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Stock Market Outlook for September 25, 2019


The weakest July increase in US home prices since 2008 suddenly puts housing back on the list of economic concerns.

 

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:

Subscribers – Click on the relevant link to view the full profile. Not a subscriber? Signup here.

Capstone Mining Corp. (TSE:CS.TO) Seasonal Chart

Capstone Mining Corp. (TSE:CS.TO) Seasonal Chart

NACCO Industries, Inc. (NYSE:NC) Seasonal Chart

NACCO Industries, Inc. (NYSE:NC) Seasonal Chart

Hon Industries, Inc. (NYSE:HNI) Seasonal Chart

Hon Industries, Inc. (NYSE:HNI) Seasonal Chart

 

 

The Markets

Stocks sold off on Tuesday as headlines crossed that the House Speaker Nancy Pelosi would move forward with an impeachment inquiry against Donald Trump.  The S&P 500 Index shed just over eight-tenths of one percent, ending the day just marginally below its 20-day moving average by the closing bell.  While highlighting the bullish case for equities in recent weeks, we must now entertain a bearish resolution.  Intermediate support remains at the 50-day moving average around 2950, however, a breakdown below this hurdle would set the stage for a double-top pattern following rejection at short-term resistance around 3020.  The pattern would be completed by a breakdown below support at 2825, projecting a move lower towards 2630.  A MACD Sell signal was generated by Tuesday’s downfall, brining an abrupt end to the positive run that began with a buy signal according to this indicator around the end of August.  The crossover is being realized at a lower level than the one that preceded it, deriving a negative momentum divergence, raising concerns pertaining to the health of the broad market trend.

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While the intermediate hurdle presented by the 50-day moving average will be looked upon as support for the S&P 500 Index, the NASDAQ 100, which has become a key metric for the momentum trade, did break definitively below its equivalent level.  A similar negative momentum divergence has been apparent through the summer.  Weakness in equity market benchmarks is typical at this time of year, as we highlighted in our monthly report to subscribers, but the setups are now becoming threatening over a longer timeframe.  Quite simply, equity benchmarks in the US had been showing a trend of higher-high and higher-lows since the significant low in December, but the lack of new highs on any broad market benchmark is suggestive that this positive trend is over.

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On the economic front, a concerning report on home prices was released before Tuesday’s session.  The headline print of the Corelogic Case-Shiller Home Price Index indicated that home prices in the 20 largest cities in the US were unchanged in July, missing the consensus analyst estimate that called for an increase of 0.1%.  Stripping out the seasonal adjustments, home prices did increase, but only by a mere 0.1%, far less than the 0.8% increase that is average for the summer month.  This is the weakest July increase since 2008.  Home prices are now higher year-to-date by 2.5%, which is 1.4% below the seasonal average trend.  This is the weakest pace through this point in the year since 2011. Subscribers can login and view the seasonal charts for this report via the following link: https://charts.equityclock.com/sp-corelogic-case-shiller-home-price-index-city-breakdown

http://charts.equityclock.com/seasonal_charts/economic_data/SPCS20RNSA_seasonal_chart.PNG

Sentiment on Tuesday, as gauged by the put-call ratio, ended bearish at 1.15.

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Seasonal charts of companies reporting earnings today:

KB Home Seasonal Chart H. B. Fuller Company Seasonal Chart Worthington Industries, Inc. Seasonal Chart AAR Corp. Seasonal Chart Pier 1 Imports, Inc. Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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