Stock Market Outlook for December 10, 2019
S&P 500 Index continues to show reaction to rising trend channel resistance, which, after the events of this week, could mean everything or nothing at all.
*** 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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Premium Income Corp. (TSE:PIC/A.TO) Seasonal Chart
Capricor Therapeutics, Inc. (NASD:CAPR) Seasonal Chart
StealthGas (NASD:GASS) Seasonal Chart
Starcore Intl Ventures Ltd. (TSE:SAM.TO) Seasonal Chart
BMO S&P-TSX Equal Weight Oil & Gas Index ETF (TSE:ZEO.TO) Seasonal Chart
Chemtrade Logistics Income Fund (TSE:CHE/UN.TO) Seasonal Chart
CanWel Holdings Corp. (TSE:CWX.TO) Seasonal Chart
Platinum Group Metals Ltd. (TSE:PTM.TO) Seasonal Chart
Brookfield Real Estate Services Inc. RV (TSE:BRE.TO) Seasonal Chart
Information Services Group Inc. (NASD:III) Seasonal Chart
Lundin Gold Inc. (TSE:LUG.TO) Seasonal Chart
iShares S&P-TSX Capped REIT Index ETF (TSE:XRE.TO) Seasonal Chart
Endeavour Mining Corp. (TSE:EDV.TO) Seasonal Chart
The Markets
Stocks drifted lower on Monday as investors took some chips off the table given the uncertainties that remain through the rest of the week. The S&P 500 Index shed nearly one-third of one percent, pulling back from resistance around 3150. The FOMC Meeting Announcement on Wednesday, the UK General Election on Thursday, and the US tariff deadline on Sunday are critical market moving events ahead, keeping both the bulls and the bears on their toes. MACD remains on a sell signal for S&P 500 Index, Dow Jones Industrial Average, and Nasdaq Composite; support for each remains apparent around 20 and 50-day moving averages. While we have been highlighting intermediate trend channel resistance for some time, the upper hurdle, around 3150, could mean everything or could be northing, depending on the outcome of the events ahead.
An interesting battle is playing out in the commodity market that could indicate whether investors should bet “risk-on” (cyclical) or “risk-off” (defensive) within the equity market. The copper/gold ratio has been trading in a tight band for the past decade, showing no definitive reason to hold one over the other amidst quantitative easing programs, subdued inflation, and general uncertainties. A break above the upper limit of the range would suggest positive things for risk assets as investors bet on the continuation of the expansionary economic cycle, while a breakdown would be indicative of risk aversion, potentially leading to an equity market peak. The ratio recently bounced from the lower limit of its range, keeping the neutral trend alive, but the outperformance of gold relative to copper this year speaks to the risk-aversion trade that flourished this past summer. Seasonally, copper tends to outperform gold between now and the end of April, resulting in a risk-on trend for equity prices. We’ll continue monitoring this ratio in the weeks/months ahead as any divergence compared to the price of stocks can often be very telling of the next move for equity markets.
Sentiment on Monday, as gauged by the put-call ratio, ended bearish at 1.02.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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