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Stock Market Outlook for June 14, 2019


Cup-and-handle or reverse head-and-shoulders – Significant bullish potential for the price of Gold above 1360.

 

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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S&T Bancorp, Inc. (NASD:STBA) Seasonal Chart

S&T Bancorp, Inc. (NASD:STBA) Seasonal Chart

Microsoft Corp. (NASD:MSFT) Seasonal Chart

Microsoft Corp. (NASD:MSFT) Seasonal Chart

Wintrust Financial Corp. (NASD:WTFC) Seasonal Chart

Wintrust Financial Corp. (NASD:WTFC) Seasonal Chart

Boston Private Financial Holdings, Inc. (NASD:BPFH) Seasonal Chart

Boston Private Financial Holdings, Inc. (NASD:BPFH) Seasonal Chart

CTS Corp. (NYSE:CTS) Seasonal Chart

CTS Corp. (NYSE:CTS) Seasonal Chart

 

 

The Markets

Stocks ticked higher on Thursday as investors nibbled away at cyclical sectors, hoping to find value in the beaten down names.  The S&P 500 Index added just over four-tenths of one percent, still remaining supported around the 50-day moving average at 2873.  Resistance around 2900 remains a formidable hurdle overhead.  While just speculation at this point, the action over the past few sessions appears to be a mere consolidation of last week’s strong return; a flag or the right shoulder of an inverse head-and-shoulder pattern may result, barring some negative catalyst that fuels a risk-off shift.  Should the market fund support anywhere above 2800, investors may be enticed to put money back to work following the downturn in May, or even the more pronounced downturn in the fourth quarter.  Headlines remain fluid, therefore, with the risk-reward approximately evenly balanced around present levels, aggressive speculation in either direction may be inappropriate.

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The action during Thursday’s session provided a mix of signals.  Defensive sectors (staples, utilities, and REITs) underperformed, while cyclicals (discretionary, energy, and communications services) topped the leaderboard.  But beyond these obvious risk gauges within the equity market, there were diverging signals provided by other asset classes.  Bond prices continue to rise and the price of gold is chipping away at long-term resistance.  These moves are indicative of investor caution.  A massive cup-and-handle pattern for the price of gold bullion suggests significant upside potential should price break solidly above resistance around 1360.  A number of elements are desired for the price of the precious metal to flourish.  First, a rollover in the US dollar would be supportive of the broader commodity complex.  The US Dollar Index has traded lower over the past couple of weeks, but the intermediate-term trend remains that of higher-highs and higher-lows.  Second, volatility/uncertainty is typically conducive for the price of gold to move higher.  This is typical of the low liquidity trading environment in the third quarter.  Volatility, as gauged by the VIX, is at the mid-point to its two month range between 11 and 23.  The bid in the price of gold in the past couple of weeks suggests that investors expect a re-escalation of volatility going into the summer.  Third, inflation is typically conducive to sending the price of gold higher.  A number of metrics point to benign inflationary pressures.  Fourth, accommodative monetary policy has historically been a benefit to the price of gold.  While the Fed has certainly committed to placing further hikes on hold, it remains speculation as to whether the Fed will in fact ease. Net-net, we certainly don’t have a perfect superfecta that would provide a strong tailwind for gold, but the rhetoric and uncertainty have certainly provided the fuel for the market to speculate.  A breakout above 1360 projects an upside target beyond 1500 on the charts.  Seasonally, the price of gold tends to move higher between the middle of July and the start of October.

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Gold Futures (GC) Seasonal Chart

Sentiment on Thursday, as gauged by the put-call ratio, ended neutral at 1.00.

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Seasonal charts of companies reporting earnings today:

  • No significant earnings scheduled for today

 

S&P 500 Index

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TSE Composite

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