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Stock Market Outlook for October 29, 2019


S&P 500 Equally Weighted Index continues to underperform its Capitalization Weighted counterpart, a prolonged trend last seen prior to the 2008/09 meltdown in equity markets.

 

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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Novanta Inc. (NASD:NOVT) Seasonal Chart

Novanta Inc. (NASD:NOVT) Seasonal Chart

Cooper Tire & Rubber Co. (NYSE:CTB) Seasonal Chart

Cooper Tire & Rubber Co. (NYSE:CTB) Seasonal Chart

Coro Mining Corp. (TSE:COP.TO) Seasonal Chart

Coro Mining Corp. (TSE:COP.TO) Seasonal Chart

Cabot Corp. (NYSE:CBT) Seasonal Chart

Cabot Corp. (NYSE:CBT) Seasonal Chart

Dover Motorsports, Inc. (NYSE:DVD) Seasonal Chart

Dover Motorsports, Inc. (NYSE:DVD) Seasonal Chart

Canadian General Investments, Ltd. (TSE:CGI.TO) Seasonal Chart

Canadian General Investments, Ltd. (TSE:CGI.TO) Seasonal Chart

Analog Devices, Inc. (NASD:ADI) Seasonal Chart

Analog Devices, Inc. (NASD:ADI) Seasonal Chart

Fluidigm Corp. (NASD:FLDM) Seasonal Chart

Fluidigm Corp. (NASD:FLDM) Seasonal Chart

WPP Group PLC (NYSE:WPP) Seasonal Chart

WPP Group PLC (NYSE:WPP) Seasonal Chart

Copart, Inc. (NASD:CPRT) Seasonal Chart

Copart, Inc. (NASD:CPRT) Seasonal Chart

Honeywell Intl (NYSE:HON) Seasonal Chart

Honeywell Intl (NYSE:HON) Seasonal Chart

 

 

The Markets

Markets advanced to open the week as stocks in the US charted new all-time highs.  The S&P 500 Index added just over half of one percent to cross above the previous hurdle at 3027.98, ending the day at 3039.42.  It is at this point that we want to apply a three-day notice period to confirm that the breakout is in fact real.  Once confirmed, the breakout from the 200-point summer range projects a calculated upside target of approximately 3225.  Major moving averages are all pointing higher, suggesting positive trends across multiple timescales.

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Encouraging is the continued adoption of cyclical bets as the defensive trade unwinds.  The consumer staples sector closed down on the day by two-tenths of a percent, the utilities sector was lower by around 1.4%, and REITs were down by over one percent.  On the flipside, technology was higher by almost 1.3% and communication services was up by over nine-tenths of one percent.  The unwind of the crowded defensive bet presents plenty of fuel for the ongoing advance of broad market benchmarks, particularly in previous unloved cyclical market segments.

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While the market rotates to more risk-on segments, momentum stocks have not been the beneficiary of this switch.  The iShares Momentum Factor ETF (MTUM) has significantly underperformed the market over the past couple of months, trading lower as the broader market trades higher.  FANG stocks (Facebook, Amazon, Netflix, and Google) are showing similar.  Having peaked in the month of July, these stocks are now well off of the previous peak.  There is not anything necessarily wrong with this as long as the breadth of the market remains upbeat and not reliant on the performance of a select group of previous market darlings.

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The S&P 500 Equally Weighted Index provides us with some clue as to the breadth of the market.  With the gain on Monday’s session of three-tenths of one percent, the equally weighted benchmark remains below resistance, having yet to break out.  The S&P 500 Equally Weighted benchmark has been underperforming its capitalization weighted benchmark for the past few years as investors become much more selective with their trades.  This is clearly not a “buy-anything market,” as was the case between 2009 and 2015 when the equally weighted index outperformed the capitalization weighted counterpart.  This can be indicative of a late-stage market.  We’ll monitor the situation accordingly.

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Sentiment on Monday, as gauged by the put call ratio, ended bullish at 0.79.

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Sectors and Industries entering their period of seasonal strength:

Industrials Sector Seasonal Chart

INDUSTRIAL Relative to the S&P 500
INDUSTRIAL Relative to the S&P 500

INDUSTRIAL Monthly Averages

 

 

Seasonal charts of companies reporting earnings today:

Mastercard Incorporated Seasonal Chart Merck & Company, Inc. Seasonal Chart Pfizer, Inc. Seasonal Chart BP p.l.c. Seasonal Chart Amgen Inc. Seasonal Chart Stryker Corporation Seasonal Chart Mondelez International, Inc. Seasonal Chart Chubb Limited Seasonal Chart ConocoPhillips Seasonal Chart S&P Global Inc. Seasonal Chart Ecolab Inc. Seasonal Chart General Motors Company Seasonal Chart Marsh & McLennan Companies, Inc. Seasonal Chart Orange Seasonal Chart HCA Healthcare, Inc. Seasonal Chart Public Storage Seasonal Chart Ecopetrol S.A. Seasonal Chart Advanced Micro Devices, Inc. Seasonal Chart Eaton Corporation, PLC Seasonal Chart Allstate Corporation (The) Seasonal Chart ONEOK, Inc. Seasonal Chart Ingersoll-Rand plc (Ireland) Seasonal Chart Electronic Arts Inc. Seasonal Chart Cummins Inc. Seasonal Chart Digital Realty Trust, Inc. Seasonal Chart Verisk Analytics, Inc. Seasonal Chart Corning Incorporated Seasonal Chart KKR & Co. Inc. Seasonal Chart Edison International Seasonal Chart Kellogg Company Seasonal Chart Boston Properties, Inc. Seasonal Chart Fresenius Medical Care Corporation Seasonal Chart Martin Marietta Materials, Inc. Seasonal Chart Incyte Corporation Seasonal Chart Seattle Genetics, Inc. Seasonal Chart Arch Capital Group Ltd. Seasonal Chart Maxim Integrated Products, Inc. Seasonal Chart Markel Corporation Seasonal Chart Waters Corporation Seasonal Chart UDR, Inc. Seasonal Chart Extra Space Storage Inc Seasonal Chart Fidelity National Financial, Inc. Seasonal Chart Paycom Software, Inc. Seasonal Chart C.H. Robinson Worldwide, Inc. Seasonal Chart IDEX Corporation Seasonal Chart Zebra Technologies Corporation Seasonal Chart Exact Sciences Corporation Seasonal Chart Leidos Holdings, Inc. Seasonal Chart FMC Corporation Seasonal Chart American Financial Group, Inc. Seasonal Chart A.O Smith Corporation Seasonal Chart RenaissanceRe Holdings Ltd. Seasonal Chart Liberty Property Trust Seasonal Chart Bio-Techne Corp Seasonal Chart Molina Healthcare Inc Seasonal Chart IPG Photonics Corporation Seasonal Chart Hubbell Inc Seasonal Chart Zendesk, Inc. Seasonal Chart Xerox Holdings Corporation Seasonal Chart Chemed Corp. Seasonal Chart EPR Properties Seasonal Chart Unum Group Seasonal Chart AGCO Corporation Seasonal Chart Herbalife Nutrition Ltd. Seasonal Chart MDU Resources Group, Inc. Seasonal Chart National Instruments Corporation Seasonal Chart GrubHub Inc. Seasonal Chart Rexford Industrial Realty, Inc. Seasonal Chart Axis Capital Holdings Limited Seasonal Chart EMCOR Group, Inc. Seasonal Chart Boston Beer Company, Inc. (The) Seasonal Chart AutoNation, Inc. Seasonal Chart Penske Automotive Group, Inc. Seasonal Chart Mattel, Inc. Seasonal Chart Steven Madden, Ltd. Seasonal Chart Ryder System, Inc. Seasonal Chart The Cheesecake Factory Incorporated Seasonal Chart Denny's Corporation Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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