, Statscan released an employment report of its own.  The headline print of December’s Labour Force Survey in Canada indicates that employment declined by 62,600, which was much weaker than the consensus analyst estimate that called for a decline of 28,000.  The unemployment rate ticked higher from 8.5% to 8.6% last month, inline with the consensus analyst estimate.  Stripping out the seasonal adjustments, which are irrelevant in this environment, employment actually declined by 113,900, or 0.6%, in December.  The average change for the month is a decline of 0.3%.  For the year overall, employment is down by 3.1%, representing the weakest pace since 1982.  The average calendar-year change is an increase of 1.4%.  We sent out further insight to subscribers intraday.  Signup now and we’ll you our report.

Sentiment on Friday, as gauged by the put-call ratio, ended bullish at 0.73.

 

 

 

Seasonal charts of companies reporting earnings today:

 

 

S&P 500 Index

 

 

TSE Composite

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