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Stock Market Outlook for July 29, 2016

 

S&P 500 Index has traded within the tightest 11-day span since 1995.

 

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:

Goldcorp Inc. (USA) (NYSE:GG) Seasonal Chart

Kinross Gold Corporation (TSE:K) Seasonal Chart

Agnico-Eagle Mines Ltd. (TSE:AEM) Seasonal Chart

Xcel Energy Inc. (NYSE:XEL) Seasonal Chart

Regions Financial Corporation (NYSE:RF) Seasonal Chart

Mylan Inc. (NASDAQ:MYL) Seasonal Chart

MBIA Inc. (NYSE:MBI) Seasonal Chart

General Mills, Inc. (NYSE:GIS) Seasonal Chart

 

 

The Markets

Another day of flat results for North American Indices had the S&P 500 record its 11th session trading in a range of a mere 61 basis points, based on daily close levels.  Investors would have to look back over 20 years ago to find a tighter range over an equivalent timeframe.  Back in August of 1995, the large-cap index traded within a range of only 53 basis points from the closing high to the closing low over an 11-day span; the eventual resolution was a break out to the upside, following a bounce from a rising 50-day moving average.  While the 50-day moving average for the benchmark continues to point higher at the present time, Thursday’s close is approximately 3% above this variable level of support, perhaps defining the near-term risk.  Momentum indicators on the daily chart continue to roll over, but price remains stubborn as investors wait for a catalyst to move the benchmark one way or the other.  The next two months will be a critical test for the strength of the S&P 500 Index as seasonal weakness typically drives stocks lower into the start of the favourable six month span that starts in October.

On the economic front, the advanced report on International Trade was released before Thursday’s opening bell.  The headline print indicated that exports rose by 0.9%, while imports increased by 1.8%.  Stripping out seasonal adjustments, exports were higher by 5.0%, well above the average increase for June of 1.1%, and imports were higher by 2.4%, marginally less than the average increase for the month of 2.5%.  Both exports and imports continue to trend below average through the first half of the year, however, June’s strong export print makes significant headway in closing the gap versus the average trend.  Exports tend to dip into the month of July as the summer factory shutdown period causes a lag in activity.  Both imports and exports typically peak in October, ahead of the important holiday season for retailers.  While alluding to the consumer, consumer goods exports was the bright spot in the report, higher in the month by 25.2%.  The average increase for consumer exports in June is only 5.0%.  The exports of consumer goods had been lagging throughout the spring, raising concerns over the health of the consumer.  However, with June’s release, this component is showing a change that is firmly above average through the first half of the year, even edging out last year’s upbeat print, which marked the high of the year.  Each component of the report is showing a year-to-date change that surpasses the results shown this time last year as export activity improves.

Turning to the weekly release of jobless claims, first time claimants jumped by 14,000 to 266,000 in the latest release, a disappointment compared to the consensus estimate of a rise to 264,000.  Stripping out adjustments, initial claims were actually lower by 36,971 to 231,325, resulting in a continued decline below the seasonal trend and back to the lows of the year.  The summer factory shutdown period is quickly fading from the rear-view mirror, resulting in that typical decline that spans through to early September.  Continued claims, which lag by a week, also showed a slight downtick, remaining inline with the average trend.  These statistics continue to suggest a healthy labour market, despite the uptick in the seasonally adjusted numbers, which often can leave analysts scratching their heads.

Sentiment on Thursday, as gauged by the put-call ratio, ended bullish at 0.90.

 

 

 

 

Seasonal charts of companies reporting earnings today:

 

S&P 500 Index

 

 

TSE Composite