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Stock Market Outlook for July 18, 2016

 

Retail Sales and Industrial Production seasonal analysis.

 

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:

Aqua America, Inc. (NYSE:WTR) Seasonal Chart

Chorus Aviation Inc (TSE:CHR.B) Seasonal Chart

 

 

The Markets

A full slate of economic reports was released on Friday, so let dive in.  First was the report on retail sales for June, which appeared to blow away expectations.  The headline print indicated that retail sales rose by 0.6% last month, much better than the consensus estimate that called for a 0.1% increase.  Less the more volatile gas and autos, the increase in sales was even better at 0.7%, twice the forecasted increase.  Striping out seasonal adjustments, sales were actually lower in the month by 1.0%, which is better than the average decline for June of 2.4%.  The year-to-date trend has converged back upon the seasonal average, lower by 12.0% through the first half of the year.  Looking through the components, the areas of the report that saw the greatest strength in the month were the least discretionary of the lot, namely grocery/food stores, health/personal care stores, and gasoline stations.  The rest of the report generally showed a change for the month that was around average, certainly not suggestive of a consumer that is out buying everything and anything.  Overall, while retail sales were strong for this typically weaker month of the year, primarily the result of one less selling day than the months that bookend it, the report is certainly not suggestive of the euphoric adjusted print that was multiple times greater than analyst forecasts.

Also released on Friday was June’s print of Industrial Production.  The headline print showed that production increased by 0.6% last month, exceeding estimates calling for a 0.4% gain.  Stripping out the seasonal adjustments, industrial production was actually higher by 3.6%, firmly above the average increase for June of 2.7%.  Production continues to lag the average trend, year-to-date, however, June’s print goes a long way in closing a gap versus the seasonal average that had been widening through the early spring.  Helping to boost the result was a surge in the production of consumer goods, which was higher by 4.9% in the last month of the second quarter.  The average increase in consumer goods production for June is 3.5%.  The jump at this time of year is typical as manufacturers seek to push through as much product as possible ahead of the summer factory shutdown period in July.  As a result, June’s gains are typically erased in the month that follows, only to rebound again into the late summer and early fall.

Sentiment on Friday, as gauged by the put-call ratio, ended bullish at 0.85.

 

 

 

Sectors and Industries entering their period of seasonal strength:

UTILITIES Relative to the S&P 500

 

 

Seasonal charts of companies reporting earnings today:

 

S&P 500 Index

 

 

TSE Composite