Stock Market Outlook for May 22, 2019
Headlines point to weakness in existing home sales, but the year-to-date change is actually quite strong.
*** 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:
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FleetCor Technologies Inc. (NYSE:FLT) Seasonal Chart
Compass Diversified Holdings (NYSE:CODI) Seasonal Chart
Essent Group Ltd. (NYSE:ESNT) Seasonal Chart
Spire Inc. (NYSE:SR) Seasonal Chart
American Campus Communities Inc. (NYSE:ACC) Seasonal Chart
Lakeland Financial Corp. (NASD:LKFN) Seasonal Chart
The Markets
Stocks closed firmly higher on Tuesday as technology stocks rebounded from Monday’s selloff following news that the Commerce Department would allow Huawei to continue purchasing US goods in order to maintain present service levels. The S&P 500 Index closed with a gain of 0.85%, erasing the loss from the session prior. The benchmark continues to battle with levels of short-term resistance and support as investors digest the trade uncertainty. Support for the large-cap benchmark remains within the range of 2775 to 2815, while resistance is becoming apparent around the now declining 20-day moving average around 2893. Momentum indicators on the large-cap benchmark are attempting to curl higher as market participants attempt to peg a short-term low.
On the hourly chart, 2853 is showing up as an important pivot point. The benchmark gapped below this hurdle during Monday’s session, then gapped above the hurdle at Tuesday’s open. The level approximately coincides with the benchmark’s 50-hour moving average, a level that acted as resistance through the first half of the month. With the benchmark clear of its downside restraints, consolidation of prices around present levels could result in the formation of a head-and-shoulders bottoming pattern. The neckline of the setup would be apparent at 2892, the breakout from which would project an upside target of a new all-time high around 2975. Seasonally, the period around the Memorial Day holiday, as we reported on Friday, typically has a positive bias. Headline risks are high, but short-term technical and seasonal setups appear enticing for a positive move ahead.
On the economic front, a report on Existing Home Sales for April was released during Tuesday’s session. The National Association of Realtors indicates that existing home sales declined by 0.4% last month to a seasonally adjusted annual rate of 5.19 million. Analysts were expecting an increase of 2.7% to a pace of 5.35 million. Stripping out the seasonal adjustments, existing home sales actually increased by 13.8% in April, which is stronger than the 10.7% gain that is average for the month. The result places the year-to-date change higher by 20.7%, which is 8.1% above the seasonal average trend. This represents the best year-to-date change through the first four months of the year since 2013. Read more of our analysis pertaining to this important gauge of the housing market via our Intraday Report Archive at https://charts.equityclock.com/. Subscribe now.
Sentiment on Tuesday, as gauged by the put-call ratio, ended neutral at 1.00. Investors are still seen leaning on their hedges, by way of put options, the effect of which mitigates downside risks given that the requirement to sell is alleviated.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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