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Stock Market Outlook for June 3, 2019


S&P 500 Index has been unchanged, on average, in the month of June with 54% of periods showing gains over the past 50 years.

 

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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Highway Holdings Ltd. (NASD:HIHO) Seasonal Chart

Highway Holdings Ltd. (NASD:HIHO) Seasonal Chart

Towne Bank (NASD:TOWN) Seasonal Chart

Towne Bank (NASD:TOWN) Seasonal Chart

Southern Co. (NYSE:SO) Seasonal Chart

Southern Co. (NYSE:SO) Seasonal Chart

Tennessee Valley Authorit (NYSE:TVE) Seasonal Chart

Tennessee Valley Authorit (NYSE:TVE) Seasonal Chart

Gladstone Land Corp. (NASD:LAND) Seasonal Chart

Gladstone Land Corp. (NASD:LAND) Seasonal Chart

National Retail Properties Inc. (NYSE:NNN) Seasonal Chart

National Retail Properties Inc. (NYSE:NNN) Seasonal Chart

Patrick Industries, Inc. (NASD:PATK) Seasonal Chart

Patrick Industries, Inc. (NASD:PATK) Seasonal Chart

Deltic Timber Corp. (NYSE:DEL) Seasonal Chart

Deltic Timber Corp. (NYSE:DEL) Seasonal Chart

 

 

The Markets

Stocks abruptly declined on Friday as investors reacted to the latest tariff threat from the President, who proposed applying an increasing rate of tariffs on goods imported from Mexico.  The S&P 500 Index immediately reacted to the downside as investors doubt the ability of this President to achieve a trade deal with anyone.  The large-cap benchmark was lower by 1.32% by the closing bell, ending firmly below its 200-day moving average, a critical level to longer-term investors.  Major moving averages (the 20, 50, and 200-day) are now all curling lower, suggesting negative trends across multiple timescales.  Momentum indicators are closing in on oversold levels, which may help to exhaust downside pressures ahead.  A minor pivot point around 2750 presents the next test for stocks on the downside, a break of which obviously increases the probability that the 2650 target implied by the head-and-shoulders topping pattern will be achieved.

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For the week, the large-cap benchmark was lower by 2.62%, representing the largest weekly drawdown of the year, so far.  The benchmark broke below its 20 and 50-week moving averages, levels that had been supporting the advance since the year began.  A sell signal with respect to MACD has now been triggered.  Momentum indicators on the weekly look have been negatively diverging from price for over a year, suggesting buying demand has been waning.  Obviously, the setup going into the month of June appears threatening.

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Seasonal tendencies for stocks in the month of June provide little to write home about. The S&P 500 Index has been unchanged, on average, in the month ahead with 54% of periods over the past 50 years showing gains. Returns have ranged from a loss of 8.6% in June of 2008 to a gain of 5.4% in June of 1999.  We have laid out the sectors that you should avoid and those areas that may provide opportunity in our monthly outlook for June.

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Gross Domestic Product in Canada was released before Friday’s opening bell and the results showed a rebound from the weather impacted slump from the month prior. Statscan indicated that GDP increased by 0.5% in March, which is marginally better than the 0.4% rise that was forecasted by analysts. Stripping out the seasonal adjustments, the increase was consistent with the headline print, rising by 0.5% during a month that typically sees a decline of 0.3%, on average. The result places the first quarter change at +0.2%, which is weaker than the 0.7% increase that has been average over the past 20 years.  We sent out our full analysis to subscribers intraday on Friday.  Subscribe now and we’ll send you this and our 64-page monthly outlook for June.

Canada GDP - All industries Seasonal Chart

Sentiment on Friday, as gauged by the put-call ratio, ended bearish at 1.19.  At the lows of the session, the ratio hit a high of 1.61, suggesting extreme caution and bearish positioning, typically a contrarian indication to buy stocks given the favourable risk/reward.

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Seasonal charts of companies reporting earnings today:

Caleres, Inc. (CAL) Seasonal Chart Capital Southwest Corporation (CSWC) Seasonal Chart Digital Turbine, Inc. (APPS) Seasonal Chart Ferroglobe PLC (GSM) Seasonal Chart Iteris, Inc. (ITI) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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