Stock Market Outlook for June 20, 2019
Equity benchmarks appear poised to take a shot at all-time highs, however, evidence of risk aversion gives reason for caution.
*** 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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MutualFirst Financial, Inc. (NASD:MFSF) Seasonal Chart
American Tower Corp. (NYSE:AMT) Seasonal Chart
TransGlobe Energy Corp. (TSE:TGL.TO) Seasonal Chart
Canadian Imperial Bank Of Commerce (TSE:CM.TO) Seasonal Chart
The Bank of Nova Scotia (NYSE:BNS) Seasonal Chart
Modine Manufacturing Co. (NYSE:MOD) Seasonal Chart
The Markets
Stocks closed the day higher as investors reacted to the outcome of the 2-day FOMC meeting. The S&P 500 index added three-tenths of one percent, continuing to advance beyond psychological resistance and the upper limit to a short-term trading range at 2900. Next hurdle on the upside is the all-time high at 2954, a definitive breakout from which could fuel a wave of buying pressures as the pronounced long-term trading range from the past year and a half would be deemed to have concluded. With the significant low at the end of May, the first step towards a trend of higher-highs and higher-lows has been achieved; the next step is a break above the previous peak.
While major equity benchmarks appear poised to take a shot at all-time highs, this is far from a risk-on market, conducive for a positive move in the broader market. Yet again, defensive sectors topped the leaderboard on Wednesday as investors bought into the interest rate sensitive sectors (utilities and REITs), as well as health care. The energy, financial, materials, and industrial sectors closed in the red. More broadly, signs of sustained strength in the small caps have yet to be seen. Transports continue to struggle, carving out what could end up being a head-and-shoulders topping pattern. Bond prices are at multi-year highs. Each of these are evidence of risk aversion, suggesting that investors are positioned for a negative move ahead. As alluded to previously, an unwind of the defensive trade would provide ammunition for the broader market to move higher overall, but, at least presently, investors are choosing to keep their guard up.
Sentiment on Wednesday, as gauged by the put-call ratio, ended bullish at 0.85.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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