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Stock Market Outlook for November 26, 2019


Remember when the basis for the bear case in stocks was the inversion of the yield curve?

 

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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Akita Drilling Ltd. (TSE:AKT/A.TO) Seasonal Chart

Akita Drilling Ltd. (TSE:AKT/A.TO) Seasonal Chart

Novo Nordisk A S (NYSE:NVO) Seasonal Chart

Novo Nordisk A S (NYSE:NVO) Seasonal Chart

Celanese Corp. (NYSE:CE) Seasonal Chart

Celanese Corp. (NYSE:CE) Seasonal Chart

 

 

The Markets

Stocks jumped on Monday in typical Thanksgiving holiday week fashion as investors bought into stocks in the health care and technology sectors.  The S&P 500 Index added three-quarters of one percent, closing at a new record high.  Monday’s advance has placed the large-cap benchmark back into overbought territory according to the relative strength index.  The momentum indicator bounced back above 70 on the daily chart, signifying a sufficiently overbought condition.  Support is apparent at the rising 20-day moving average.

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While it feels like we’ve come a long way from the risk-off trend that has dominated much of 2019, the chart of the 10-year treasury yield suggests that the market has yet to break free of its risk-off path.  The yield on the 10-year note continues to show a general trend of lower-lows and lower-highs.  Recently, the cost of borrowing tested declining trendline resistance, from which it has since backed off.  The bond market has now alleviated the parabolic condition that was apparent into the month of September and the next move will be telling of the risk sentiment of investors through the end of this year and into next.  A continuation of the long-term path lower, implying higher bond prices, could lead to investors re-adopting risk-off bets, while the shorter-term trend of higher-highs and higher-lows could see a market that is more cyclically dominated.  Our thoughts is that there will be some kind of hybrid performance where rates stay low, perhaps in a range, allowing those areas that are interest rate sensitive to maintain a steady footing, while cyclical performance will be selective, depending on the dominant news trends of the time.  Seasonally, bond prices tend to weaken into the end of the year, but then rebound through the first couple of months of the new year.

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Now that bond yields have retraced the parabolic move lower through the end of summer, you don’t read much about the inversion of the yield curve that was all the talk through August and September.  The cost of borrowing at shorter-term maturities moved above longer-term counterparts at various points along the curve, including the 10’s over 2’s.  It was that condition that got the bears growling, but the spread has since widened and the bears are no longer sticking their necks out to spout their negative rhetoric.  The activity is a lesson in sentiment where the consensus should rarely be relied upon as what to expect next.  This market may very well grind higher until all bears go back into hibernation and then we begin the next phase with a downturn that investors are not positioned for.  Of course, we’ll attempt to keep you on the right side of the boat throughout.

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Sentiment on Monday, as gauged by the put-call ratio, ended slightly bullish at 0.94.

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Seasonal charts of companies reporting earnings today:

Bank of Nova Scotia (The) Seasonal Chart Vmware, Inc. Seasonal Chart Analog Devices, Inc. Seasonal Chart Autodesk, Inc. Seasonal Chart HP Inc. Seasonal Chart Dollar Tree, Inc. Seasonal Chart Veeva Systems Inc. Seasonal Chart Hormel Foods Corporation Seasonal Chart Keysight Technologies Inc. Seasonal Chart Best Buy Co., Inc. Seasonal Chart Burlington Stores, Inc. Seasonal Chart Momo Inc. Seasonal Chart Eaton Vance Corporation Seasonal Chart Cracker Barrel Old Country Store, Inc. Seasonal Chart Dick's Sporting Goods Inc Seasonal Chart Central Garden & Pet Company Seasonal Chart American Woodmark Corporation Seasonal Chart Central Garden & Pet Company Seasonal Chart Dycom Industries, Inc. Seasonal Chart Golar LNG Limited Seasonal Chart Guess?, Inc. Seasonal Chart Bitauto Holdings Limited Seasonal Chart Abercrombie & Fitch Company Seasonal Chart QAD Inc. Seasonal Chart Golar LNG Partners LP Seasonal Chart Movado Group Inc. Seasonal Chart Chico's FAS, Inc. Seasonal Chart Titan Machinery Inc. Seasonal Chart Tsakos Energy Navigation Ltd Seasonal Chart Citi Trends, Inc. Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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