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Stock Market Outlook for August 9, 2017

Job openings record largest June increase on record while hires struggle.


Real Time Economic Calendar provided by


**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:

Comtech Telecommunications (NASD:CMTL) Seasonal Chart

ViaSat, Inc. (NASD:VSAT) Seasonal Chart

Global Payments, Inc. (NYSE:GPN) Seasonal Chart

Emerson Electric Co. (NYSE:EMR) Seasonal Chart

NetApp Inc. (NASDAQ:NTAP) Seasonal Chart

Hain Celestial Group Inc (NASDAQ:HAIN) Seasonal Chart


The Markets

Stocks closed lower on Tuesday as investors showed caution amidst escalating tensions between North Korea and the US.  The S&P 500 Index shed almost a quarter of one percent, giving back the gains accumulated earlier in the session.  The large-cap benchmark tested short-term support at its rising 20-day moving average at the lows of the session as momentum indicators continue to roll over, negatively diverging from price.  Waning buying pressures remain apparent with few catalysts to fuel another round of buying.

Turning to a more global look, the MSCI World ex-US Index has reached the target of an ascending triangle pattern that we profiled late last year and earlier this year.  The break above the upper limit of the bullish setup pointed to horizontal resistance at the 2015 high around 1950, or over 13% above the breakout level.  The benchmark hit a high of 1947 in recent days, arguably a bull’s-eye from a technical perspective.  As for the state of the benchmark at present, momentum indicators remain in bullish territory and a trend of higher-highs and higher-lows with respect to price remains intact.   The benchmark broke above a long-term declining trendline this past spring and performance relative to the S&P 500 Index is similarly breaking a negative trend that has spanned the past eight years.  While a period of digestion to alleviate the overbought readings on the weekly chart would not be out of the question, the long-term breakout from both an absolute and relative performance perspective could be indicative of a longer-term shift away from US equities and into developed markets around the globe as US investors turn to foreign investments to find value.  Seasonally, global equity benchmarks, such as the MSCI World ex-US Index, tend to weaken through August and September, much like stocks closer to home, as market volatility leaves few areas of the globe immune at this time of year.

On the economic front, the Job Openings and Labor Turnover Survey for June was released during Tuesday’s session.  The headline print indicated that openings increased by 8.1% to 6.163 million in June, exceeding the consensus estimate calling for 5.600 million.  Stripping out the seasonal adjustments, openings actually increased by 7.7%, the best June gain on record and a significant divergence form the 2.2% decline that is average for the month of June.  The result puts the year-to-date trend into an above average position on the year as employers seem keen on making available positions amidst the recent pickup in economic activity.  But while the opportunities are available, the below average gain in hires suggest that employers may be having difficulty filling them.  Total nonfarm hires increased by a mere 1.1%, less than half of the average increase for June of 3.9%. Quits, meanwhile, were higher by 2.1%, also less than half of the average increase for the month of 4.5%.  Both hires and quits have been trending slightly below average on the year, although a significant improvement from the pace recorded last year remains evident.  Quits are often viewed as a gauge of the level of confidence that employees have in the market as they transition towards new opportunities, so while the improvement versus last year’s lacklustre gains is encouraging, the below average rate suggests a labor market that may still fall short of being categorized as robust.  Layoffs/discharges are on the rise, trending above the seasonal norm and providing further evidence that strength in labor conditions are not broad based.  Overall, the strength in openings is indicative of possible future hiring activity, but the weakness in the other categories may simply be a factor of a maturing economy as companies become more selective of hires for future activity.  Seasonally, hires typically chart their highest level of the year in June, fading thereafter into the end of the year, while quits typically peak in August as the desire for a fresh start come the beginning of September spans well beyond those of school age.

Job Openings: Total Nonfarm Seasonal Chart


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



Sectors and Industries entering their period of seasonal strength:



Seasonal charts of companies reporting earnings today:



S&P 500 Index



TSE Composite