Tech Talk Financial Network
0
All posts from Tech Talk Financial Network
Tech Talk Financial Network in Equity Clock,

Stock Market Outlook for August 25, 2016

 

Oil inventories continue to rise, diverging from seasonal norms.

 

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:

TRANSAT AT Inc (TSE:TRZ.A, TRZ.B) Seasonal Chart

 

 

The Markets

Stocks sold off on Wednesday as investors panicked out of stocks in the health care sector following renewed concerns over the pricing practices of biotech companies.  The Nasdaq Biotechnology Index fell 3.37%, reversing earlier gains as news was released that Mylan had been contacted by the senate aging committee to request more information on the pricing of their EpiPen product.  Outrage has emerged over recent days pertaining to the company’s 500% price increase of the widely used injector used to combat severe allergic reactions.  The decline led to a break of Nasdaq Biotech Index below support at 3000, a level that had previously acted as resistance through the spring and early summer.  Short-term double top resistance projects downside potential to around 2900, which would see a test of the benchmark’s rising 50-day moving average.  The industry benchmark remains higher by over 15% since the start of its period of seasonal strength at the end of June; positive seasonal tendencies conclude, on average, by the middle of September.

S5BIOTX Index Relative to the S&P 500

On the economic front, a report on existing home sales failed to confirm the housing market strength that the report on new home sales provided just a day earlier.  Sales of existing homes declined 3.2% in July to a seasonally adjusted annual rate of 5.39 million, missing estimates calling for a rate of 5.52 million.  Stripping out seasonal adjustments, sales actually declined by 11.7%, almost double the average decline for July of 6.0%.  The year-to-date change has fallen back below the average trend, the result of above average growth in prices weighing on sales volume.  Inventories remained unchanged in the month, helping the months of supply move slightly higher from 4.5 to 4.7; a balanced market is considered 6 months.  As with new home sales, sales of existing homes typically fall off into the last half of the year as moving conditions become less than ideal once the school year begins and ahead of the end of year holiday period.

In other news, the Energy Information Administration released its weekly read of oil inventories in the US.  The headline print showed that crude oil added 2.5 million barrels last week, while gasoline stocks were essentially unchanged.  The result saw the days of supply for both oil and gas tick mildly higher by a tenth of a day, holding above their respective seasonal averages.  Oil days of supply is showing a noticeable flattening in its trend, a divergence compared with the declining trend that is typical through the end of summer.  While US production of crude oil did decline slightly last week, imports jumped back up to around the highs of the year.  Imports remain the big unknown into the fall as they threaten to pressure oil inventories further.

With inventory pressures showing signs of re-emerging, the price of oil remained weak throughout the session.  WTI Crude shed close to 3% on the day, moving back towards short-term support around $46.  Resistance remains apparent at $50.  Seasonally, the price of oil peaks, on average, into the middle of September.

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

 

 

 

 

 

Seasonal charts of companies reporting earnings today:

 

S&P 500 Index

 

 

TSE Composite