Stock Market Outlook for June 23, 2020
Shares of Apple fuel the technology sector to another record closing high as the developer conference keeps investors onside with the growth trade.
*** 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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Allscripts, Inc. (NASD:MDRX) Seasonal Chart
Scotts Co. Cl A (NYSE:SMG) Seasonal Chart
CBOE Holdings Inc. (NASD:CBOE) Seasonal Chart
Federal Realty Investment Trust (NYSE:FRT) Seasonal Chart
Rollins, Inc. (NYSE:ROL) Seasonal Chart
Weingarten Realty Investors (NYSE:WRI) Seasonal Chart
The Markets
Stocks gained on Monday as the technology sector lifted broad market benchmarks off the lows set earlier in the session. The S&P 500 Index gained around two-thirds of one percent, remaining supported by its rising 20-day moving average. The benchmark has been little changed for the past two and a half weeks, continuing to consolidate below horizontal resistance at 3130. Momentum indicators remain on sell signals following the gap lower recorded back on June 11, which has rattled investors expecting a V-shaped recovery back to previous highs. Major moving averages remain in positions of support and the levels of significance below are plentiful.
As highlighted off the top, technology was the market driver on Monday as Apple held its developer conference, virtually. The tech titan gained 2.62%, closing at a record high. Outperformance in this largest constituent of the market has remained persistent for years as it becomes the default play for most market participants. Momentum indicators are hovering around overbought territory, but they have yet to show signs of rolling over. Shares of Apple have an optimal holding period, according to our work, of June 12th to September 3rd, benefitting from the demand for stable growth stocks during the often volatile summer session. Buying ahead of the developer conferences has typically been a prudent strategy. The company has yet to show any material impact to revenue resulting from the pandemic, but earnings season ahead will provide the final say of whether or not this remains the case.
Strength in shares of Apple pushed the Technology sector ETF (XLK) to a new record close. It is now just 72 cents below the record intraday high charted on June 10th at $104.60. Momentum indicators for the ETF have noticeably stalled as the rebound from the March low starts to lose steam. The Technology sector, by way of the QQQ ETF, has been our heaviest equity weight in the model portfolio that we provide to subscribers at the end of our monthly report.
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On the economic front, a report on existing home sales in the US was released during Monday’s session. The headline print of May’s report indicates that activity declined by 9.7% last month to a seasonally adjusted annualized rate of 3.91 million. The result missed the consensus analyst estimate that called for a rate of 4.29 million. The year-over-year change has fallen again from -17.2% in April to -26.6% in May. We sent out further insight to subscribers detailing how the real estate market is actually faring in this pandemic. Subscribe now.
Sentiment on Monday, as gauged by the put-call ratio, ended bullish at 0.79.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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