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Stock Market Outlook for September 8, 2015

 

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:

AT&T Inc. (NYSE:T) Seasonal Chart

Sierra Wireless, Inc. (TSE:SW) Seasonal Chart

Google Inc. (NASDAQ:GOOG) Seasonal Chart

Darden Restaurants, Inc. (NYSE:DRI) Seasonal Chart

 

The Markets

Stocks ended the week on a sour note as investors reacted to the latest employment report and the potential impact it may have in determining the timing of the looming rate increase.  The S&P 500 Index closed lower by 1.53%, testing short-term support charted earlier in the week around 1910.  Looking at the nonfarm payroll report, the headline number indicated that 173,000 jobs were created in August, significantly below estimates calling for an increase of 223,000.   A better than expected increase in wages and a dip in the unemployment rate helped to offset the disappointing headline print.  Actual change in payrolls for the month, stripping out seasonal adjustments, was a gain of 258,000, or an increase of two-tenths of one percent.  The August gain matched the 50-year average percentage change for the eighth month of the year, a month that typically sees an uptick in hiring following the summer factory shutdown period and ahead of the new school year.  Gains continue into September with every year in the past 50 showing higher payrolls during this last month of the third quarter.  With almost three-quarters of the year behind us, employment continues to run above average, fuelled by above average growth in consumer related industries, such as retail.  This is encouraging going into the important fourth quarter consumer spending season, which sees increased purchases prior to Thanksgiving and Christmas.  Retail stocks enter a period of seasonal strength in October, running through to the end of November, benefitting from the holiday sales.  Reaction to Friday’s employment report is expected to continue through this week as investors try to anticipate the Fed’s response at the upcoming FOMC meeting that starts on September 16th.

One element of the report looked rather questionable.  As highlighted last month, manufacturing employment remained unchanged in July, a period dominated factory shutdowns and slower economic activity in this segment of the economy.  August’s report didn’t vary from this trend, recording a third month of no change versus the month prior.  Generally, each seasonal chart of the employment report’s components, as presented above, shows an actual (2015) trend than is the same shape as the average trend, whether it be above or below the average line.  Manufacturing employment is the lone component deviating from the average shape, flat lining in the midst of up and down gyrations that are common in the summer months.  With all of the volatility surrounding regional manufacturing reports this summer, at least some movement in the 2015 trend would be expected here.  Perhaps the tabulator fell asleep at the wheel when estimating this data point.  Manufacturing activity warrants further monitoring going into the fall as the full story remains unclear.

Sentiment on Friday, as gauged by the put-call ratio, ended bearish at 1.48.

 

Sectors and Industries entering their period of seasonal strength:

 

 

Seasonal charts of companies reporting earnings today:

 

 

S&P 500 Index

 

 

TSE Composite