Stock Market Outlook for December 21, 2018
Historic put-call ratio as the market floods the bear camp.
*** 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
CSX Corporation (NYSE:CSX) Seasonal Chart
Canadian Tire Corp. Ltd. (TSE:CTC) Seasonal Chart
Central Fund of Canada Limited (AMEX:CEF) Seasonal Chart
Goldcorp Inc. (USA) (NYSE:GG) Seasonal Chart
ONEX Corporation (TSE:ONEX) Seasonal Chart
Williams Companies, Inc. (NYSE:WMB) Seasonal Chart
The TJX Companies, Inc. (NYSE:TJX) Seasonal Chart
Sherwin-Williams Company (NYSE:SHW) Seasonal Chart
Cirrus Logic, Inc. (NASD:CRUS) Seasonal Chart
North American Energy Partners Inc. (NYSE:NOA) Seasonal Chart
Transcontinental Inc. (TSE:TCL.A) Seasonal Chart
Mosaic Co (NYSE:MOS) Seasonal Chart
Sandstorm Gold (TSE:SSL) Seasonal Chart
Cooper Cos. Inc. (NYSE:COO) Seasonal Chart
ZCL Composites (TSE:ZCL) Seasonal Chart
Imax Corp. (NYSE:IMAX) Seasonal Chart
Corby Spirit and Wine Ltd. (TSE:CSW-A) Seasonal Chart
Avalon Rare Metals Inc (TSE:AVL) Seasonal Chart
CGI Group Inc. (TSE:GIB.A) 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.
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.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
| Sponsored By... |
|
