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Stock Market Outlook for October 23, 2018

Bank ETF closing in on its calculated downside target following recent parabolic decline.

 

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:

Open Text Corporation  (TSE:OTEX) Seasonal Chart

Open Text Corporation (TSE:OTEX) Seasonal Chart

Pulte Homes, Inc.  (NYSE:PHM) Seasonal Chart

Pulte Homes, Inc. (NYSE:PHM) Seasonal Chart

Avery Dennison Corporation (NYSE:AVY) Seasonal Chart

Avery Dennison Corporation (NYSE:AVY) Seasonal Chart

Cyanotech Corp. (NASD:CYAN) Seasonal Chart

Cyanotech Corp. (NASD:CYAN) Seasonal Chart

Viad Corp. (NYSE:VVI) Seasonal Chart

Viad Corp. (NYSE:VVI) Seasonal Chart

 

 

The Markets

Stocks closed mixed on Monday as investors continued to analyze ongoing geopolitical concerns and looked ahead to earnings that will be released in the week ahead.  The S&P 500 Index closed down by 0.43%, ending below its 200-day moving average.  Financials and REITs were the biggest drags on the broad market benchmarks, highlighting the dilemma that investors are battling with respect to rates.  Despite only a marginal decline in rates during the session, the SPDR S&P Bank ETF plunged by 2.84%, continuing a parabolic decline that originated from the breakdown of the trading range between $46 and $51.  Downside target based on the break of the trading range is to $41, which at this point is close to being achieved.  The ETF is presently the most oversold since January of 2016, just prior to the 60%+ gain that was achieved in the year that followed.  The financial sector may present an important tell of whether risk sentiment has returned to equity markets, an important trait of the best six month trend for stocks that is upon our doorstep.  Seasonally, the bank industry benefits from positive tendencies starting around the end of November.

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Banks Industry Seasonal Chart
S5BANKX Index Relative to the S&P 500S5BANKX Index Relative to the Sector

S5BANKX Index Monthly Averages

Monday’s mixed outing follows what should have been a positive handoff from stocks in China.  The Shanghai Composite surged by over four percent, following through with Friday’s reversal session that saw the benchmark gain 2.58% after initially opening lower.  Outside reversals from a parabolic decline are typically indicative of bottoming patterns.  Resistance is overhead at declining 20 and 50-day moving averages, levels that if broken could entice investors back into the struggling emerging market.  Seasonally, the Shanghai Composite benefits from seasonal strength in the first half of the year, outperforming North American benchmarks in the process.

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SSE Composite Index Seasonal Chart

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

$SSEC Monthly Averages

Sentiment on Monday, as gauged by the put-call ratio, ended bearish at 1.07.

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Seasonal charts of companies reporting earnings today:

3M Company (MMM) Seasonal Chart Allegheny Technologies Incorporated (ATI) Seasonal Chart  Avery Dennison Corporation (AVY) Seasonal Chart Biogen Inc. (BIIB) Seasonal Chart Canadian National Railway Company (CNI) Seasonal Chart Capital One Financial Corporation (COF) Seasonal Chart Carlisle Companies Incorporated (CSL) Seasonal Chart Caterpillar, Inc. (CAT) Seasonal Chart Centene Corporation (CNC) Seasonal Chart Chubb Limited (CB) Seasonal Chart Corning Incorporated (GLW) Seasonal Chart Edwards Lifesciences Corporation (EW) Seasonal Chart Equity Residential (EQR) Seasonal Chart F.N.B. Corporation (FNB) Seasonal Chart Fifth Third Bancorp (FITB) Seasonal Chart Graphic Packaging Holding Company (GPK) Seasonal Chart Harley-Davidson, Inc. (HOG) Seasonal Chart Hawaiian Holdings, Inc. (HA) Seasonal Chart Hersha Hospitality Trust (HT) Seasonal Chart Hubbell Inc (HUBB) Seasonal Chart IDEX Corporation (IEX) Seasonal Chart Illumina, Inc. (ILMN) Seasonal Chart iRobot Corporation (IRBT) Seasonal Chart JetBlue Airways Corporation (JBLU) Seasonal Chart Juniper Networks, Inc. (JNPR) Seasonal Chart Lockheed Martin Corporation (LMT) Seasonal Chart McDonald's Corporation (MCD) Seasonal Chart Navient Corporation (NAVI) Seasonal Chart NextEra Energy, Inc. (NEE) Seasonal Chart PACCAR Inc. (PCAR) Seasonal Chart Pentair plc. (PNR) Seasonal Chart PulteGroup, Inc. (PHM) Seasonal Chart Quest Diagnostics Incorporated (DGX) Seasonal Chart Regions Financial Corporation (RF) Seasonal Chart Robert Half International Inc. (RHI) Seasonal Chart Rocky Brands, Inc. (RCKY) Seasonal Chart Six Flags Entertainment Corporation New (SIX) Seasonal Chart Synovus Financial Corp. (SNV) Seasonal Chart Texas Instruments Incorporated (TXN) Seasonal Chart Total System Services, Inc. (TSS) Seasonal Chart Transcat, Inc. (TRNS) Seasonal Chart  Trustmark Corporation (TRMK) Seasonal Chart United Technologies Corporation (UTX) Seasonal Chart Valmont Industries, Inc. (VMI) Seasonal Chart Varian Medical Systems, Inc. (VAR) Seasonal Chart Verizon Communications Inc. (VZ) Seasonal Chart Waters Corporation (WAT) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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