Stock Market Outlook for September 10, 2019
Broken ascending triangle patterns on the charts of major benchmarks project upside potential of 2% to 4% above present levels.
*** 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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United Financial Bancorp Inc. (NASD:UBNK) Seasonal Chart
Science Applications International Corp. (NYSE:SAIC) Seasonal Chart
Blackrock, Inc. (NYSE:BLK) Seasonal Chart
Employers Holdings Inc. (NYSE:EIG) Seasonal Chart
C.H. Robinson Worldwide, Inc. (NASD:CHRW) Seasonal Chart
The Markets
Stocks closed mixed on Monday as investors continue to digest the breakout in equity markets from short-term resistance recorded last week. The S&P 500 Index was essentially unchanged, continuing to hold the gap charted last Thursday around the 50-day moving average. The breakout from an ascending triangle projects upside towards 3055.
Similar setups can be seen on the charts of other benchmarks. The NASDAQ 100 projects upside towards 8150, or around 4% above present levels, while the Dow Jones Industrial average projects upside towards 27,500, or 2.5% above current levels. Short-term momentum indicators had become overbought as of Friday, therefore some digestion appears inevitable.
Gradually, investors are adopting the bias that the breakout in equity benchmarks was legitimate and defensive bets are being sold off. The long-term treasury bond ETF (TLT) fell 1.78% on Monday, breaking firmly below its 20-day moving average. The gold miners ETF (GDX) fell by 2.63%, moving below its 50-day moving average. Defensive equity sectors (staples, utilities and REITs) were all down more than the broad market. The month of September is notorious for rotation like this as investors sell their winners and re-allocate to those areas that they are underweight. However, this tendency typically plays out closer to the end of the month as portfolio managers rebalance their books ahead of the end of the third quarter. Energy and financial stocks have been the beneficiary of this rotation, two areas that investors were likely underweight coming into September.
On the economic front, vehicle sale totals for August were released at the end of last week. The report indicated that total vehicles sales jumped by 16.9% last month, which is more than three times the 5.2% increase that is average for August. The result places the year-to-date change in positive territory at 1.1%, still below the 5.5% increase that is average through the first two-thirds of the year. Subscribe now to find out what the results say about the strength of the consumer and of business.
Sentiment on Monday, as gauged by the put-call ratio, ended close to neutral at 0.98.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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