Stock Market Outlook for April 20, 2020
S&P 500 Index closed back above its 50-day moving average, an important milestone for the bulls.
*** 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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Apartment Investment and Management Co. (NYSE:AIV) Seasonal Chart
Kroger Co. (NYSE:KR) Seasonal Chart
Lockheed Martin Corp. (NYSE:LMT) Seasonal Chart
AMAG Pharmaceuticals, Inc. (NASD:AMAG) Seasonal Chart
Mondelez International, Inc. (NASD:MDLZ) Seasonal Chart
OGE Energy Corp. (NYSE:OGE) Seasonal Chart
Andrew Peller Ltd. (TSE:ADW/A.TO) Seasonal Chart
Healthcare Leaders Income ETF (TSE:HHL.TO) Seasonal Chart
Invesco Dynamic Software ETF (NYSE:PSJ) Seasonal Chart
Apogee Enterprises, Inc. (NASD:APOG) Seasonal Chart
The Markets
Stocks rallied to end the week as traders embraced the news that Gilead’s antiviral medication Remdesivir is showing success in treating COVID-19 patients. The S&P 500 Index closed higher by 2.68%, moving back above its 50-day moving average for the first time since the middle of February. The large-cap benchmark gapped back above the 2800 to 2830 zone that the benchmark had gapped below on Wednesday. This is the third gap in the past week around the 2800 level, emphasizing the significance that the market is placing on this zone. When the market was below this hurdle it was considered resistance, but now that it is above it is considered support. Momentum indicators on this daily look continue to look toppy, despite the day’s gain, with the MACD histogram remaining stagnant below the peak charted at the beginning of the week and Stochastics and RSI showing similar. These indicators are merely hinting of a sell signal ahead. MACD remains on a buy signal that was triggered on March 26th. The next level of significance on the upside is the open gap at 2900, followed by the declining 200-day moving average at 3012. The market remains in this zone of massive supply between 2700 and 3000, the band that the benchmark traded within for much of the past couple of years. Investors that initiated positions in this range and were impacted by the recent waterfall decline in prices are likely to consider selling closer to their entry points. The bulls have their work cut out for them, particularly as we encroach on the aforementioned 2900 and 3000 levels of resistance, assuming levels above the 50-day moving average at 2863 can be maintained in the short-term.
For the week, the large-cap benchmark was higher by 3.04%, continuing to make progress above the 200-week moving average. From this weekly look, MACD has yet to trigger a new buy signal following the sell signal that was initiated in the last week of February. RSI and Stochastics have moved back to neutral territory around 50, rebounding from the oversold state realized in the middle of March. The same gap at 2900 that is readily apparent on the daily chart stands out on this chart as well. This level is going to be a big nut to crack, but it would be a major victory for the bulls, if achieved. To read more insight on the market technicals and how we are positioning, subscribe now.
Sentiment on Friday, as gauged by the put-call ratio, ended bullish at 0.92.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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