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Stock Market Outlook for August 20, 2019


US equity benchmarks have essentially gone nowhere over the past year and a half as the Citigroup Economic Surprise Index declined, but it is now on an upswing – will stocks follow suit?

 

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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Telecom Argentina (NYSE:TEO) Seasonal Chart

Telecom Argentina (NYSE:TEO) Seasonal Chart

Carnival Plc. (NYSE:CUK) Seasonal Chart

Carnival Plc. (NYSE:CUK) Seasonal Chart

Cree, Inc. (NASD:CREE) Seasonal Chart

Cree, Inc. (NASD:CREE) Seasonal Chart

Meredith Corp. (NYSE:MDP) Seasonal Chart

Meredith Corp. (NYSE:MDP) Seasonal Chart

Network Appliance, Inc. (NASD:NTAP) Seasonal Chart

Network Appliance, Inc. (NASD:NTAP) Seasonal Chart

Raymond James Financial Inc. (NYSE:RJF) Seasonal Chart

Raymond James Financial Inc. (NYSE:RJF) Seasonal Chart

Hawkins Chemical, Inc. (NASD:HWKN) Seasonal Chart

Hawkins Chemical, Inc. (NASD:HWKN) Seasonal Chart

 

 

The Markets

Stocks continued to rebound on Monday as bond yields came off the lows set last week.  The S&P 500 Index gained 1.21%, moving back towards resistance presented by the 20 and 50-day moving averages. 

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Monday’s move opened a gap in the 2900 to 2920 zone on the large-cap benchmark as investors continue to jump back and forth between risk-off and risk-on.  This is now the fourth gap charted in this range just in the month of August, highlighting the significance of this zone to the market.  A short-term double-bottom low around 2825 presents the basis of a bullish setup; should price break above resistance around 2940, the theoretical target is towards 3055, based on the 115 point range between the upper and lower limits of this short-term span.  The levels of reference are numerous as the market seeks to find an equilibrium between buyers and sellers.

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Perhaps a benefit to stocks in the near-term is the fact that economic data appears to be coming in stronger than analysts estimates, according to the Citigroup Economic Surprise Index.  The gauge, which measures the degree to which actual economic results compare with analyst estimates, has been increasing since the start of third quarter, hinting of the conclusion of the year-and-a-half long trend of declines.  Following the passage of the Trump tax cuts, expectations for the economy ramped up, however, actual results failed to deliver on the euphoric forecasts.  The equity market has essentially gone nowhere since.  But as expectations and reality converge, as it appears to have done through the second quarter, the indicator found a low.  This could be conducive to flushing out the negative sentiment that has flourished for the past year, which has sent investors into bonds and other defensive assets.  This is just speculation at present, but the sustainability of the defensive trade is certainly in question, particularly with the parabolic move lower in treasury yields in recent months.  An unwind of the defensive bet could prove to be beneficial for risk assets.

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Released to subscribers on Monday was the latest look at shipping activity in the US, a leading indicator of broader economic activity.  Subscribe now and we’ll send it to you.

Sentiment on Monday, as gauged by the put-call ratio, ended slightly bullish at 0.94.

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Seasonal charts of companies reporting earnings today:

Cree, Inc. (CREE) Seasonal Chart Fanhua Inc. (FANH) Seasonal Chart Harmony Gold Mining Company Limited (HMY) Seasonal Chart Home Depot, Inc. (The) (HD) Seasonal Chart Jack Henry & Associates, Inc. (JKHY) Seasonal Chart Kohl's Corporation (KSS) Seasonal Chart La-Z-Boy Incorporated (LZB) Seasonal Chart Medtronic plc (MDT) Seasonal Chart Nordson Corporation (NDSN) Seasonal Chart Photronics, Inc. (PLAB) Seasonal Chart Premier, Inc. (PINC) Seasonal Chart ScanSource, Inc. (SCSC) Seasonal Chart   TJX Companies, Inc. (The) (TJX) Seasonal Chart Toll Brothers, Inc. (TOL) Seasonal Chart Urban Outfitters, Inc. (URBN) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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