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Stock Market Outlook for November 5, 2019


Lowest level on the put-call ratio since January 23rd of 2018 suggests investor complacency, skewing the risk-reward unfavourably for equity investors.

 

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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Safeguard Scientifics, Inc. (NYSE:SFE) Seasonal Chart

Safeguard Scientifics, Inc. (NYSE:SFE) Seasonal Chart

Affiliated Managers Group Inc. (NYSE:AMG) Seasonal Chart

Affiliated Managers Group Inc. (NYSE:AMG) Seasonal Chart

Brink's Co. (NYSE:BCO) Seasonal Chart

Brink’s Co. (NYSE:BCO) Seasonal Chart

USA Truck, Inc. (NASD:USAK) Seasonal Chart

USA Truck, Inc. (NASD:USAK) Seasonal Chart

West Fraser Timber Co. Ltd. (TSE:WFT.TO) Seasonal Chart

West Fraser Timber Co. Ltd. (TSE:WFT.TO) Seasonal Chart

Hormel Foods Corp. (NYSE:HRL) Seasonal Chart

Hormel Foods Corp. (NYSE:HRL) Seasonal Chart

Brookline Bancorp, Inc. (NASD:BRKL) Seasonal Chart

Brookline Bancorp, Inc. (NASD:BRKL) Seasonal Chart

TFI International Inc. (TSE:TFII.TO) Seasonal Chart

TFI International Inc. (TSE:TFII.TO) Seasonal Chart

 

 

The Markets

New record highs on US benchmarks as crowded defensive bets continue to unwind.  On Monday, the S&P 500 Index added four-tenths of one percent, gapping higher above the defined short-term trend channel that we presented at the end of last week.  The large-cap benchmark has become short-term overbought, which exhausted the momentum intraday on Monday, causing the index to close well off of the high of 3085.  The 50-hour moving average has provided support to the short-term path, suggesting downside risks towards 3043.  A retracement from this juncture would be inline with seasonal norms.  While November has seasonally been a strong month overall, the strength in the period has historically been derived by the start and the end of the month; between now and November 20th, losses are the norm.  The benchmark is already higher by 1.34% for the second to last month of the year, ahead of the 1.2% average return for the month overall.  The market has followed seasonal norms quite nicely over the past month, therefore the next move may be digestion of the gains that brought us here.

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It is not just stocks closer to home that are charting new 52-week highs.  The MSCI World ex-US Index has broken out of its multi-month range that was capped around 1950.  The span between 1800 and 1950 projects a calculated upside move towards 2100, which would be just shy of the previous high of 2173 recorded in January of 2018.  Global benchmarks, according to this aggregate measure, have effectively gone nowhere for over a decade, unable to surpass the all-time high charted in 2007 close to 2400.  Momentum of the relative performance compared with the S&P 500 Index has been positively diverging from price, hinting of waning underperformance, typically a precursor to a trend of outperformance.  Seasonally, the MSCI World ex-US Index tends to gain through the end of the year, peaking in the month of January.

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$MSWORLD

Sentiment on Monday, as gauged by the put-call ratio, ended bullish at 0.65.  This is the lowest level since January 23rd of 2018, just before the market peak charted a few days later on January 26th that led to the over 10% drawdown, from peak to trough, on the S&P 500 Index.  A put-call ratio this low is indicative of complacency, leaving markets vulnerable to a shock event, should one be realized.  Complacent readings on their own are not necessarily signals to immediately sell, but it does provide reason for caution as the risk-reward is skewed unfavourably for equity investors.  We’ll see how this indicator plays out this time, but our caution in equities, as a result, has gone up exponentially after a number of months of being bullish and fully invested in stocks.

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Seasonal charts of companies reporting earnings today:

Fidelity National Information Services, Inc. Seasonal Chart Becton, Dickinson and Company Seasonal Chart Allergan plc. Seasonal Chart Emerson Electric Company Seasonal Chart Telefonica SA Seasonal Chart Regeneron Pharmaceuticals, Inc. Seasonal Chart Newmont Goldcorp Corporation Seasonal Chart Zimmer Biomet Holdings, Inc. Seasonal Chart Eversource Energy Seasonal Chart PPL Corporation Seasonal Chart Microchip Technology Incorporated Seasonal Chart Telefonica Brasil S.A. Seasonal Chart Diamondback Energy, Inc. Seasonal Chart Plains All American Pipeline, L.P. Seasonal Chart Expeditors International of Washington, Inc. Seasonal Chart Arconic Inc. Seasonal Chart Host Hotels & Resorts, Inc. Seasonal Chart Alleghany Corporation Seasonal Chart Autohome Inc. Seasonal Chart Mylan N.V. Seasonal Chart Omega Healthcare Investors, Inc. Seasonal Chart DaVita Inc. Seasonal Chart Henry Schein, Inc. Seasonal Chart Insulet Corporation Seasonal Chart Devon Energy Corporation Seasonal Chart Westlake Chemical Corporation Seasonal Chart Caesars Entertainment Corporation Seasonal Chart Lamar Advertising Company Seasonal Chart Assurant, Inc. Seasonal Chart Jones Lang LaSalle Incorporated Seasonal Chart Voya Financial, Inc. Seasonal Chart Douglas Emmett, Inc. Seasonal Chart Tapestry, Inc. Seasonal Chart Catalent, Inc. Seasonal Chart Jazz Pharmaceuticals plc Seasonal Chart TIM Participacoes S.A. Seasonal Chart Louisiana-Pacific Corporation Seasonal Chart Intrepid Potash, Inc Seasonal Chart Mallinckrodt plc Seasonal Chart Frontier Communications Corporation Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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