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Stock Market Outlook for June 4, 2019


Technology drags the market lower to start the new month, but bearish positioning and sentiment is setting the market up for a spring-loaded rebound.

 

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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Splunk Inc. (NASD:SPLK) Seasonal Chart

Splunk Inc. (NASD:SPLK) Seasonal Chart

First Financial Corp. Indiana (NASD:THFF) Seasonal Chart

First Financial Corp. Indiana (NASD:THFF) Seasonal Chart

National Research Corp. (NASD:NRC) Seasonal Chart

National Research Corp. (NASD:NRC) Seasonal Chart

Baxter Intl Inc. (NYSE:BAX) Seasonal Chart

Baxter Intl Inc. (NYSE:BAX) Seasonal Chart

 

 

 

The Markets

Stocks closed marginally lower on Monday as trade war concerns persist.  The S&P 500 Index shed just less than three-tenths of one percent, led my technology names as the Justice Department launches antitrust probes.  The benchmark remains below its 200-day moving average, a key hurdle for long-term investors.  On the hourly chart, the large-cap benchmark continues to grind along previous declining trendline resistance, which has provided points of short-term support through the back half of May.  The benchmark is attempting to overcome short-term oversold levels from the end of May as bearish momentum hints of exhaustion.  Bearish sentiment has reached extremes, as has positioning, in recent days, and while that is not necessarily a trigger for a countervailing move, it does suggest that the market is spring-loaded, poised to snap-back should a positive headline fuel an unwind of the bearish consensus bet.  The month of June is notorious for countervailing moves as the second quarter comes to a close.  Learn more by subscribing to our service and we will send you our Market Outlook for June.

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As mentioned, Technology was the pain-point for markets on Monday.  The S&P 500 Technology Sector Index fell by 1.76%, intersecting with its 200-day moving average for the first time since March.  The Technology benchmark is now the most oversold since the December lows.  Over the past month, investors have migrated away from the momentum sector, which has suffered from the collateral damage related to failed trade negotiations.  Underperformance versus the market has been evident since the end of April, coinciding with the peak in the broad market.  Seasonally, the sector tends to hold up better than the broad market during the summer, benefitting from the growth characteristics within.  In the Seasonal Advantage Portfolio, we continue to be on the lookout for opportunities to enter the sector for a summer play, but have yet to be enticed by any of the constituents thus far.  The recent decline in the market segment expands our universe of possibilities as sector constituents come back down to levels of support and more reasonable valuations.  As indicated on a recent BNN Market Call episode, Software and Services is probably going to be our first choice.

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Technology Sector Seasonal Chart

On the economic front, a report on construction spending was released during Monday’s session.  The headline print indicated that construction spending in the US was unchanged in April, missing the consensus analyst estimate that called for a rise of 0.4%. Stripping out the seasonal adjustments, total construction spending actually increased by 6.8% in this fourth month of the year, which is slightly weaker than the 7.3% increase that is average for this spring month. The result places the year-to-date change 3.0% above the seasonal average trend, representing the second best pace through this period in the past decade. Seasonally, total construction spending tends to rise through the month of August.  We sent out further analysis of this report to subscribers intraday.  Don’t be left out, subscribe now!

http://charts.equityclock.com/seasonal_charts/economic_data/TTLCON_seasonal_chart.PNG

Sentiment on Monday as gauged by the put-call ratio, ended bearish at 1.13.

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Seasonal charts of companies reporting earnings today:

Ambarella, Inc. (AMBA) Seasonal Chart Cantel Medical Corp. (CMD) Seasonal Chart Cracker Barrel Old Country Store, Inc. (CBRL) Seasonal Chart Donaldson Company, Inc. (DCI) Seasonal Chart Gamestop Corporation (GME) Seasonal Chart Guidewire Software, Inc. (GWRE) Seasonal Chart HealthEquity, Inc. (HQY) Seasonal Chart Lands' End, Inc. (LE) Seasonal Chart Navistar International Corporation (NAV) Seasonal Chart Orion Energy Systems, Inc. (OESX) Seasonal Chart Quanex Building Products Corporation (NX) Seasonal Chart Salesforce.com Inc (CRM) Seasonal Chart Tiffany & Co. (TIF) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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