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Stock Market Outlook for June 3, 2020


Percent of stocks in the S&P 500 trading above 50-day moving averages at the highest level in at least two decades.

 

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.

CTS Corp. (NYSE:CTS) Seasonal Chart

CTS Corp. (NYSE:CTS) Seasonal Chart

Westwood Holdings Group, Inc. (NYSE:WHG) Seasonal Chart

Westwood Holdings Group, Inc. (NYSE:WHG) Seasonal Chart

Sientra, Inc. (NASD:SIEN) Seasonal Chart

Sientra, Inc. (NASD:SIEN) Seasonal Chart

 

 

The Markets

Stocks continue to grind higher, shaking off concerns relating the unrest in the US as investors instead focus on the developments pertaining to the reopening of the economy.  The S&P 500 Index added over eight-tenths of one percent, continuing to add to marginal gains above the widely scrutinized 200-day moving average.  The benchmark is reaching towards resistance at 3100, which represents the open gap that the benchmark resisted from early in March.  The hurdle also marks the calculated upside target from the breakout of the multi-week trading range between 2800 and 2950.  The index reached an intraday high of 3081 on Tuesday, around six-tenths of one percent from this target.  Of course, the big hurdle in this recovery is going to be 3300, the initial gap lower in February that fuelled the panic selling thereafter.  Despite the breakout from the 200-day moving average, the levels of reference above this market remain many and we must be prepared for reaction that could turn buyers into sellers.

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Just Released…

Our monthly outlook for June breaks down everything you need to know for the month(s) ahead.

Highlights in this report include:

  • Equity market tendencies in the month of June
  • The evolution of investor sentiment throughout the past few months
  • A review of the indications provided previous to regain confidence in the market
  • What analyst expectations have to tell us
  • The alleviation of strains in the credit market
  • A real-time look at the state of employment
  • The impact of home prices on consumer confidence
  • The Fed’s fight to maintain market stability
  • What’s next in the seasonal rotation
  • The technical status of the S&P 500 Index
  • Sector reviews and ratings
  • Notable stocks and ETFs entering their period of strength in June

Subscribe now to receive this 69-page report.

In yesterday’s report to subscribers we highlighted what the percent of stocks in the S&P 500 Index trading above 200-day moving averages was telling us.  Today, let’s turn to the percent of stocks trading above the 50-day moving average.  With stocks surging above their 50-day averages amidst the apparent V-shaped recovery from the March low, the percent of stocks trading above this hurdle has surged to the highest level that we have on record.  At 97.60%, the breadth indicator is more elevated than any other rally in the past two decades, including the rebound from the 2009 low and the more recent rebound fro the December 2018 bottom that resulted in a V-recovery.  At the lows for stocks, this was a market that was stretched below significant moving averages, presenting a catalyst for stocks to rebound, particularly at the end of the quarter as mean reversion was set to pull stocks higher.  As we close in on the end of the second quarter, mean reversion in the opposite direction must also be contemplated.  Historically, extremes above 90% in this metric have not necessarily been bearish for the market, but it can lead to periods of consolidation, particularly when the indicator shows signs of peaking.

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Sentiment on Tuesday, as gauged by the put-call ratio, ended bullish at 0.79.

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Seasonal charts of companies reporting earnings today:

Campbell Soup Company Seasonal Chart Guidewire Software, Inc. Seasonal Chart Greif, Inc. Seasonal Chart Cinemark Holdings Inc Seasonal Chart American Eagle Outfitters, Inc. Seasonal Chart Comtech Telecommunications Corp. Seasonal Chart Vera Bradley, Inc. Seasonal Chart Fossil Group, Inc. Seasonal Chart Tilly's, Inc. Seasonal Chart Express, Inc. Seasonal Chart Pyxis Tankers Inc. Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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