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Stock Market Outlook for August 11, 2016

 

Quit rate continues to trend below average, warning of a lack of employee confidence.

 

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:

Kaiser Aluminum Corp. (NASDAQ:KALU) Seasonal Chart

 

 

The Markets

Stocks ended fractionally lower on Wednesday as the energy sector led the declines following another oil inventory report that showed a build with respect to the unrefined commodity.  Oil inventories increased by 1.1 million barrels last week, while gasoline posted a pronounced decline of 2.8 million barrels.  The result left the days of supply of oil unchanged at 31.3, while the gasoline days of supply declined by a third of a day to 24.1, back inline with the seasonal average for this time of year.  The story is shifting from concerns pertaining to increasing gasoline inventories to concerns pertaining to increasing oil inventories.  Crude oil realized the third consecutive week of inventory increases during a period when drawdowns are typical.  Despite an ongoing decline in domestic oil production, crude oil inventories may continue to see upside pressure, while gasoline inventories draw down amidst the seasonal dip in production going into the refiner transition period.  Given that winter blend gasoline is less pure than the summer equivalent, the amount of input needed is generally less, possibly leaving more oil for storage.  A key variable is crude imports, which continue to hover around the highs of the year.  Albeit choppy, the seasonal chart of crude imports shows a peak, on average, around this time of year; declines are typical through the fall.  That was the trend last year, but above average domestic production at that time kept inventories on an upward trajectory.  Lots of factors to consider going into the fall, but right now the market is betting that the conclusion of the high demand summer driving season will cause inventories to swell once again.  Following the report, the price of oil dipped by 2.48%, continuing to roll over after hitting its declining 20-day moving average.

Elsewhere on the economy, the Job Openings and Labor Turnover Survey was released during Wednesday’s session.  The report showed that job openings increased by a non-seasonally adjusted 1.4% in June, diverging from the average for the month of a 2.5% decline.  This puts the year-to-date change in openings slightly above the seasonal average.  Hires, on the other hand, continue to trend below average, a factor of the ongoing skills mismatch between listings and applicants.  But the more telling indicator of employee confidence is the quit rate, which continues to trend firmly below average through the first six months of the year. Employees are not feeling confident that they can obtain a better opportunity elsewhere, resulting in this lag versus the average trend.  These “insiders” can provide valuable information pertaining to the health of the economy: a similar lag in the quit rate was realized in 2007, ahead of the last recession, as various strains became apparent in economic activity.

Sentiment on Wednesday, as gauged by the put-call ratio, ended bullish at 0.87.

 

 

 

 

 

 

Seasonal charts of companies reporting earnings today:

 

S&P 500 Index

 

 

TSE Composite