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Stock Market Outlook for October 24, 2018

Outside reversal candlesticks charted in the homebuilding and auto industries, hinting of a significant low.

 

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:

Mylan Inc.  (NASDAQ:MYL) Seasonal Chart

Mylan Inc. (NASDAQ:MYL) Seasonal Chart

Mosaic Co (NYSE:MOS) Seasonal Chart

Mosaic Co (NYSE:MOS) Seasonal Chart

Orbotech Ltd. (NASD:ORBK) Seasonal Chart

Orbotech Ltd. (NASD:ORBK) Seasonal Chart

Akamai Technologies, Inc. (NASDAQ:AKAM) Seasonal Chart

Akamai Technologies, Inc. (NASDAQ:AKAM) Seasonal Chart

 

 

The Markets

Stocks traded sharply lower on Tuesday as disappointing earnings from Caterpillar and 3M weighed on investor sentiment.  The S&P 500 Index fell by 2.3% at the lows of the session, but rallied back to the flat-line as the day progressed as investors used the gap lower to purchase beaten down names.  The SPDR S&P Bank ETF, highlighted in yesterday’s report, initially gapped lower to around the $41 range, then rallied back throughout the session to close nearly flat on the day.  Homebuilding stocks did the same, charting outside reversal candlesticks in the process as investors flooded into this depressed industry.  Auto companies saw similar price action.  These industries have been the poster children for some of the headwinds facing the market, whether it pertain to the tariff war, rate concerns, or the fears of an economic slowdown, therefore the reversals that were recorded present an encouraging signal that the market is attempting to bottom follow a very weak October, thus far.

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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

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Home Building Industry Seasonal Chart
S5HOME Index Relative to the S&P 500S5HOME Index Relative to the Sector

S5HOME Index Monthly Averages

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Automobiles & Components Industry Seasonal Chart
S5AUCO Index Relative to the S&P 500S5AUCO Index Relative to the Sector

S5AUCO Index Monthly Averages

But before we get all too enthusiastic about the depressed levels of stocks in order to put cash to work, the price action on Tuesday still caused damage amongst the major equity benchmarks in the US.   The S&P 500 Index and Nasdaq Composite closed firmly below their 200-day moving averages, raising concerns that this long-term hurdle could act as resistance on any rebound attempt.  The reversal during the session, while encouraging, merely closes the gap that was opened following the opening bell; follow-through from the afternoon rally would be required in order to confirm that the market is finding a low that investors can become comfortable with.  Cyclical sectors continue to drag on market performance, while defensives outperform, which is certainly not a sign that investors are ready to take on risk.  The framework for a rebound attempt is present, as long as investors can overcome this pessimistic sentiment.

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Sentiment on Tuesday, as gauged by the put-call ratio, ended bearish at 1.04.

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Sectors and Industries entering their period of seasonal strength:

Lumber Futures (LB) Seasonal Chart
FUTURE_LB1 Relative to the S&P 500FUTURE_LB1 Relative to Gold

FUTURE_LB1 Monthly Averages

 

 

Seasonal charts of companies reporting earnings today:

Advanced Micro Devices, Inc. (AMD) Seasonal Chart Aflac Incorporated (AFL) Seasonal Chart Agnico Eagle Mines Limited (AEM) Seasonal Chart Alexion Pharmaceuticals, Inc. (ALXN) Seasonal Chart Align Technology, Inc. (ALGN) Seasonal Chart Allegiant Travel Company (ALGT) Seasonal Chart AllianceBernstein Holding L.P. (AB) Seasonal Chart Amphenol Corporation (APH) Seasonal Chart AT&T Inc. (T) Seasonal Chart Barrick Gold Corporation (ABX) Seasonal Chart Boeing Company (The) (BA) Seasonal Chart Boston Scientific Corporation (BSX) Seasonal Chart Brink's Company (The) (BCO) Seasonal Chart Callaway Golf Company (ELY) Seasonal Chart Celestica, Inc. (CLS) Seasonal Chart Citrix Systems, Inc. (CTXS) Seasonal Chart CoreLogic, Inc. (CLGX) Seasonal Chart Deutsche Bank AG (DB) Seasonal Chart Dolby Laboratories (DLB) Seasonal Chart DTE Energy Company (DTE) Seasonal Chart Equifax, Inc. (EFX) Seasonal Chart F5 Networks, Inc. (FFIV) Seasonal Chart Ford Motor Company (F) Seasonal Chart Forward Air Corporation (FWRD) Seasonal Chart Freeport-McMoran, Inc. (FCX) Seasonal Chart General Dynamics Corporation (GD) Seasonal Chart Goldcorp Inc. (GG) Seasonal Chart Graco Inc. (GGG) Seasonal Chart Hilton Worldwide Holdings Inc. (HLT) Seasonal Chart Illinois Tool Works Inc. (ITW) Seasonal Chart Ingersoll-Rand plc (Ireland) (IR) Seasonal Chart Knight Transportation, Inc. (KNX) Seasonal Chart Las Vegas Sands Corp. (LVS) Seasonal Chart Legg Mason, Inc. (LM) Seasonal Chart Microsoft Corporation (MSFT) Seasonal Chart Nasdaq, Inc. (NDAQ) Seasonal Chart New Gold Inc. (NGD) Seasonal Chart Northrop Grumman Corporation (NOC) Seasonal Chart O'Reilly Automotive, Inc. (ORLY) Seasonal Chart Owens Corning Inc (OC) Seasonal Chart Packaging Corporation of America (PKG) Seasonal Chart Raymond James Financial, Inc. (RJF) Seasonal Chart Restaurant Brands International Inc. (QSR) Seasonal Chart Thermo Fisher Scientific Inc (TMO) Seasonal Chart Torchmark Corporation (TMK) Seasonal Chart Trinity Industries, Inc. (TRN) Seasonal Chart Tupperware Brands Corporation (TUP) Seasonal Chart United Parcel Service, Inc. (UPS) Seasonal Chart Vertex Pharmaceuticals Incorporated (VRTX) Seasonal Chart Visa Inc. (V) Seasonal Chart Whirlpool Corporation (WHR) Seasonal Chart Xilinx, Inc. (XLNX) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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