Stock Market Outlook for June 18, 2019
S&P 500 Index trading within the narrowest 5-session range since the end of 2017.
*** 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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Southwest Airlines Co. (NYSE:LUV) Seasonal Chart
Thor Industries, Inc. (NYSE:THO) Seasonal Chart
Monmouth Real Estate Investment Corp. (NYSE:MNR) Seasonal Chart
Suntrust Banks, Inc. (NYSE:STI) Seasonal Chart
Carmax Inc. (NYSE:KMX) Seasonal Chart
The Markets
Stocks closed mildly higher on Monday as investors wait for the outcome of the 2-day Fed meeting that concludes on Wednesday. The S&P 500 Index added just less than a tenth of a percent, fuelled by strength in energy, real estate, and communication services. The benchmark continues to trade in a tight range as investors wait for the next catalyst to move stocks. The five session range between the high and the low is a mere 22 points, which is the narrowest span since the end of 2017 as investors sat on their hands until the full benefits of tax Cuts and Jobs Act came into effect. These narrow ranges typically precede explosive moves, whether it be higher or lower; it is just a matter of who blinks first, the bulls or the bears. On the hourly chart, horizontal resistance around 2900 and variable support around the 50-hour moving average, now at 2885, approximately define the short-term limits. Watch for the direction of the break.
While equity benchmarks struggle with previous highs, leading some to speculate that a downturn similar to the fourth quarter will soon follow, the NYSE advance decline-line fails to confirm this bearish thesis. The indicator, which measures the difference between the number of advancing and declining issues, broke out to a new all-time high in the past week. This is typically characteristic of a bullish trending market. Recall, it was in September of last year that a negative divergence with respect to this indicator and price provided warning of something ominous ahead. Clearly, a similar setup is not being foretold, by this chart anyways.
On the economic front, a report on manufacturer sentiment was released before the opening bell. The headline print of the Empire State Manufacturing Survey showed –8.6, which is the weakest result since October of 2016. Analysts had forecasted a decline from +17.8 to +10.0. Stripping out the seasonal adjustments, the empire manufacturing survey actually came in at –2.3, which is well below the +10.9 that is average for this time of year. This is the weakest June result since 2011, certainly a concerning statistic.
Sentiment on Monday, as gauged by the put-call ratio, ended neutral at 1.00.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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