Stock Market Outlook for July 17, 2019
Summer rally period that began on June 27th peaks today, on average.
*** 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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Altus Group Ltd. (TSE:AIF.TO) Seasonal Chart
TELUS Corp. (TSE:T.TO) Seasonal Chart
Rogers Corp. (NYSE:ROG) Seasonal Chart
Eldorado Gold Corp. (TSE:ELD.TO) Seasonal Chart
The Markets
Stocks drifted slightly lower on Tuesday as investors reacted to comments from President Trump that there is still a “long way to go” on trade talks with China. The S&P 500 Index dipped by a third of one percent, maintaining levels above 3000. While previous resistance at 2950 is an important level to watch on a retracement attempt, levels down to the 50-day moving average, now at 2894, are fair game in order to keep the bullish trend intact. Momentum indicators on the daily chart are showing signs of peaking. MACD is converging with its signal line, suggesting a sell signal may be imminent. The Relative Strength Index (RSI) has stalled around overbought territory. Stocks are vulnerable to rolling over in the short-term unless a catalyst to fuel an upside move is achieved. The summer rally period for the broad equity market peaks, on average, today, therefore a retracement following the recent breakout would be healthy and welcomed. From the start of the average summer rally period on June 27th through to Tuesday’s close, the S&P 500 Index gained 3.10%, well ahead of the 1.16% gain that has been the average over the past 50 years. Subscribers to our service were alerted to and positioned for this summer seasonal uptick via our monthly outlook, which includes our proprietary seasonal portfolio allocation. Don’t miss the next seasonal trend. Subscribe now!
Bucking the trend of the broader market decline on Tuesday were shares of transportation companies following upbeat earnings from JB Hunt. The Dow Jones Transportation Average rallied to the tune of 1.83% on Tuesday, continuing to advance beyond a convergence of moving averages around 10,400. The benchmark remains within a range between 9,700 and 11,200. It would be difficult to be bullish of the broader transportation industry until a break of the upper limit is achieved. We sent out analysis pertaining to a key metric of shipping activity in the US to subscribers on Tuesday. Signup now and we’ll send you our report.
On the economic front, a report on retail sales in the US was released before the opening bell. The headline print of June’s report indicates that activity increased by 0.4% last month, beating the consensus estimate that called for a rise of 0.1%. Less the more volatile components of autos and gas, the increase was even better at 0.7%, surpassing estimates that called for a 0.4% increase. Stripping out the seasonal adjustments, total retail trade actually declined by 5.5%, which is weaker than the 2.6% decline that is average for this time of year. The result places the year-to-date change 2.2% above the seasonal average trend. This is the best first half of the year performance that we have on record with data spanning the past 27 years. We sent out further analysis to subscribers. Login now to access this report.
Sentiment on Tuesday, as gauged by the put-call ratio, ended slightly bullish at 0.90.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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