Equity Clock

Stock Market Outlook for February 18, 2021

Retail Sales in the US fell by 18.9% in January, which is the best start of the year performance on record.  The average change in retail trade for the first month of the year is a decline of 22.5%.

 

 

 

*** 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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Kellogg Co. (NYSE:K) Seasonal Chart

Comstock Resources, Inc. (NYSE:CRK) Seasonal Chart

Delek US Holdings, Inc. (NYSE:DK) Seasonal Chart

FirstAsset Canadian Convertible Bond ETF (TSE:CXF.TO) Seasonal Chart

iShares Diversified Monthly Income ETF (TSE:XTR.TO) Seasonal Chart

BMO High Yield US Corporate Bond Hedged To CAD Index ETF (TSE:ZHY.TO) Seasonal Chart

Wells Fargo Advantage Income Fund, Inc. (AMEX:EAD) Seasonal Chart

 

 

The Markets

Stocks closed mixed on Wednesday as investors pit much stronger than expected data on the economy against lofty equity valuations, particular in the technology sector.  The S&P 500 Index closed little changed, down by a mere three basis points (0.03%) after testing the psychologically important hurdle at 3900 at the lows of the session.  Momentum indicators, while showing characteristics of a bullish trend, are starting to roll over, potentially on the verge of triggering a sell signal with respect to MACD.  The momentum indicator has been negatively diverging from price for the past couple of months, indicative of waning buying demand, which, after the rally over the past many months, is to be expected.

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

• US Retail Sales and Industrial Production
• Canada Consumer Price Index (CPI) and how to benefit from inflationary pressures
• The Canadian Dollar and how to position for the longer-term

Subscribe now and we’ll send this outlook to you.

On the economic front, January’s report on retail sales blew away expectations.  Headlines state that retail trade surged by 5.3% last month, which was significantly stronger than the 1.1% increase that was expected by analysts.  Less gas and autos, the increase was even stronger at 6.1%, another beat versus the consensus analyst estimate that called for a rise of a mere 0.5%.  Stripping out the adjustments, retail sales actually fell by 18.9% in January, which is stronger than the 22.5% decline that is average for the first month of the year.  This is the best January performance on record.  The result follows a 7.4% rise in retail sales last year, which was the second best calendar year performance in the past two decades.  We sent out further insight to subscribers intraday, including what is driving the strength.  Subscribe now. 

Also on the economic front, we received insight industrial production in the US.  The headline print of January’s report indicates that activity increased by 0.9%, which was stronger than the consensus analyst estimate that called for a gain of 0.5%.  The manufacturing component reported an increase of 1.0%, which was double the forecasted increase of 0.5%.  Stripping out the seasonal adjustments, industrial production in the US actually increased by 1.3% in January, which is a positive divergence compared to the 0.2% decline that is average for the month.  This is the strongest January performance since 1986.  The result follows a 3.1% decline in production last year when pandemic restrictions in March and April took a bite out of activity for the year overall.  We sent out further insight to subscribers intraday, including how to play the results.  Subscribe now.

 

Sentiment on Wednesday, as gauged by the put-call ratio, ended bullish at 0.71.

 

 

 

Seasonal charts of companies reporting earnings today:

 

 

S&P 500 Index

 

 

TSE Composite

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