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Stock Market Outlook for May 5, 2020


European benchmarks are breaking below their recent consolidation ranges as their period of seasonal weakness begins.

 

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.

Electronic Arts, Inc. (NASD:EA) Seasonal Chart

Electronic Arts, Inc. (NASD:EA) Seasonal Chart

Sun Life Financial (NYSE:SLF) Seasonal Chart

Sun Life Financial (NYSE:SLF) Seasonal Chart

Broadridge Financial Solutions, LLC (NYSE:BR) Seasonal Chart

Broadridge Financial Solutions, LLC (NYSE:BR) Seasonal Chart

Haemonetics Corp. (NYSE:HAE) Seasonal Chart

Haemonetics Corp. (NYSE:HAE) Seasonal Chart

U.S. Physical Therapy, Inc. (NYSE:USPH) Seasonal Chart

U.S. Physical Therapy, Inc. (NYSE:USPH) Seasonal Chart

iShares U.S. Consumer Goods ETF (NYSE:IYK) Seasonal Chart

iShares U.S. Consumer Goods ETF (NYSE:IYK) Seasonal Chart

 

 

The Markets

Stocks gained on Monday as investors bought into the early morning weakness following a rough trading session overseas.  The S&P 500 Index gained 0.42%, bouncing from its rising 20-day moving average at the lows of the session.  The benchmark remains within the confines of major moving averages with the 200-day presenting resistance overhead, while the 20-and 50-day moving averages are in positions of support.  Momentum indicators on the daily chart continue to roll over; a bearish MACD crossover appears imminent. 

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The gain for North American benchmarks on Monday follows declines of 3% to 4% for European indices as traders overseas played catch-up to Friday’s action in the US.  The German DAX shed 3.58%, the French CAC fell by 4.24%, and the Spanish IBEX traded down by 3.6%.  Each benchmark gapped below short-term rising trendlines that had supported the rebound rally from the March lows.  The patterns across the charts give the appearance of a traditional bear flag pattern, with the flag pole derived by the March move lower, followed by the “flag” consolidation pattern in recent weeks.  The continuation pattern is fulfilled by a break of the lower limit of the consolidation range, which, according to Monday’s breakdown, now has been achieved.  At the end of March, we speculated that European benchmarks may outperform US indices into the month of May given that countries in the region were showing declining coronavirus cases, which may allow them to reopen their economies sooner than the US.  The case count in European countries continues to decline, which is more than can be said of the US, yet investors remain unattracted to these equities, as gauged by the relative performance of European benchmarks relative to the US.  Until buying demand emerges, we will not demand them either.  Seasonally, European benchmarks tend to decline between now and September.

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DAX Index Seasonal Chart

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CAC 40 Index Seasonal Chart

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On the economic front, factory orders for March were released during Monday’s session.  The headline print indicated that activity fell by 10.3% in March, which is weaker than the 9.5% decline that was forecasted by analysts.  Stripping out the seasonal adjustments, the Value of Manufacturers’ New Orders for All Manufacturing Industries actually increased by 0.3% in this third month of the year, which is significantly weaker than the 12.5% increase that is average for March.  The year-to-date change is now down by 3.7%, a negative divergence compared to the 6.7% increase that is average through the first quarter.  Non-defense aircraft orders were a big drag on the headline print.  The category has fallen negative by the largest margin in history as orders from beleaguered aircraft company Boeing are withdrawn amidst the uncertainty in the airline industry.  Subscribers can login to the chart database to view the 140 seasonal charts associated with this report at the following link: https://charts.equityclock.com/u-s-factory-orders

http://charts.equityclock.com/seasonal_charts/economic_data/UMTMNO_seasonal_chart.PNG

Also released on Monday was the tally of US Vehicle Sales for the month of April. We broke it down and sent out  insight to subscribers intraday.  Signup now and we’ll send you our report.

Sentiment on Monday, as gauged by the put-call ratio, ended close to neutral at 0.97.

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Upcoming Presentation

The Money Show will be holding a Canadian Webinar series on May 7th, titled “Opportunities and Strategies for What Comes Next.”   We’ll be presenting at 5:20pm ET on the topic of “Using Seasonality to Invest in an Abnormal Economic Environment.”  Attendance is free.  Click the banner below to reserve your spot now.

 

 

 

 

 

Seasonal charts of companies reporting earnings today:

Walt Disney Company (The) Seasonal Chart Dominion Energy, Inc. Seasonal Chart Regeneron Pharmaceuticals, Inc. Seasonal Chart Illinois Tool Works Inc. Seasonal Chart Activision Blizzard, Inc Seasonal Chart Newmont Corporation Seasonal Chart L3Harris Technologies, Inc. Seasonal Chart Thomson Reuters Corp Seasonal Chart DuPont de Nemours, Inc. Seasonal Chart Electronic Arts Inc. Seasonal Chart SBA Communications Corporation Seasonal Chart Allstate Corporation (The) Seasonal Chart MercadoLibre, Inc. Seasonal Chart Sysco Corporation Seasonal Chart Suncor Energy Inc. Seasonal Chart KLA Corporation Seasonal Chart Republic Services, Inc. Seasonal Chart Verisk Analytics, Inc. Seasonal Chart Prudential Financial, Inc. Seasonal Chart Equity Residential Seasonal Chart Match Group, Inc. Seasonal Chart Incyte Corporation Seasonal Chart Marathon Petroleum Corporation Seasonal Chart Sun Life Financial Inc. Seasonal Chart Transdigm Group Incorporated Seasonal Chart AMTEK, Inc. Seasonal Chart MPLX LP Seasonal Chart Aptiv PLC Seasonal Chart Fiat Chrysler Automobiles N.V. Seasonal Chart Arista Networks, Inc. Seasonal Chart Occidental Petroleum Corporation Seasonal Chart Leidos Holdings, Inc. Seasonal Chart Healthpeak Properties, Inc. Seasonal Chart Xylem Inc. Seasonal Chart Expeditors International of Washington, Inc. Seasonal Chart FMC Corporation Seasonal Chart Martin Marietta Materials, Inc. Seasonal Chart Wayfair Inc. Seasonal Chart Catalent, Inc. Seasonal Chart PerkinElmer, Inc. Seasonal Chart DaVita Inc. Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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