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Stock Market Outlook for October 2, 2019


Gold mining benchmark rolling over right on cue.

 

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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Robert Half Intl, Inc. (NYSE:RHI) Seasonal Chart

Robert Half Intl, Inc. (NYSE:RHI) Seasonal Chart

Deere & Co. (NYSE:DE) Seasonal Chart

Deere & Co. (NYSE:DE) Seasonal Chart

NVIDIA Corp. (NASD:NVDA) Seasonal Chart

NVIDIA Corp. (NASD:NVDA) Seasonal Chart

Silicon Laboratories, Inc. (NASD:SLAB) Seasonal Chart

Silicon Laboratories, Inc. (NASD:SLAB) Seasonal Chart

American Airlines Group Inc. (NASD:AAL) Seasonal Chart

American Airlines Group Inc. (NASD:AAL) Seasonal Chart

Companhia Brasileira de Distribuicao, SA (NYSE:CBD) Seasonal Chart

Companhia Brasileira de Distribuicao, SA (NYSE:CBD) Seasonal Chart

Resolute Forest Products Inc. (TSE:RFP.TO) Seasonal Chart

Resolute Forest Products Inc. (TSE:RFP.TO) Seasonal Chart

QUALCOMM Inc. (NASD:QCOM) Seasonal Chart

QUALCOMM Inc. (NASD:QCOM) Seasonal Chart

 

Upcoming BNN Appearance:

I will be on BNN’s Market Call Tonight at 6:00pm ET on Thursday, October 3rd taking your calls on Technical Analysis and Seasonal Investing.  CALL TOLL-FREE 1-855-326-6266,  EMAIL marketcall@bnnbloomberg.ca,  or TWEET @MarketCall.

 

The Markets

Stocks dipped on Tuesday following the release of a concerning read of manufacturing conditions in the US.  Stocks initially opened firmly higher, but immediately reversed following the release of the ISM Manufacturing report for September, which came in at 47.8.  Analysts were expecting a read of 50.0, the dividing level between expansion and contraction.  The S&P 500 Index shed 1.23%, closing below its 50-day moving average and testing the upper limit of August’s short-term trading range that topped out around 2940.  The potential of a double-top around 3025 continues to  pose a threat; the negative setup would be fulfilled by a break below August’s low at 2825.  Momentum indicators remain on a sell signal following bearish crossovers that were generated in the final week of September.  The bears will be seeking follow-through below the 50-day moving average to give further credence to the double-top, while the bulls will be seeking stability, keeping the argument of support around the 50-day moving average intact.  We’ll know in short order.

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While the prospect of a double-top is examined on the S&P 500, another topping pattern is playing out across other benchmarks.  The S&P 500 Industrial, Material, Financial, Consumer Discretionary, Technology, and Communication Services sectors are either showing a triple-top or head-and-shoulders topping pattern, a negative setup that would be confirmed by break of support around the August lows. 

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A shorter-term head-and-shoulders pattern is apparent on the chart of the gold mining index, which attempted to rally on Tuesday amidst the volatility, but came under pressure by the closing bell.  Downside target of this third quarter volatility hedge points to the 200-day moving average, or another 12% below present levels.  In the Seasonal Advantage Portfolio that we manage in partnership with Castlemoore, we took profits in our gold mining positions last week when it became apparent that a lower-high would be realized, brining an end to the short-term trend of higher-highs and higher-lows.  Seasonally, gold mining stocks tend to peak by the end of September, on average, therefore the rollover this year is being realized right on cue.

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http://charts.equityclock.com/seasonal_charts/indexes/$HUI.PNG

On the economic front, a report on construction spending in the US was released during Tuesday’ session.  The headline print of August’s report indicates that activity increased by 0.1%, which was weaker than the consensus estimate that called for a 0.3% rise. The year-over-year change now sits at -1.9%. Stripping out the seasonal adjustments, construction spending in the US actually increased by 0.7% in August, which is weaker than the 2.3% increase that is average for this time of year. The year-to-date change is higher by 24.9%, which is weaker than the 27.8% increase that is average with two-thirds of the year now complete.  Read more about the metrics behind the aggregate result by subscribing to our service and we’ll send you our report.  Today’s report includes stocks that are in a position to benefit seasonally from a certain area of construction spending in the US. 

Total Construction Spending  Seasonal Chart

North of the border, Statscan released Gross Domestic Product (GDP) figures for July.  The report indicated that GDP in this country was unchanged in July, which is a slight miss versus expectations of an increase of 0.1%. The year-over-year increase now sits at 1.3%. Stripping out the seasonal adjustments, GDP in Canada actually declined by 5.5% in July, which is marginally better than the 6.2% decline that is average for the summer month. The year-to-date pace is now 0.5% above the seasonal average trend, which is the weakest pace in three years.  We sent out further insight to subscribers, including comments on the Canadian Dollar.  Signup now to get the full story.

http://charts.equityclock.com/seasonal_charts/economic_data/v65201756_seasonal_chart.PNG

Sentiment on Tuesday, as gauged by the put-call ratio, ended bearish at 1.09.

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Seasonal charts of companies reporting earnings today:

Paychex, Inc. Seasonal Chart Lennar Corporation Seasonal Chart RPM International Inc. Seasonal Chart Acuity Brands, Inc. Seasonal Chart Bed Bath & Beyond Inc. Seasonal Chart Amyris, Inc. Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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