Stock Market Outlook for January 4, 2019
Employment typically unchanged in the month of December.
*** 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:
Providence Service Corp. (NASD:PRSC) Seasonal Chart
Eastern Co. (NASD:EML) Seasonal Chart
RioCan Real Estate Investment Trust (TSE:REI.UN) Seasonal Chart
The Hershey Company (NYSE:HSY) Seasonal Chart
Gencor Industries Inc. (NASD:GENC) Seasonal Chart
Monro Muffler Brake, Inc. (NASDAQ:MNRO) Seasonal Chart
Halliburton Company (NYSE:HAL) Seasonal Chart
The Markets
Stocks dipped on Thursday as a rare earnings warning from Apple reignited fears of a global economic slowdown. The S&P 500 Index shed 2.48%, dragged lower by the technology sector, which saw a loss of over 5% on the day. The S&P 500 Technology Sector Index remains bound below resistance at 20, 50, and 200-day moving averages with momentum indicators firmly embedded in bearish territory. The silver lining to the sector is that the decline since the October peak has charted a parabolic trend lower, an unsustainable slope that suggests a reversion to the mean is increasingly probable. Seasonally, technology is one of the few sectors that has not averaged a loss in the first month of the year, a tendency that, at least right now, looks to be in doubt given the ongoing negative sentiment that is prevailing in the market.
On Friday, investors will be looking towards the next catalyst for stocks by way of the monthly non-farm payroll report. Analysts are expecting that 180,000 new payrolls were added last month, an improvement from the 155,000 reported previous. Seasonally, employment in the month of December has historically been unchanged, on average, before incorporating in the seasonal adjustments. Employment in the US continues to show growth that is firmly above average, on track to post its best calendar year since 2015. We’ll be sending out a breakdown of the report, from a seasonal perspective, to subscribers of our service on Friday. Want to be included in this distribution? Simply subscribe to either the monthly or yearly option via the following link: https://charts.equityclock.com/subscribe
Sentiment on Thursday, as gauged by the put-call ratio, ended overly bearish at 1.31. The result is just the latest in a number of overly bearish readings that this indicator has produced over the past few months, the highest being the 1.82 level realized on December 20th. The market is overwhelmingly leaning towards the bear camp, making it prone to a mean reversion move as hedges and negative bets are unwound. Some kind of catalyst is likely required to kick investors out of their bearish bets.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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