Contact | RSS Feed

Stock Market Outlook for January 16, 2020


Investors showing signs of risk aversion now that the Phase 1 trade deal has been signed.

 

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.

Avon Products, Inc. (NYSE:AVP) Seasonal Chart

Avon Products, Inc. (NYSE:AVP) Seasonal Chart

Fiserv, Inc. (NASD:FISV) Seasonal Chart

Fiserv, Inc. (NASD:FISV) Seasonal Chart

China Petroleum and Chemical Corp. (Sinopec) (NYSE:SNP) Seasonal Chart

China Petroleum and Chemical Corp. (Sinopec) (NYSE:SNP) Seasonal Chart

Hilton Worldwide Holdings Inc. (NYSE:HLT) Seasonal Chart

Hilton Worldwide Holdings Inc. (NYSE:HLT) Seasonal Chart

iShares MSCI EAFE Index ETF (CAD-Hedged) (TSE:XIN.TO) Seasonal Chart

iShares MSCI EAFE Index ETF (CAD-Hedged) (TSE:XIN.TO) Seasonal Chart

iShares MSCI United Kingdom ETF (NYSE:EWU) Seasonal Chart

iShares MSCI United Kingdom ETF (NYSE:EWU) Seasonal Chart

Vanguard FTSE Europe ETF (NYSE:VGK) Seasonal Chart

Vanguard FTSE Europe ETF (NYSE:VGK) Seasonal Chart

SPDR S&P Retail ETF (NYSE:XRT) Seasonal Chart

SPDR S&P Retail ETF (NYSE:XRT) Seasonal Chart

 

 

The Markets

Stocks closed mildly higher on Wednesday, the day the the US and China signed a Phase 1 agreement, which is thought to alleviate the trade hurdles that have impacted the manufacturing economy over the past year.  The S&P 500 Index added just less than two-tenths of one percent, continue to hover around overbought territory.  Judging by the reaction of investors following the signing, investors look to be contemplating using the event as a “sell on news” catalyst.  Stocks briefly dipped in the red following the signing as investors begin to book profits.  Earnings will continue to provide an influence in the days ahead.  Seasonally, equity markets tend to become a bit volatile through the remainder of January and into February, so we remain cognizant of the risks of being overly exposed to risk while avoiding speculating on a market peak.  The next seasonal up-leg for stocks is typically realized through March and April, ahead of first quarter earnings season.

S&P 500 Index Seasonal Chart

Wednesday’s session was noticeably risk-off, despite the positive cyclical implications that could be derived by the alleviation of trade woes between China and the US.  The Utilities ETF (XLU) added over one percent to close at a new all-time high.  REITs and consumer staples also reported exceptional performance, each putting pressure on their previous peaks last charted in the fourth quarter.  The relative performance of each is starting to improve following a period of underperformance against the market over the past few months.  Volatility in equity markets at the start of the year has historically been beneficial to REITs, which tend to outperform the market, on average, through the end of February.  REIT sector ETFs in Canada and the US tested rising 200-day moving average lines in December, providing the support to the present rebound attempt.

image

http://charts.equityclock.com/seasonal_charts/IYR_RelativeToSPX.png

image

image

The move higher in interest rate sensitive securities follows gains in bond prices as treasury ETFs attempt to solidify support.  The iShares 7-10 Year Treasury ETF (IEF) has confirmed support at $110 and is now moving above the convergence of moving resistance presented by the 20 and 50-day.  Momentum indicators are starting to curl higher, indicating renewed buying pressures.  Altogether, a risk-off shift is becoming apparent, typically a sign of investors becoming cautious of risk assets, mainly cyclical equities. 

image

http://charts.equityclock.com/seasonal_charts/IEF_RelativeToSPX.png

The Volatility Index (VIX), also known as the fear gauge, is presently grinding around support of 12, the test of which has led to short-term peaks in broad equity market gauges over the past year.  Seasonally, the VIX rises into February.

image

Volatility Index (VIX) Seasonality

Sentiment on Wednesday, as gauged by the put-call ratio, ended bullish at 0.75.

image

 

 

Seasonal charts of companies reporting earnings today:

Taiwan Semiconductor Manufacturing Company Ltd. Seasonal Chart Morgan Stanley Seasonal Chart CSX Corporation Seasonal Chart Bank Of New York Mellon Corporation (The) Seasonal Chart PPG Industries, Inc. Seasonal Chart People's United Financial, Inc. Seasonal Chart Bank OZK Seasonal Chart WNS (Holdings) Limited Seasonal Chart Home BancShares, Inc. Seasonal Chart Progress Software Corporation Seasonal Chart Bryn Mawr Bank Corporation Seasonal Chart

 

 

S&P 500 Index

image

image

 

 

TSE Composite

image

image

 

Sponsored By...
Seasonal Advantage Portfolio by CastleMoore

Comments are closed.