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Stock Market Outlook for November 16, 2015

 

Unreasonably high expectations or an insufficient seasonal adjustment factor? Retail sales continue to follow the average seasonal trend.

 

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:

Sony Corporation (ADR) (NYSE:SNE) Seasonal Chart

Pilgrim’s Pride Corporation (NASDAQ:PPC) Seasonal Chart

Skechers USA Inc (NYSE:SKX) Seasonal Chart

Suncor Energy Inc. (TSE:SU) Seasonal Chart

Bonavista Energy Corp (TSE:BNP) Seasonal Chart

Cogeco Cable Inc. (TSE:CCA) Seasonal Chart

Churchill Downs, Inc. (NASDAQ:CHDN) Seasonal Chart

 

The Markets

Stocks traded sharply lower for a second day on Friday, capping off the weakest week for major equity benchmarks since August.  For the week, the S&P 500 Index shed 3.63%, closing below its 20 and 200-day moving averages.  Horizontal support around 2040 was also breached, leading to a test of the next level of support around 2020.  Weakness after the closing bell attributed to the attacks in Paris may lead to a test of the final level of support around 2000, also around the 50-day moving average.  A break of this level could raise questions pertaining to the strength of the intermediate trend of the market.  The large-cap benchmark is now lower by 2.71% since the average start of the strongest six months of the year on October 28th, emphasizing the need to employ a simple technical overlay in the execution of a seasonal investment strategy.  As long as the S&P 500 Index can maintain strength around 2000, buying opportunities should emerge, allowing investors another crack at an entry point for the period of seasonal strength though the end of the year.  However, weakness below 2000…beware.

Leading the move lower on Friday were shares of retail stocks following a report on retail sales for the month of October.  Headline print showed that sales increased by 0.1%, a disappointment compared to the consensus expectation of a gain of 0.3%.  Less autos and gas, the 0.3% increase was inline with estimates.  Stripping out seasonal adjustments, total retail trade increased 3.1%, which is inline with the average increase for October of 3.3%.  The year-to-date change remains inline with the average trend through October.  Sales at auto dealers and gas stations remain the two laggards versus the average trend.  Overall, despite what may have been unreasonably high expectations or an insufficient seasonal adjustment factor for October, the report continues to follow the average trend, as it has all year, shaking off weakness that has caused a significant lag in other areas of the economy.  The S&P 500 Retailing Industry Index fell 3.74% following the result, trading off of the recent all-time highs to test support back around major moving averages.  The retail industry remains in a period of seasonal strength though the end of the month.

Sentiment on Friday, as gauged by the put-call ratio, ended bearish at 1.16.

 

 

 

Seasonal charts of companies reporting earnings today:

 

 

S&P 500 Index

 

TSE Composite