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Stock Market Outlook for December 19, 2019


As equity benchmarks battle with short-term resistance, bond funds are approaching an important level of support that could test the resolve of the bearish thesis in the market.

 

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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Pluristem Life Systems Inc. (NASD:PSTI) Seasonal Chart

Pluristem Life Systems Inc. (NASD:PSTI) Seasonal Chart

Russel Metals, Inc. (TSE:RUS.TO) Seasonal Chart

Russel Metals, Inc. (TSE:RUS.TO) Seasonal Chart

Central Garden & Pet Co. (NASD:CENTA) Seasonal Chart

Central Garden & Pet Co. (NASD:CENTA) Seasonal Chart

Oncolytics Biotech, Inc. (TSE:ONC.TO) Seasonal Chart

Oncolytics Biotech, Inc. (TSE:ONC.TO) Seasonal Chart

Detour Gold Corp. (TSE:DGC.TO) Seasonal Chart

Detour Gold Corp. (TSE:DGC.TO) Seasonal Chart

Brunswick Corp. (NYSE:BC) Seasonal Chart

Brunswick Corp. (NYSE:BC) Seasonal Chart

Nordstrom, Inc. (NYSE:JWN) Seasonal Chart

Nordstrom, Inc. (NYSE:JWN) Seasonal Chart

Tenneco Automotive (NYSE:TEN) Seasonal Chart

Tenneco Automotive (NYSE:TEN) Seasonal Chart

Genesco, Inc. (NYSE:GCO) Seasonal Chart

Genesco, Inc. (NYSE:GCO) Seasonal Chart

 

 

The Markets

Stocks closed little changed on Wednesday as weakness in shares of FedEx had investors reassessing their exposure to cyclical sectors.  The shipping giant saw its stock slip by over 10% as investors reacted to an earning miss, which the company cited was the result of weak global economic conditions and the loss of a large customer.  The stock gapped below intermediate support presented by the 50-day moving average, trading back to levels around 52-week lows.  A similar reaction was recorded following its previous earnings release.  For subscribers, we have emphasized the weakness in shipping activity as reason to avoid the transportation stocks, despite positive seasonal tendencies into the peak holiday shipping period.  We’ll be providing an update to subscribers regarding the shipping metric that we follow, as it relates to seasonal norms, and whether or not the recent weakness in the stocks presents a buying opportunity, according to our three-pronged approach.

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FedEx Corp. (NYSE:FDX) Seasonality

With weakness in transportation stocks dragging on the broader industrial sector, market benchmarks, such as the Dow Jones Industrial Average and S&P 500 Index, had trouble staying in the green throughout the session.  The S&P 500 Index ended the day with a loss of four basis points, still remaining around all-time high territory.  The flat trading since Monday’s gap open has emphasized a level of resistance at 3200, effectively a psychological hurdle.  The open gap between 3170 and 3180 presents a risk of being filled before an attempt to break the upside hurdle is put forth.  Momentum indicators on the hourly chart of the large-cap benchmark continue to show bullish characteristics and major moving averages, by this view, continue to point higher, suggesting that the short-term trend remains positive.

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While the equity market battles with a level of short-term resistance, bond funds are encroaching on an important level of support.  The iShares 7-10 year treasury bond fund is moving back towards intermediate support at $110, which marks the lower limit of a triangle pattern.  A break below the lower limit of this setup would project downside potential towards $106, thereby shaking loose a key contingent of the market that has held onto bearish bets throughout this year amidst mounting uncertainties.  The rotation out of bonds would be thought to have positive benefits for stocks.  Seasonally, December is the weakest month of the year for the treasury market as investors gravitate towards equity exposure given the risk-on bias through year-end.

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Sentiment on Wednesday, as gauged by the put-call ratio, ended bearish at 1.06.

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Seasonal charts of companies reporting earnings today:

Nike, Inc. Seasonal Chart Accenture plc Seasonal Chart Darden Restaurants, Inc. Seasonal Chart ConAgra Brands, Inc. Seasonal Chart FactSet Research Systems Inc. Seasonal Chart Sanderson Farms, Inc. Seasonal Chart AAR Corp. Seasonal Chart Scholastic Corporation Seasonal Chart Apogee Enterprises, Inc. Seasonal Chart Rite Aid Corporation Seasonal Chart CalAmp Corp. Seasonal Chart Shiloh Industries, Inc. Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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