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Stock Market Outlook for November 18, 2019


S&P 500 Index has now become the most overbought since January of 2018.

 

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:

Subscribers – Click on the relevant link to view the full profile. Not a subscriber? Signup here.

MDC Holdings, Inc. (NYSE:MDC) Seasonal Chart

MDC Holdings, Inc. (NYSE:MDC) Seasonal Chart

Just Energy Group Inc. (TSE:JE.TO) Seasonal Chart

Just Energy Group Inc. (TSE:JE.TO) Seasonal Chart

Manitowoc Co, Inc. (NYSE:MTW) Seasonal Chart

Manitowoc Co, Inc. (NYSE:MTW) Seasonal Chart

Materion Corp. (NYSE:MTRN) Seasonal Chart

Materion Corp. (NYSE:MTRN) Seasonal Chart

Codexis Inc. (NASD:CDXS) Seasonal Chart

Codexis Inc. (NASD:CDXS) Seasonal Chart

Apollo Global Management LLC (NYSE:APO) Seasonal Chart

Apollo Global Management LLC (NYSE:APO) Seasonal Chart

Hill International Inc. (NYSE:HIL) Seasonal Chart

Hill International Inc. (NYSE:HIL) Seasonal Chart

CenterState Banks, Inc. (NASD:CSFL) Seasonal Chart

CenterState Banks, Inc. (NASD:CSFL) Seasonal Chart

Pilgrims Pride Corp. (NASD:PPC) Seasonal Chart

Pilgrims Pride Corp. (NASD:PPC) Seasonal Chart

Sherritt Intl Corp. (TSE:S.TO) Seasonal Chart

Sherritt Intl Corp. (TSE:S.TO) Seasonal Chart

Clean Harbors, Inc. (NYSE:CLH) Seasonal Chart

Clean Harbors, Inc. (NYSE:CLH) Seasonal Chart

 

 

The Markets

Stocks jumped on Friday following further trade optimism and a strong read of retail sales for the month of October.  The S&P 500 Index gained just over three-quarters of one percent, punching through recent short-term resistance around 3100.  The benchmark advanced further into overbought territory with the Relative Strength Index (RSI) pushing firmly above 70 and charting the highest level since January of 2018.  Overbought readings should not be perceived as a signal to necessarily sell the market, but rather a signal of strength as the market gains strength and finally draws in the marginal buyer that it has struggled to entice in recent days.  Still, the desire to add to risk in equity markets around these lofty levels is low.

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For the week, the large-cap benchmark added just less than nine-tenths of one percent, marking the sixth consecutive week of gains.  The benchmark is now knocking on the door of trend channel resistance at 3150, which we will be monitoring closely.  Momentum indicators continue to show bullish characteristics, including MACD and RSI, which are pointing higher.

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While Friday’s broad market return had the appearance of strength across the board, six of the 11 sectors closed essentially flat, including materials, which closed in the red.  Health care dominated the market performance with the Health Care Sector ETF (XLV) showing a gain of 2.13%.  This follows news that the Trump administration is implementing a plan to force hospitals and insurance companies to disclose the rates that they’ve negotiated in order to promote transparency.  The Health care Providers ETF (IHF) jumped 3.5% by the closing bell.  Earlier in the week we showed how the health care sector was consolidating above the neckline of a head-and-shoulders bottoming pattern, a setup that presents significant upside potential for the beleaguered market segment.  Seasonally, the average period of strength for the sector runs from April 25th to December 4th, therefore making this a prominent sector allocation within the Seasonal Advantage Portfolio that we manage in partnership with Castlemoore.  The allocation has been one of the top gainers over the past month and a half.

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On the economic front, a report on retail sales in the US was released before Friday’s opening bell.  The headline print indicated that retail trade increased by 0.3% in October, offsetting the loss of the same magnitude in the month prior. Analysts were expecting an increase of 0.2%. Less gas and autos, the increase was more muted at 0.1%, which is short of the 0.3% increase that was expected by analysts. Stripping out the seasonal adjustments, retail sales actually increased by 5.5% in October, which is stronger than the 3.0% increase that is average for the month. The year-to-date change has now expanded to 5.1% above the seasonal average trend, which remains the best performance through this time of year in at least 27 years.  We sent out further insight to subscribers, including an update on the seasonal trade in the retail industry.  Subscribe to either the monthly or yearly option and we’ll send you our report directly to your inbox.

US Retail Sales

Also on the economic front, industrial production data for October was dropped just prior to the market open. The headline print indicated that activity declined by 0.8% last month, a significant miss versus expectations of a 0.4% decline that was forecasted by analysts. The manufacturing component was lower by 0.6%, also a miss versus the consensus analyst estimate of -0.5%. Stripping out the seasonal adjustments, industrial production in the US actually declined by 1.5% in October, which is much weaker than the 0.6% decline that is average for the month. The result places the year to change in contractionary territory at -1.2%, which is well below the 1.7% increase that is average through the first ten months of the year. This is the weakest pace since 2015 and only the second negative year-to-date performance through October in this present economic recovery.  We sent out further insight to subscribers intraday, including what another report has to say about manufacturing activity for the month ahead.  Signup now.

http://charts.equityclock.com/seasonal_charts/economic_data/IPB50001N_seasonal_chart.PNG

Sentiment on Friday, as gauged by the put-call ratio, ended bullish at 0.84.

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Seasonal charts of companies reporting earnings today:

Woodward, Inc. Seasonal Chart Ashland Global Holdings Inc. Seasonal Chart Manchester United Ltd. Seasonal Chart 21Vianet Group, Inc. Seasonal Chart America's Car-Mart, Inc. Seasonal Chart Fang Holdings Limited Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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