Stock Market Outlook for October 30, 2019
Make or break moment for the rising trend channel on the US Dollar Index with GDP and FOMC set to act as an influence on Wednesday.
*** 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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Cognex Corp. (NASD:CGNX) Seasonal Chart
Forestar Group Inc. (NYSE:FOR) Seasonal Chart
Jacobs Engineering Group Inc. (NYSE:JEC) Seasonal Chart
ON Semiconductor Corp. (NASD:ON) Seasonal Chart
Axos Financial, Inc. (NYSE:AX) Seasonal Chart
Colfax Corp. (NYSE:CFX) Seasonal Chart
Hologic, Inc. (NASD:HOLX) Seasonal Chart
AutoWeb, Inc. (NASD:AUTO) Seasonal Chart
Johnson Controls Intl plc (NYSE:JCI) Seasonal Chart
Quanex Corp. (NYSE:NX) Seasonal Chart
The Markets
Stocks were generally flat on Tuesday as investors digested the record highs charted during the previous day’s session. The S&P 500 Index ended lower by just less than a tenth of a percent, remaining above the gap opened during Monday’s session around the previous intraday peak at 3028. Previous short-term horizontal resistance is now in a position of support at 3020.
Wednesday’s session brings a couple of catalysts and the impact on the US dollar will be closely scrutinized. The first read of third quarter GDP will be released before Wednesday’s bell, while the FOMC meeting announcement will be released later in the afternoon. Both events have the potential to be highly influential on the domestic currency. The US Dollar Index broke below short and intermediate levels of support around 20 and 50-day moving averages over the past few weeks, helping to support stocks ahead of the average start to the best six months of the year at the end of October. The 200-day moving average is now the hurdle on the downside. The currency has remained, stubbornly, in a long-term trend of higher-highs and higher-lows, providing a headwind to corporate fundamentals. The desire for risk assets to flourish is a weaker currency. Seasonally, the US Dollar Index has entered into its strongest period of the year, which sees the appreciation of the currency through the middle of November. A realization of this seasonal norm would be a burden on stocks that have just freshly broken to new highs. We’ll monitor things accordingly once the dust settles from Wednesday’s announcements.
Sentiment on Tuesday, as gauged by the put-call ratio, ended bullish at 0.85.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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