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Stock Market Outlook for June 21, 2019


Oil Services ETF gaps higher off of a level of support (and a 16-year low) following news of escalating geopolitical tensions that fuelled a surge in the price of Oil.

 

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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Richelieu Hardware Ltd. (TSE:RCH.TO) Seasonal Chart

Richelieu Hardware Ltd. (TSE:RCH.TO) Seasonal Chart

Achillion Pharmaceuticals Inc. (NASD:ACHN) Seasonal Chart

Achillion Pharmaceuticals Inc. (NASD:ACHN) Seasonal Chart

Educational Development Corp. (NASD:EDUC) Seasonal Chart

Educational Development Corp. (NASD:EDUC) Seasonal Chart

BCE, Inc. (NYSE:BCE) Seasonal Chart

BCE, Inc. (NYSE:BCE) Seasonal Chart

Bank Of Montreal (NYSE:BMO) Seasonal Chart

Bank Of Montreal (NYSE:BMO) Seasonal Chart

Tricon Capital Group Inc. (TSE:TCN.TO) Seasonal Chart

Tricon Capital Group Inc. (TSE:TCN.TO) Seasonal Chart

 

 

The Markets

Stocks closed sharply higher as the euphoria surrounding the dovish comments from the Fed carried over to the Thursday session.  The S&P 500 Index added almost one percent, ending the session at a new record high.  Energy, industrial, materials, and technology stocks topped the leaderboard as investors rotated toward under-owned segments of the market.  Short-covering was undoubtedly a factor.  This is something we had been anticipating going into the end of the quarter as those areas that investors were underweight (areas that have underperformed) should benefit from inflows amidst a typical portfolio rebalancing procedure going into the end of the quarter.

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Energy was the top performer on the day, buoyed by strength in oil services given that the price of oil spiked following news of escalating tensions between the US and Iran.  The Oil services ETF added over 4%, bouncing off of a 16 year low and horizontal support at $13.00.  The industry group has been on a path of underperformance for the past 8 years given the stagnation and volatility in the price of the underlying commodity.  While the peak period of seasonal strength for the industry came to an end in May, a subsequent period of strength running from July/August and into the middle of September can provide a brief lift in prices.  Summer demand supporting the price of the commodity and supply disruptions amidst the peak of hurricane season are factors behind this third quarter climb.  The window is open to find an entry point to this trade and Thursday’s gap higher from a level of support provides a fairly tempting trigger to act on.  First level of resistance is the 50-day moving average at $15.42.

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It’s that time again.  We are busy preparing our outlook for the month ahead, covering the each of the three prongs to our approach (technical, fundamental, and seasonal).  Subscribe now to be included on this distribution that provides guidance on how to manage your portfolio in July.

Sentiment on Thursday, as gauged by the put-call ratio, ended bullish at 0.76.  This is amongst the lowest levels of the year, providing a hint of investor complacency.

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Seasonal charts of companies reporting earnings today:

CarMax Inc (KMX) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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