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Stock Market Outlook for January 28, 2020


Markets showing typical volatility for this time of year, although the catalyst has no seasonal significance.

 

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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Canadian Energy Services & Technology Corp. (TSE:CEU.TO) Seasonal Chart

Canadian Energy Services & Technology Corp. (TSE:CEU.TO) Seasonal Chart

Palatin Technologies, Inc. (AMEX:PTN) Seasonal Chart

Palatin Technologies, Inc. (AMEX:PTN) Seasonal Chart

American Outdoor Brands Corp. (NASD:AOBC) Seasonal Chart

American Outdoor Brands Corp. (NASD:AOBC) Seasonal Chart

AVX Corp. (NYSE:AVX) Seasonal Chart

AVX Corp. (NYSE:AVX) Seasonal Chart

Tronox Inc. (NYSE:TROX) Seasonal Chart

Tronox Inc. (NYSE:TROX) Seasonal Chart

 

 

The Markets

Stocks sold off on Monday as fear over the spread of the coronavirus forced investors to de-risk.  The S&P 500 Index shed 1.57%, realizing the largest one-day decline since the start of October.  The benchmark gapped below its 20-day moving average, which had been supporting the the short-term trend for the past few months.  Next hurdle on the downside is the 50-day moving average, now at 3198.  Momentum indicators are rolling over, following through from Friday’s sell signals with respect to RSI and MACD.  Stocks have now become short-term oversold, which could help to exhaust selling pressures in the near-term, however, evidence of a short-term low has yet to be identified.  Seasonally, equity markets remain volatile, on average, into the start of February just based on the digestion of gains from the fourth quarter.  The coronavirus adds a new variable that falls outside of the seasonal model.  We sent out a special report to subscribers on Monday exploring the impact of previous viral outbreaks on stocks.

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Volatility Index (VIX) Seasonality

One of the hedges against the average tendency for volatility through the end of January is doing its job.  The Gold ETF gained nearly seven-tenths of one percent on Monday, moving to a new multi-year high.  Gold miners, however, closed marginally lower.  Both show positive seasonal tendencies into the month ahead.  Previous viral outbreaks have shown  a better propensity for gains in the bullion as opposed to the stocks.

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SPDR Gold Shares (NYSE:GLD) Seasonality 

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VanEck Vectors Gold Miners ETF (NYSE:GDX) Seasonality

The seasonal trade in gold through the start of the year had shown significant potential given the apparent topping of the US Dollar, above average pace of inflation, accommodative monetary policy, and general geopolitical uncertainty.  But one of those factors is starting to turn into a headwind.  The US Dollar has moved back above major moving averages in recent days, now putting the upper limit to its declining intermediate trend channel to the test.  The US Dollar ETF (UUP) has already broken above the high set in December, bringing an end to the trend of lower-highs.  A resumption of the trend higher on the dollar index would be bearish for commodities in general.  Seasonally, strength in the US dollar is typical into February before it levels off in the back half of the first quarter.  We’ll be monitoring the action of the US Dollar accordingly given its impact on commodities and stocks.

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On the economic front, a report on new home sales in the US was released during Monday’s session.  The headline print indicated that activity declined by 0.4% to a seasonally adjusted annual rate of 694,000.  Analysts were expecting a 4.4% increase to 728,000.  Stripping out the seasonal adjustments, new home sales actually declined by 7.8%, which is weaker than the unchanged result that is average for the last month of the year.  For the year,overall, new home sales were higher by 23.7% in 2019, which is the best calendar year increase since 1991.  The average annual increase over the past 20 years has been 1.0%.  We’ve uploaded the seasonal charts for this report at the following link: https://charts.equityclock.com/u-s-new-home-sales  Subscribe now for full access.

New Home Sales Seasonal Chart

Sentiment on Monday, as gauged by the put-call ratio, ended marginally bearish at 1.01.

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Seasonal charts of companies reporting earnings today:

Apple Inc. Seasonal Chart Pfizer, Inc. Seasonal Chart SAP SE Seasonal Chart United Technologies Corporation Seasonal Chart Lockheed Martin Corporation Seasonal Chart Starbucks Corporation Seasonal Chart 3M Company Seasonal Chart Stryker Corporation Seasonal Chart Canadian National Railway Company Seasonal Chart Advanced Micro Devices, Inc. Seasonal Chart HCA Healthcare, Inc. Seasonal Chart Koninklijke Philips N.V. Seasonal Chart Equity Residential Seasonal Chart eBay Inc. Seasonal Chart PACCAR Inc. Seasonal Chart Xilinx, Inc. Seasonal Chart McCormick & Company, Incorporated Seasonal Chart Boston Properties, Inc. Seasonal Chart Maxim Integrated Products, Inc. Seasonal Chart Nucor Corporation Seasonal Chart Principal Financial Group Inc Seasonal Chart W.R. Berkley Corporation Seasonal Chart PulteGroup, Inc. Seasonal Chart C.H. Robinson Worldwide, Inc. Seasonal Chart Reinsurance Group of America, Incorporated Seasonal Chart Lear Corporation Seasonal Chart Alaska Air Group, Inc. Seasonal Chart Pentair plc. Seasonal Chart Xerox Holdings Corporation Seasonal Chart A.O Smith Corporation Seasonal Chart Autoliv, Inc. Seasonal Chart MKS Instruments, Inc. Seasonal Chart Popular, Inc. Seasonal Chart Polaris Inc. Seasonal Chart Harley-Davidson, Inc. Seasonal Chart Graphic Packaging Holding Company Seasonal Chart CIT Group Inc (DEL) Seasonal Chart Mercury Systems Inc Seasonal Chart Silgan Holdings Inc. Seasonal Chart Rexnord Corporation Seasonal Chart UMB Financial Corporation Seasonal Chart PolyOne Corporation Seasonal Chart First BanCorp. Seasonal Chart Trustmark Corporation Seasonal Chart Flagstar Bancorp, Inc. Seasonal Chart Skyline Champion Corporation Seasonal Chart MACOM Technology Solutions Holdings, Inc. Seasonal Chart Great Western Bancorp, Inc. Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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