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Stock Market Outlook for October 7, 2015

 

Weakness in the US Dollar Index risks distorting seasonal trends in the transportation and energy sectors through the end of the year.

 

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:

AGCO Corporation (NYSE:AGCO) Seasonal Chart

Vale (ADR) (NYSE:VALE) Seasonal Chart

Peabody Energy Corporation (NYSE:BTU) Seasonal Chart

SEI Investments Company (NASDAQ:SEIC) Seasonal Chart

Potash Corp./Saskatchewan Inc. (TSE:POT) Seasonal Chart

KLA-Tencor Corporation (NASDAQ:KLAC) Seasonal Chart

Cognizant Technology Solutions Corp. (NASDAQ:CTSH) Seasonal Chart

Advanced Micro Devices, Inc. (NYSE:AMD) Seasonal Chart

 

 

The Markets

Stocks ended marginally lower on Tuesday, weighed down by the ongoing decline in shares of biotech companies.  The iShares Biotech ETF shed 3.6%, impacting the broader health care sector with a decline of 2.33%, according to the S&P 500 Health Care Sector Index.  The Health Care sector remains in a very sharp negative trend and is significantly underperforming the broader market, a trend that is certainly an anomaly compared with the average seasonal trend.  Fortunately, the broader market is holding up rather well, despite the downfall in this former market darling.   Filling the void is strength in energy and material stocks.  A pickup in shares of the beaten down semiconductor industry is also offering a place for investors to rotate to.  Overall, investors continue to find opportunities, mitigating a panic event that would result in a broader market decline.  On the chart of the S&P 500 Index, the large cap benchmark continues to test resistance around 1990, a critical point in confirming the significance of the double-bottom support charted in recent days around 1875.

HEALTHCARE Relative to the S&P 500

The more notable move on Tuesday was in the price of Oil, which surged over 6%, moving firmly above 20 and 50-day moving average lines.  Momentum indicators are signalling a bullish trend and resistance around the 200-day average is being targeted.  The jump in the price of the energy commodity immediately impacted airline stocks, which, according to the NYSE Airline Index, plunged almost 3%.  Seasonally, the opposite scenario is typical through to December with the transportation industry strengthening alongside a weaker oil price.  Of course, the catalyst for the move in the commodity complex appears to be the continued reprieve in the US Dollar, which, according to the currency index, is rolling over from its 50-day moving average following speculation that the Fed will not be able to raise rates this year.  The currency benchmark continues to maintain a band of support surrounding its 200-day moving average, a break of which could act as the catalyst for a significant retracement of the move charted between mid-2014 and the start of 2015.  The resulting impact on commodity prices risks distorting average seasonal trends away from industries that benefit from the lower input prices, such as transportation, towards companies that produce the raw materials.

Sentiment on Tuesday, as gauged by the put-call ratio, ended bullish at 0.93.

 

 

Sectors and Industries entering their period of seasonal strength:

FUTURE_S1 Relative to the S&P 500

 

 

Seasonal charts of companies reporting earnings today:

 

 

S&P 500 Index

 

 

TSE Composite