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Stock Market Outlook for April 12, 2016

 

 

Gold and Silver holding above declining wedge patterns, typically a bullish setup.

 

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:

Altria Group, Inc. (NYSE:MO) Seasonal Chart

Chemtrade Logistics Income Fund (TSE:CHE.UN) Seasonal Charts

 

The Markets

Stocks flat-lined for a second day as investors wait for the release of quarterly reports.  The S&P 500 Index gave back the vast majority of gains accumulated in early trade with investors booking profits around levels of resistance.  The large-cap benchmark broke and closed marginally below support at its 20-day moving average as downside pressures continue to grow.  And while the market benchmark pressures through this short-term level of support, the volatility index is starting to confirm this moving average as a propping point after regaining this level within the past week.  Momentum indicators have curled higher, triggering buy signals within the past few days.  So equity benchmarks losing momentum and volatility gaining it, the weight of evidence is slowly confirming a shift in trend.

While stocks come under pressure, the prices of precious metal commodities are flourishing.  The gold ETF (GLD) advanced 1.35% and the ETF that tracks silver (SLV) rose by 3.56% following a weaker US dollar and a shift towards risk aversion.  Both commodity funds gapped higher on the session, immediately defining a level of support directly below.  For GLD, that range of support can be found between $118.80 and $119.50 and for SLV that similar range of support has been charted between $14.65 and $14.95. The gold ETF recently retraced its breakout move from around $114 and found support around its rising 50-day moving average before jumping higher, back towards the highs of the year.  Longer-term, price continues to hold above previous declining trendline resistance, which also defined the upper limit of a falling wedge pattern, typically a bullish setup.  The suggestion is that a positive trend is emerging.  Seasonally, the price of gold remains out of seasonal favour until July, when volatility tends to spike through the third quarter.

On the economic front, a report on wholesale sales was released on Friday.  The headline print indicated that sales declined by 0.2% in February, while inventories declined by 0.5%, missing estimates.  Stripping out seasonal adjustments, sales rose by 2.5% in February, diverging from the average change for the second month of the year of -2.3%.  Inventories, on the other hand, declined by 1.0%, also diverging from the average change for the month of +0.1%.  The year-to-date change for both inventories and sales remains below average as weak export demand and low commodity prices restrain activity in this segment of the economy; the rebound in commodity prices in the second half of February and into the month of March should help to support the improvement in wholesale data in the months ahead.  Of course, as with other economic reports, March is typically the strongest month of the year for wholesale sales activity, accounting for the bulk of the gains for the year and tying together the activity for the first quarter.

Sentiment on Monday, as gauged by the put-call ratio, ended bullish at 0.87.

 

 

Seasonal charts of companies reporting earnings today:

  

 

S&P 500 Index

TSE Composite