Stock Market Outlook for December 2, 2019
December is the strongest month of the year for stocks. The S&P 500 Index has gained an average of 1.4% in this last month of the year with 72% of periods showing a positive result.
*** 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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Iconix Brand Group, Inc. (NASD:ICON) Seasonal Chart
Everi Holdings Inc. (NYSE:EVRI) Seasonal Chart
Crown Holdings Inc. (NYSE:CCK) Seasonal Chart
Uni-Select, Inc. (TSE:UNS.TO) Seasonal Chart
Valero Energy Corp (NYSE:VLO) Seasonal Chart
CGI Group, Inc. (NYSE:GIB) Seasonal Chart
Public Storage, Inc. (NYSE:PSA) Seasonal Chart
Hammond Power Solutions Inc. (TSE:HPS/A.TO) Seasonal Chart
Denbury Resources, Inc. (NYSE:DNR) Seasonal Chart
Whirlpool Corp. (NYSE:WHR) Seasonal Chart
Orthofix Medical Inc. (NASD:OFIX) Seasonal Chart
HCA Healthcare, Inc. (NYSE:HCA) Seasonal Chart
SSR Mining Inc. (TSE:SSRM.TO) Seasonal Chart
Extendicare Inc. (TSE:EXE.TO) Seasonal Chart
The Markets
Stocks in the US closed lower on Friday in a shortened holiday session, which left investors with little time to enact final month-end portfolio positioning. The S&P 500 Index fell by four-tenths of one percent, giving back the gain charted in the session prior to the Thanksgiving holiday. For the week, the large-cap index was higher by just less than one percent, trading up to rising trend channel resistance at the high of the period. The upper limit to the rising range comes in around 3150, a level that the benchmark pulled back from in Friday’s session. Further negative reaction from this upper hurdle could lead to a retracement in the benchmark back towards levels of support, such as previous horizontal resistance at 3025.
For the month of November, the benchmark was higher by a very impressive 3.4%, which is more than double the 1.2% increase that is average for the second to last month of the year. Following a number of months of the benchmark bouncing around support at the 20-month moving average, the benchmark finally achieved lift-off, marking one of the few months over the past year when the benchmark has not intersected with this variable level. While healthy that the benchmark has broken out to new all-time highs, the simple fact is that being elevated above levels of support opens the risk of retracement, skewing the risk-reward, presently, in an unfavourable manner.
For the month ahead, December is seasonally the strongest month of the year, both by average return and the frequency of positive results. The S&P 500 Index has averaged a gain of 1.4% in December over the past 50 years and the benchmark has closed higher in 72% of periods. However, with last December showing the weakest performance for the last month of the year since 1931, it will be interesting to see if the near-term bias of investors causes some investors to think twice about how aggressive they are in playing this year-end tendency. Looking for insight on how to allocate your portfolio for the month ahead? In our just released monthly outlook for December we look at the following:
- Equity market tendencies in the month of December
- An opportunity to rotate to Canadian equities in the month ahead
- The trade in Gold and when the next upleg typically begins
- The contingency for the strength in the equity and commodity market during the final month of the year
- A fundamental review of the drivers that have brought the equity market to new all-time highs and the drivers of equity prices through the first six months of 2020
- What the indicators of trade activity are suggesting
- A review of the third quarter earnings season and what seasonal trade provides a good potential based, in part, on the results
- The technical status of the S&P 500 Index
- Notable stocks entering their period of strength in December
Signup now and we’ll send you this 71-page report.
On the economic front, Statscan released its report on Canadian Gross Domestic Product (GDP) for September. The report indicated that GDP in Canada increased by a marginal 0.1% in September, which was inline with the consensus analyst estimate. The year-over-year increase now sits at 1.6%. Stripping out the seasonal adjustments, GDP in Canada actually increased by 3.9% in September, which is weaker than the 4.9% increase that is average for this last month of the third quarter. The year-to-date pace is now merely inline with the seasonal average trend, giving up the above average pace that had been apparent in recent months. Our full report of the results is scheduled to be released to subscribers on Saturday. Signup now and in addition to our monthly outlook, we’ll also include our analysis on what is driving the Canadian economy, including a look at some threatening datapoints that may not bode well for stocks in the first half of the new year. Simply navigate to the following link and select either the monthly or yearly subscription option: https://charts.equityclock.com/subscribe
Sentiment on Friday, as gauged by the put-call ratio, ended close to neutral at 0.96
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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