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Stock Market Outlook for June 12, 2018

Gravestone doji suggesting short-term buying exhaustion on S&P 500 Index.

 

Real Time Economic Calendar provided by Investing.com.

 

*** 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:

Amgen, Inc.  (NASDAQ:AMGN) Seasonal Chart

Amgen, Inc. (NASDAQ:AMGN) Seasonal Chart

Public Storage  (NYSE:PSA) Seasonal Chart

Public Storage (NYSE:PSA) Seasonal Chart

Apple Inc.  (NASDAQ:AAPL) Seasonal Chart

Apple Inc. (NASDAQ:AAPL) Seasonal Chart

Gilead Sciences, Inc.  (NASDAQ:GILD) Seasonal Chart

Gilead Sciences, Inc. (NASDAQ:GILD) Seasonal Chart

 

 

The Markets

Gains in US equity markets were muted to start the week as investors weighed the ongoing trade rhetoric against improving economic numbers.  The S&P 500 Index added just over a tenth of one percent, closing well off of the highs of the day.  A “gravestone” doji candlestick suggests short-term buying exhaustion, possibly leading to a pullback in  prices in the days to come.  Intermediate support at the 50-day moving average, which is now pointing higher, is hovering around 2670.

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The positive price action on the large cap benchmark over the past week has pulled one breadth indicator out of danger territory.  In previous reports we have highlighted the percent of stocks listed in the S&P 500 Index that are trading above their respective 200-day moving averages.  When less than 62.5% of stocks trade below their long-term average, downside momentum often begins to build, leading to volatility and market weakness.  After a number of months below this 62.5% level, the percentage of stocks trading below their long-term moving average has since improved to 65.8%, edging past that proposed line in the sand.  Barring any black swan events, the indicator is suggesting a less volatile path ahead following the elevated levels that kept investors on edge through the month of May.  Keep in mind that seasonally a period of rising volatility begins in the month of July, running through the third quarter, so while tenchicals suggest a calmer ride ahead, that average annual pattern is set to begin. Best not to get too complacent.  Volatility peaks in the month of October, on average.

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Sentiment on Monday, as gauged by the put-call ratio, ended bullish at 0.74.  Following the overly bearish reading presented closer to the end of March, suggesting an ideal entry point to equity positions, the risk-reward profile has shifted once again, indicating higher levels of risk as managers take down their portfolio insurance given the decline in volatility in recent weeks.  The sentiment gauge is still well off of the complacent levels recorded in the middle of January, just prior to stocks hitting their highs of the year.

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Seasonal charts of companies reporting earnings today:

Caseys General Stores, Inc. (CASY) Seasonal Chart Digital Turbine, Inc. (APPS) Seasonal Chart H&R Block, Inc. (HRB) Seasonal Chart John Wiley & Sons, Inc. (JW.A) Seasonal Chart Lands' End, Inc. (LE) Seasonal Chart Oxford Industries, Inc. (OXM) Seasonal Chart  SCIENCE APPLICATIONS INTERNATIONAL CORPORATION (SAIC) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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