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Stock Market Outlook for December 21, 2018


Historic put-call ratio as the market floods the bear camp.

 

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:

Crombie REIT (TSE:CRR-UN) Seasonal Chart

Crombie REIT (TSE:CRR-UN) Seasonal Chart

CSX Corporation  (NYSE:CSX) Seasonal Chart

CSX Corporation (NYSE:CSX) Seasonal Chart

Canadian Tire Corp. Ltd. (TSE:CTC) Seasonal Chart

Canadian Tire Corp. Ltd. (TSE:CTC) Seasonal Chart

Central Fund of Canada Limited (AMEX:CEF) Seasonal Chart

Central Fund of Canada Limited (AMEX:CEF) Seasonal Chart

Goldcorp Inc. (USA) (NYSE:GG) Seasonal Chart

Goldcorp Inc. (USA) (NYSE:GG) Seasonal Chart

ONEX Corporation  (TSE:ONEX) Seasonal Chart

ONEX Corporation (TSE:ONEX) Seasonal Chart

Williams Companies, Inc.  (NYSE:WMB) Seasonal Chart

Williams Companies, Inc. (NYSE:WMB) Seasonal Chart

The TJX Companies, Inc.  (NYSE:TJX) Seasonal Chart

The TJX Companies, Inc. (NYSE:TJX) Seasonal Chart

Sherwin-Williams Company  (NYSE:SHW) Seasonal Chart

Sherwin-Williams Company (NYSE:SHW) Seasonal Chart

Cirrus Logic, Inc. (NASD:CRUS) Seasonal Chart

Cirrus Logic, Inc. (NASD:CRUS) Seasonal Chart

North American Energy Partners Inc. (NYSE:NOA) Seasonal Chart

North American Energy Partners Inc. (NYSE:NOA) Seasonal Chart

Transcontinental Inc. (TSE:TCL.A) Seasonal Chart

Transcontinental Inc. (TSE:TCL.A) Seasonal Chart

Mosaic Co (NYSE:MOS) Seasonal Chart

Mosaic Co (NYSE:MOS) Seasonal Chart

Sandstorm Gold (TSE:SSL) Seasonal Chart

Sandstorm Gold (TSE:SSL) Seasonal Chart

Cooper Cos. Inc. (NYSE:COO) Seasonal Chart

Cooper Cos. Inc. (NYSE:COO) Seasonal Chart

ZCL Composites (TSE:ZCL) Seasonal Chart

ZCL Composites (TSE:ZCL) Seasonal Chart

Imax Corp. (NYSE:IMAX) Seasonal Chart

Imax Corp. (NYSE:IMAX) Seasonal Chart

Corby Spirit and Wine Ltd. (TSE:CSW-A) Seasonal Chart

Corby Spirit and Wine Ltd. (TSE:CSW-A) Seasonal Chart

Avalon Rare Metals Inc (TSE:AVL) Seasonal Chart

Avalon Rare Metals Inc (TSE:AVL) Seasonal Chart

CGI Group Inc. (TSE:GIB.A) Seasonal Chart

CGI Group Inc. (TSE:GIB.A) Seasonal Chart

Paramount Resources (TSE:POU) Seasonal Chart

Paramount Resources (TSE:POU) Seasonal Chart

 

 

The Markets

And the pain in equity markets continues.  The S&P 500 Index shed another 1.58% on Thursday to chart a fresh low for the year.  This comes the session following comments from Fed Chair Jerome Powell, who failed to soothe investors nerves on Wednesday as the Fed announced another quarter point increase to the Fed Funds Rate.  At the lows of the session, the large-cap benchmark was down a whopping 17% from its high charted almost three months ago to the day.  Momentum indicators, including RSI and Stochastics, are increasingly moving into oversold territory as investors continue to lean on the sell button.  The large-cap benchmark is now 10.4% below its 200 day moving average, which is more stretched than what the benchmark was at the lows in 2015 and 2016.  You would have to look back to the start of October of 2011 to find a more stretched downside condition than what we are presently seeing.  Typically, these stretched conditions unwind fairly quickly.  Back in October of 2011, it took only 17 sessions for the benchmark to revert back to its 200-day moving average, alleviating the stretched state.  Similarly, at the end of September of 2015 it took 18 sessions for the mean reversion to play out and then in February 2016 it took 20 sessions.  A mean reversion in the present market would see the benchmark move back to 2755, which would be a significant return, if achieved.

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But while the stretched condition of stocks is notable, the extreme sentiment reading in the market on Thursday is historic.  The put call ratio closed at a whopping 1.82, the highest level in decades.  It is extremes, such as this, that typically indicate an optimal risk-reward point to enter into equity positions.  The market has flooded the bearish camp and the unwind could be significant.

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Seasonal charts of companies reporting earnings today:

CarMax Inc (KMX) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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