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Stock Market Outlook for June 9, 2020


Total put-call ratio falls to the lowest level in years as stocks become increasingly overbought.

 

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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Kaman Corp. (NYSE:KAMN) Seasonal Chart

Kaman Corp. (NYSE:KAMN) Seasonal Chart

Centrais Eletricas Brasileiras SA (NYSE:EBR) Seasonal Chart

Centrais Eletricas Brasileiras SA (NYSE:EBR) Seasonal Chart

SPDR Barclays Convertible Securities ETF (NYSE:CWB) Seasonal Chart

SPDR Barclays Convertible Securities ETF (NYSE:CWB) Seasonal Chart

Western Asset Managed Municipals Fund Inc. (NYSE:MMU) Seasonal Chart

Western Asset Managed Municipals Fund Inc. (NYSE:MMU) Seasonal Chart

 

 

The Markets

The rally continues.  The S&P 500 Index gained 1.20% to start the new trading week, inching closer to the open gap between 3250 and 3325.  Momentum indicators continue to become increasingly overbought with the Relative Strength Index now at 73.81; readings above 70 meet an overbought criteria.  But perhaps no better way to peg a level that clearly defines where the large-cap benchmark is overbought or oversold is to overlay Bollinger bands to see how current prices stack up to a calculated range.  Bollinger bands plot two standard deviations above and below a set moving average, which, if you recall from your high school statistics class, encompasses 95% of values within a normal distribution.  This would suggest that values outside of two standard deviations above the mean would be increasingly rare.  Using a 20-day moving average, the level of the S&P 500 Index has been pushing the limits of its upper Bollinger band for the past week and a half, closing above this upper threshold on a number of occasions.  Applying a 50-day moving average, the S&P 500 Index just surpassed the upper Bollinger band on Friday, maintaining that elevated state into Monday’s session.  At 37 points above the upper Bollinger band using a 50-day moving average, this is the most overbought state, based on points, on record; based on percent above the upper band, at 1.1%, the overbought state is the seventh highest in the past two decades.   Being overbought isn’t necessarily a negative omen for the equity market as positive trends have historically continued long after the overbought state was realized, but it does leave stocks vulnerable to consolidation in the short-term.

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Sentiment on Monday, as gauged by the put-call ratio, ended overly bullish at 0.60.  This is the lowest level since December of 2016, emphasizing that the level of complacency continues to build in this market.

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Seasonal charts of companies reporting earnings today:

Brown Forman Corporation Seasonal Chart Five Below, Inc. Seasonal Chart HD Supply Holdings, Inc. Seasonal Chart Verint Systems Inc. Seasonal Chart Signet Jewelers Limited Seasonal Chart AMC Entertainment Holdings, Inc. Seasonal Chart Quotient Limited Seasonal Chart Genesco Inc. Seasonal Chart Gamestop Corporation Seasonal Chart Movado Group Inc. Seasonal Chart Limoneira Co Seasonal Chart Conn's, Inc. Seasonal Chart Iteris, Inc. Seasonal Chart Lakeland Industries, Inc. Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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