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Stock Market Outlook for August 22, 2018

S&P 500 hits new all-time high, taking 134 sessions to recoup the losses recorded in 9.

 

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:

SKTelecom Co. Ltd. (NYSE:SKM) Seasonal Chart

SKTelecom Co. Ltd. (NYSE:SKM) Seasonal Chart

SORL Auto Parts Inc (NASD:SORL) Seasonal Chart

SORL Auto Parts Inc (NASD:SORL) Seasonal Chart

Gran Tierra Energy (TSE:GTE) Seasonal Chart

Gran Tierra Energy (TSE:GTE) Seasonal Chart

AFLAC Incorporated  (NYSE:AFL) Seasonal Chart

AFLAC Incorporated (NYSE:AFL) Seasonal Chart

 

 

The Markets

Stocks ended in the green for the fourth straight session as geopolitical concerns continued to ease and investors remained focussed on the all-time highs on the S&P 500 Index.  The large-cap benchmark broke above January’s high at 2872.87 intraday, but was unable to hold this level on a closing basis.  Assuming Tuesday marks the return to all-time highs on the large-cap benchmark, then you can clock the total recovery time at 134 sessions from the closing low charted on February 8.  This compared to the 9 sessions that it took to strip 10% of value from the widely followed equity benchmark, emphasizing the need to have a disciplined sell strategy.  Rising market trends can play out over long periods of time, but the following retracement is typically fast paced, leading many to sell into the panic.  While everyone’s sell discipline is going to be different, the important thing is that you have one and hold to it when those signals cross.  For information on our strategy that we are enacting with the Seasonal Advantage Portfolio, click here.

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Speaking of the seasonal strategy, one important hurdle in the way of the positive seasonality for the Canadian banks is on our doorstep.  Canadian bank earnings season begins on Wednesday with Royal Bank kicking things off.  Bloomberg reports that the banks are expected to show profit growth of up to 10% for the third quarter.  Analyst expectations are upbeat, but with the slightly parabolic gains charted in recent weeks combined with an inverted hammer on the chart as of Tuesday suggests that the sector may be vulnerable to profit taking.  The Canadian financial sector tends to be a good place to hide during the summer months, in part due to the yield provided by the big six.  The S&P/TSX Capped Financial Index has sharply outperformed the market, on average, between mid-July and the end of September as investors rotate into higher yielding assets.  In the seasonal model that we run, we have taken profits in sector in order to mitigate any volatility surrounding the release of earnings, whether it be positive or negative.  The resulting swings could create ideal entry points in the month of September.

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S&P/TSX Capped Financial Index Seasonal Chart

$SPTFS Relative to the S&P 500
$SPTFS Relative to the S&P 500

$SPTFS Monthly Averages

Sentiment on Tuesday, as gauged by the put-call ratio, ended bullish at 0.81.

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Seasonal charts of companies reporting earnings today:

Analog Devices, Inc. (ADI) Seasonal Chart AstroNova, Inc. (ALOT) Seasonal Chart  Bitauto Holdings Limited (BITA) Seasonal Chart Frontline Ltd. (FRO) Seasonal Chart Huazhu Group Limited (HTHT) Seasonal Chart L Brands, Inc. (LB) Seasonal Chart Lowe's Companies, Inc. (LOW) Seasonal Chart Momo Inc. (MOMO) Seasonal Chart Navios Maritime Acquisition Corporation (NNA) Seasonal Chart Photronics, Inc. (PLAB) Seasonal Chart QAD Inc. (QADA) Seasonal Chart Raven Industries, Inc. (RAVN) Seasonal Chart Royal Bank Of Canada (RY) Seasonal Chart Ship Finance International Limited (SFL) Seasonal Chart Sociedad Quimica y Minera S.A. (SQM) Seasonal Chart Synopsys, Inc. (SNPS) Seasonal Chart Target Corporation (TGT) Seasonal Chart  Williams-Sonoma, Inc. (WSM) Seasonal Chart Zayo Group Holdings, Inc. (ZAYO) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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