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Stock Market Outlook for July 28, 2016

 

S&P 500 Index remains in a tight range following FOMC.

 

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:

TELUS Corporation (TSE:T) Seasonal Chart

 

 

 

The Markets

Stocks closed mixed on Wednesday as investors reacted to the latest announcement from the FOMC.  The S&P 500 Index closed lower by 12 basis points, remaining within the tight trading range that it has held for the past two weeks.  Short-term resistance is apparent around 2175, while initial support is provided around 2160.  Momentum has been on the decline throughout the range bound trade as investors wait for a catalyst to push the market one way or the other.

Oil took a hit during Wednesday’s session as the latest report form the Energy Information Administration indicated a build with respect to the unrefined commodity.   Crude oil in storage increased by 1.7 million barrels last week, the result of another uptick in domestic oil production, the third consecutive weekly increase since bottoming at the beginning of July.  The trend for production remains well below average through this point in July.  The impact of the build saw the days of supply of oil increase by two-tenths of a day to 31.3, still well above the average for this day in July of 22.9.  The trend for the days of supply is still implied lower, following a seasonal decline that typically bottoms in September.  The price of oil tested levels below $42 intraday, breaking minor support at $42.50 that was identified previously. psychological

As for gasoline, the divergence with the seasonal trend continues as gasoline inventories increased in the latest week by 500,000 barrels.  The days of supply remained unchanged at 24.8, above the average for this time of year of 24.1.  Production remains close to all-time highs above 10 million barrels, but, if seasonal trends have anything to say, a decline in production should be realized through the weeks ahead as we near the transition period from summer to winter blend gasoline.  The price of gasoline is presently testing support around $1.30.

On the economic front, a report on Durable Goods Orders for June disappointed investors.  The headline print indicated that new orders declined by 4.0%, missing estimates calling for a 1.3% decline.  Excluding the more volatile transportation component, orders were lower by 0.5%, also well off of the consensus estimate calling for a gain of 0.3%.  Stripping out seasonal adjustments, the Value of Manufacturers’ New Orders for Capital Goods Industries actually increased by 6.2%, which is significantly below the average increase for the last month of the second quarter of 17.7%.  Following a better than average growth rate through the first five months of the year, orders have now fallen below the average trend, weighed down by orders for transportation equipment; orders for durable goods excluding transportation industries continues to show an above average change through the first half of the year, higher by 8.5%.  Quarter-ends typically see a jump in orders as some of the big ticket items, such as airplanes, influence results.  Orders for non-defense aircraft posted a rare decline in the month, lower by 31% versus an average increase of 27.6%.  What may be encouraging in the report is that manufacturers’ inventories fell by 2.4% in June, more than the 1.8% average decline for this time of year.  Inventories have been trending well below average through the first half of the year, which is a positive given that inventory levels have been excessive over the past few years.

Sentiment on Wednesday, as gauged by the put-call ratio, ended bullish at 0.92.

 

 

 

Seasonal charts of companies reporting earnings today:

 

S&P 500 Index

 

 

TSE Composite