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Stock Market Outlook for May 24, 2019


Outside reversal around a level of resistance on the US Dollar Index suggesting upside exhaustion.

 

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:

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Braskem SA (NYSE:BAK) Seasonal Chart

Braskem SA (NYSE:BAK) Seasonal Chart

Univest Corp. of Pennsylvania (NASD:UVSP) Seasonal Chart

Univest Corp. of Pennsylvania (NASD:UVSP) Seasonal Chart

Dynavax Technologies Corp. (NASD:DVAX) Seasonal Chart

Dynavax Technologies Corp. (NASD:DVAX) Seasonal Chart

Celgene Corp. (NASD:CELG) Seasonal Chart

Celgene Corp. (NASD:CELG) Seasonal Chart

SP Plus Corp. (NASD:SP) Seasonal Chart

SP Plus Corp. (NASD:SP) Seasonal Chart

Camden National Corp. (NASD:CAC) Seasonal Chart

Camden National Corp. (NASD:CAC) Seasonal Chart

Alexanders, Inc. (NYSE:ALX) Seasonal Chart

Alexanders, Inc. (NYSE:ALX) Seasonal Chart

 

 

The Markets

Stocks sold off sharply on Thursday as lingering trade concerns once again took a toll on risk assets.  The S&P 500 Index shed 1.19%, gapping below the 2853 pivot point that we have been highlighting in recent days.  The benchmark has been meandering above the upper limit to its broken declining trend channel for the past week, attempting to maintain support above 2800, a key psychological level.  Momentum indicators on the hourly look continue to show bearish characteristics.

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Not helping equity market sentiment on Thursday was the plunge in the price of oil, which broke sharply below its 200-day moving average.  The rising trend that originated from the December low is deemed to have concluded and a declining trend appears underway.  Next level of significant support comes in around $55, followed by a more minor level of support at $52.  Seasonally, the price of the energy commodity tends to remain supported through the high demand summer season.  We alerted subscribers of the near-termed downside risks one month ago when the price of WTI Crude was trading around $66 and in a report released on Wednesday we reiterated the need for further monitoring to before being enticed by the pullback.  Want to be included on future distributions? Subscribe now and we’ll send these intraday updates directly to your inbox.

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Crude Oil Futures (CL) Seasonal Chart

Watch the US Dollar Index in the days ahead.  The currency benchmark traded firmly higher during Thursday’s session as investors sought shelter amidst the global equity selloff, but the gains were quickly reversed as the session dragged on.  The outside reversal is being realized at resistance around 98, suggesting a reluctance to bid the currency higher above this hurdle.  The US dollar has effectively become this consensus trade over the past year as investors jump on to the steady trend of higher-highs and higher-lows.  But as the grind higher continues, negative momentum divergences remain apparent, suggesting waning buying demand.  A reversal of the positive trend, essentially shaking loose the consensus bet, would alleviate a headwind that has impacted stocks since the benchmark’s low in January of last year.  Seasonal tendencies for the currency turn negative between the end of May and the end of September.

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US Dollar Index Futures (DX) Seasonal Chart

On the economic front, a report on new home sales was released during Thursday’s session. The headline print indicated that new home sales fell by 6.9% in April from an upwardly revised seasonally adjusted annual rate of 723,000 to a pace of 673,000. Analysts were expecting a rate of 680,000. Stripping out the seasonal adjustments, sales of new homes actually fell by 8.3%, which is weaker than the 1.4% decline that is average for the spring month. The result places the year-to-date change 37.3% above average through the first four months of the year, representing the best rate in over two decades. Signup now to receive our updates and analysis intraday.

New Home Sales Seasonal Chart

Sentiment on Thursday, as gauged by the put-call ratio, ended bearish at 1.21.  Once again, investors are loading up on puts in an effort to hedge their portfolios.

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Seasonal charts of companies reporting earnings today:

Buckle, Inc. (The) (BKE) Seasonal Chart Foot Locker, Inc. (FL) Seasonal Chart Hibbett Sports, Inc. (HIBB) Seasonal Chart KNOT Offshore Partners LP (KNOP) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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