Stock Market Outlook for April 24, 2020
Headlines pertaining to Gilead’s coronavirus treatment, Remdesivir, cause investors to reverse course on Thursday, leaving broad market gauges stalled around their declining 50-day moving averages.
*** 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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IAMGold Corp. (TSE:IMG.TO) Seasonal Chart
Vertex Pharmaceuticals Inc. (NASD:VRTX) Seasonal Chart
Luminex Corp. (NASD:LMNX) Seasonal Chart
FLY Leasing Ltd. (NYSE:FLY) Seasonal Chart
Cornerstone OnDemand, Inc. (NASD:CSOD) Seasonal Chart
Alimentation Couche-Tard, Inc. (TSE:ATD/A.TO) Seasonal Chart
Carbonite, Inc. (NASD:CARB) Seasonal Chart
Agnico-Eagle Mines Ltd. (TSE:AEM.TO) Seasonal Chart
Shaw Communications, Inc. (NYSE:SJR) Seasonal Chart
Cerner Corp. (NASD:CERN) Seasonal Chart
Tennant Co. (NYSE:TNC) Seasonal Chart
Westport Fuel Systems Inc. (NASD:WPRT) Seasonal Chart
Rogers Communications, Inc. (NYSE:RCI) Seasonal Chart
BlackRock MuniHoldings Investment Quality Fund (NYSE:MFL) Seasonal Chart
iShares MSCI USA Momentum Factor ETF (AMEX:MTUM) Seasonal Chart
SPDR S&P Health Care Equipment ETF (NYSE:XHE) Seasonal Chart
The Markets
Stocks closed flat on Thursday, giving back earlier gains, as traders reacted to a headline that suggested Gilead’s anticipated treatment for coronavirus, Remdesivir, may not be as effective as initially hoped. Shares of the biotech titan dipped by 4.34%, testing support around rising 20 and 50-day moving averages at the lows of the session. Trendline support beneath the stock remains firmly intact, however, fading relative performance compared to the broad market suggests buying demand has waned in recent days. Seasonally, the optimal holding period for the stock is ahead, running from May 31st to October 27th, following a similar path as the broader biotechnology industry.
The S&P 500 Index closed down by a mere five basis points on Thursday, continuing to react to its declining 50-day moving average. On one hand, the stalling of the trend around this significant moving average emphasizes where the supply to sell stock currently sits. On the other hand, the fact that the benchmark has effectively been pinned to this variable hurdle for the past week emphasizes the resiliency of the bulls to not allow the benchmark to drift too far away from the hurdle. This is a typical hurdle for investors to cling to in times of uncertainty until the next catalyst for stocks comes along. Momentum indicators continue to roll over, which has triggered a sell signal according to stochastics. MACD and RSI continue to show characteristics of a bear market trend with each showing struggle around their middle line. Follow along with our approach by subscribing to our service to receive daily and monthly reports on everything relevant to execute a three-pronged approach incorporating seasonal, technical, and fundamental analysis.
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On the economic front, a report on new home sales in the US was released during Thursday’s session. The headline print indicated that sales of new homes fell by 15.4% in March to a seasonally adjusted annualized rate of 627,000. Analysts were expecting a rate of 643,000. Stripping out the seasonal adjustments, new home sales actually fell by 7.6% last month, which is a significant negative divergence compared to the 15.5% increase that is average for the third month of the year. The year-to-date change is now trending 13.0% below the seasonal norm, representing the worst first quarter performance since 2011. As with everything else in the economy, the disconnect from seasonal norms is obvious. March is typically the peak of the buying season for new homes, but, with the economy shutdown, potential buyers are unable to contribute to this seasonal economic tendency. Those that are purchasing are attempting to stretch their closing date by going after homes not started or under construction, which are still up on the year by 35.7% and 33.3%, respectively. Meanwhile, sales of completed new homes are up a mere 15% year-to-date. There is an obvious desire from those that are buying to close after this coronavirus event fades. The seasonal charts from this report are available via the following link: https://charts.equityclock.com/u-s-new-home-sales
Sentiment on Thursday, as gauged by the put-call ratio, ended bullish at 0.87.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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