Stock Market Outlook for September 24, 2019
Bond and equity funds facing a critical test around their respective 20-day moving averages.
*** 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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Innergex Renewable Energy Inc. (TSE:INE.TO) Seasonal Chart
AAR Corp. (NYSE:AIR) Seasonal Chart
Oshkosh Corp. (NYSE:OSK) Seasonal Chart
Knight-Swift Transportation Holdings Inc. (NYSE:KNX) Seasonal Chart
Kelly Services, Inc. (NASD:KELYA) Seasonal Chart
Allison Transmission Holdings, Inc. (NYSE:ALSN) Seasonal Chart
The Markets
Stocks closed essentially unchanged on Monday following the release of weak European manufacturing data. The S&P 500 Index traded on either side of the flatline throughout the session, finally ending the day lower by a mere basis point. The rising 20-day moving average appears poised to connect with price and reaction to the short-term hurdle will be critical. The benchmark broke above its 20-day moving average at the end of August, putting the variable hurdle into a position of support. Confirmation of support would, inevitably, keep the short-term rising trend intact, giving the benchmark another shot at resistance presented by the all-time high around 3025.
The S&P 500 Index is not the only area where reaction to 20-day moving average will be scrutinized. Bond prices took a shot at the short-term hurdle on Monday, showing gains while stocks showed losses, then reversing through the afternoon session. For the long-term treasury bond ETF (TLT), the widely traded fixed income fund pulled back as soon at the hurdle was hit, closing marginally lower on the day. Momentum indicators for the fixed income ETF had been showing characteristics of a bullish trend since the end of last year, but the recent pullback from a parabolic pace through the month of August has put into question the sustainability of the bullish pace. MACD is at the lowest level since last November, holding below the zero line. A failure for the fixed income ETF to chart a new high would provide fairly conclusive evidence that the trend of higher-highs and higher-lows has concluded and an intermediate move lower is underway. This rotation of funds from fixed income could provide a catalyst for stocks. Seasonally, treasury bonds tend to peak, on average, in the month of September.
This weekend we held our annual symposium at the Toronto Money Show, discussing the topic of Improving Investment Returns by combining Seasonal, Fundamental, and Technical Analysis. If you could not attend, we’ve uploaded our presentation for you to access and view at your leisure. Included within are the status of where the economy stands now and potential candidates for your seasonal portfolio through the last quarter of the year. You can login and view the PDF of our presentation via the following link: https://charts.equityclock.com/featured/to-money-show-presentation-2019
Sentiment on Monday, as gauged by the put-call ratio, ended bearish at 1.03.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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