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Stock Market Outlook for November 8, 2019


Treasury prices and defensive sectors moving below trendline support as the risk-off trade unwinds.

 

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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Nicholas Financial, Inc. (NASD:NICK) Seasonal Chart

Nicholas Financial, Inc. (NASD:NICK) Seasonal Chart

Sensata Technologies Holding N. V. (NYSE:ST) Seasonal Chart

Sensata Technologies Holding N. V. (NYSE:ST) Seasonal Chart

Amneal Pharmaceuticals, Inc. (NYSE:AMRX) Seasonal Chart

Amneal Pharmaceuticals, Inc. (NYSE:AMRX) Seasonal Chart

Aviat Networks Inc. (NASD:AVNW) Seasonal Chart

Aviat Networks Inc. (NASD:AVNW) Seasonal Chart

Middlefield Banc Corp. (NASD:MBCN) Seasonal Chart

Middlefield Banc Corp. (NASD:MBCN) Seasonal Chart

Chuy's Holdings Inc. (NASD:CHUY) Seasonal Chart

Chuy’s Holdings Inc. (NASD:CHUY) Seasonal Chart

Capital Sr Living Corp. (NYSE:CSU) Seasonal Chart

Capital Sr Living Corp. (NYSE:CSU) Seasonal Chart

Teva Pharmaceutical Industries Ltd. (NYSE:TEVA) Seasonal Chart

Teva Pharmaceutical Industries Ltd. (NYSE:TEVA) Seasonal Chart

Technical Communications Corp. (NASD:TCCO) Seasonal Chart

Technical Communications Corp. (NASD:TCCO) Seasonal Chart

Stifel Financial Corp. (NYSE:SF) Seasonal Chart

Stifel Financial Corp. (NYSE:SF) Seasonal Chart

Fortune Brands Home & Security, Inc. (NYSE:FBHS) Seasonal Chart

Fortune Brands Home & Security, Inc. (NYSE:FBHS) Seasonal Chart

Endo Pharmaceuticals Holdings, Inc. (NASD:ENDP) Seasonal Chart

Endo Pharmaceuticals Holdings, Inc. (NASD:ENDP) Seasonal Chart

HD Supply Holdings, Inc. (NASD:HDS) Seasonal Chart

HD Supply Holdings, Inc. (NASD:HDS) Seasonal Chart

 

 

The Markets

Stocks pushed higher on Thursday as news that trade tariffs between the US and China would be rolled back reignited investor enthusiasm.  The S&P 500 Index closed higher by just less than three-tenths of one percent, achieving a new record closing high.  Despite the positive result, the benchmark ended well off of the high of the session as defensive sectors, such as utilities, REITs, and consumer staples, came under pressure amidst the exodus from defense to risk.  The Utilities ETF (XLU) was lower by 1.35%, maintaining a trend of underperformance versus the market that has been in place since the start of October.  This is quite the shift compared to the same period last year when investors shied away from risk and ploughed into the defensive bet, resulting in a divergence compared to seasonal norms.  Historically, the utilities sector has underperformed the market, on average, between the start of October through to early December as investors adopt a bullish bias going into the end of year consumer and business spending period.  A bout of mean reversion then carries the sector into the new year.

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http://charts.equityclock.com/seasonal_charts/UTILITIES_RelativeToSPX.PNG

The strain in the defensive, often interest rate sensitive, sectors during Thursday’s session stemmed from the surge in yields in a continuation of the unwind of the strength in bond prices.  The iShares 7-10 year treasury bond ETF was lower by eight-tenths of one percent; the 20+ year treasury bond ETF (TLT) was lower by 1.81%.  Both broke levels of support presented by the September lows, confirming trends of lower-highs and lower-lows.  This is a shift from the trend of higher-highs and higher-lows that has dominated the past year amidst concerns pertaining to the economy.  The 20 and 50-day moving averages have been moving lower ever since the end of the period of seasonal strength for bonds at the beginning of October.  Next hurdle for the two bond ETFs is their respective 200-day moving averages ($107.84 for IEF, $130.39 for TLT).  We have been noting the parabolic trend in bond prices (and yields) to subscribers of our service for some time, suggesting that an unwind was inevitable, likely coinciding with the risk-on shift in equity markets.  Given the significance of the inflows to risk-off trades over the past year, the unwind could still have room to go.  Seasonally, investors tend to be cyclically focussed through the end of the year.

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http://charts.equityclock.com/seasonal_charts/futures/CME_TY1_RelativeToSPX.PNG

While the gains in stocks and the strength in cyclical sectors is certainly comforting, investor sentiment again fell into complacent territory on Thursday, according to the put-call ratio.   The level of puts compared with calls fell to 0.66.  Levels this low have, in recent history, coincided with significant equity market peaks.

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Seasonal charts of companies reporting earnings today:

Enbridge Inc Seasonal Chart Duke Energy Corporation Seasonal Chart Honda Motor Company, Ltd. Seasonal Chart Ameren Corporation Seasonal Chart Magna International, Inc. Seasonal Chart Aercap Holdings N.V. Seasonal Chart BRF S.A. Seasonal Chart STARWOOD PROPERTY TRUST, INC. Seasonal Chart KT Corporation Seasonal Chart Essent Group Ltd. Seasonal Chart Colony Capital, Inc. Seasonal Chart Diamondrock Hospitality Company Seasonal Chart Bottomline Technologies, Inc. Seasonal Chart Enerplus Corporation Seasonal Chart E.W. Scripps Company (The) Seasonal Chart U S Concrete, Inc. Seasonal Chart Fly Leasing Limited Seasonal Chart Entercom Communications Corp. Seasonal Chart Stemline Therapeutics, Inc. Seasonal Chart Ares Commercial Real Estate Corporation Seasonal Chart Summit Midstream Partners, LP Seasonal Chart Recro Pharma, Inc. Seasonal Chart Genie Energy Ltd. Seasonal Chart Olympic Steel, Inc. Seasonal Chart OFS Capital Corporation Seasonal Chart Unit Corporation Seasonal Chart UTStarcom Holdings Corp Seasonal Chart inTest Corporation Seasonal Chart Vertex Energy, Inc Seasonal Chart PLx Pharma Inc. Seasonal Chart Sequential Brands Group, Inc. Seasonal Chart Superior Drilling Products, Inc. Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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