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Stock Market Outlook for October 8, 2015

 

Make or break time for the broad equity market as earnings season gets set to begin with Alcoa.

 

Real Time Economic Calendar provided by Investing.com.

 

**NEW** As part of the ongoing process to offer new and up-to-date information regarding seasonal and technical investing, we are adding a section to the daily reports that details the stocks that are entering their period of seasonal strength, based on average historical start dates.   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:

Panera Bread Company (NASDAQ:PNRA) Seasonal Chart

Corning Incorporated (NYSE:GLW) Seasonal Chart

The Bank of New York Mellon Corporation (NYSE:BK) Seasonal Chart

Apple Inc. (NASDAQ:AAPL) Seasonal Chart

 

The Markets

A continued rally in cyclical equities helped to fuel further gains in broad market benchmarks on Wednesday.  The S&P 500 Index closed at its 50-day moving average as earnings season gets set to begin.  Make or break time for the broad market as it attempts to overcome what has proven to be significant intermediate resistance.

While material stocks rallied over recent days on the back of the weaker US Dollar, one of the stocks leading the charge in this space was Alcoa, which kicks off the third quarter earnings season after the closing bell today.  Like many commodity sensitive stocks, Alcoa recently moved above a bottoming pattern with a break above the September highs around $10.  Momentum indicators are trending positive going into the report.  Seasonally, Alcoa, along with other material stocks, typically find a low in October or November, trading higher into the new year.  Assuming nothing rattles investors following the report, the stock may still have legs to move higher given the positive seasonal tendencies ahead and the momentum building behind it.  However, from a strategy perspective, holding through the report is done at your own peril given the volatility that accompanies the event.  Support would be expected around the 50-day moving average, which is now showing signs of curling higher.

The price of oil pulled back slightly on Thursday following the latest inventory report that reminded investors how awash the market is with the energy commodity.  Oil inventories rose by 3.1 Million barrels, pushing the days of supply of the commodity higher to 28.7.  The average for this time of year is 22.6 days.  Gasoline inventories also saw an equally large build, increasing the days of supply to 24.8, also above average for this time of year.  The price of gasoline declined around 1.7%, while oil shed nearly 1.9%.  But the bearish inventory report didn’t stop investors from continuing to bid up energy stocks, particularly in Canada with the S&P/TSX Capped Energy Index surging around 3%.  The energy benchmark broke above resistance around 180, completing a bottoming pattern that targets around the 200-day moving average at 207.  While the period of strength for the energy stocks during the late summer and early fall is predominantly behind us, individual equity opportunities can continue to exist, particularly with companies that benefit from the seasonal rise in natural gas prices (even though the tendency is failing to materialize within the commodity itself).  The First Trust Natural Gas ETF broke above resistance within the last couple of days around $7, trading well above its 20 and 50-day moving averages.  Natural gas inventories, which have also been running above average, will be released this (Thursday) morning.

Sentiment on Wednesday, as gauged by the put-call ratio, ended bearish at 1.09.

 

 

 

Sectors and Industries entering their period of seasonal strength:

S5CMHW Index Relative to the S&P 500

 

 

Seasonal charts of companies reporting earnings today:

 

 

S&P 500 Index

 

 

TSE Composite