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Stock Market Outlook for July 2, 2020


The S&P 500 Index has gained 0.8%, on average, in July with 60% of periods showing positive results.

 

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.

Broadway Financial Corp. (NASD:BYFC) Seasonal Chart

Broadway Financial Corp. (NASD:BYFC) Seasonal Chart

Royal Bank Of Canada (NYSE:RY) Seasonal Chart

Royal Bank Of Canada (NYSE:RY) Seasonal Chart

ProShares Ultra Financials (NYSE:UYG) Seasonal Chart

ProShares Ultra Financials (NYSE:UYG) Seasonal Chart

 

Note: Our next report will be released on July 2nd.

 

The Markets

Stocks surged on Tuesday as investors executed their final orders before the end of the quarter.  The S&P 500 Index gained 1.54%, continuing to bounce from levels around the 200-day moving average.  The benchmark tested its 20-day moving average at the highs of the session, while the 50-day at 2989 remains in a position of support.  Momentum indicators on this daily look are starting to curl back higher, attempting to keep the characteristics of a bullish trend intact.  RSI is showing signs of turning higher from around its 50-line, while MACD is starting to curl higher above 0.

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For the month of June, the S&P 500 Index gained 1.84%, continuing to make progress retaking levels above the 20-month average at 2917.  The gain is a divergence versus the 0.6% decline that has been average for this late-spring month over the past 20 years.  As for the month ahead, the bias of the equity market is much more upbeat.  The large-cap benchmark has gained by 0.8%, on average, with 60% of periods showing positive results.  In our just released monthly outlook for July, we highlight the areas to look out for in the month ahead and how our seasonal model portfolio is allocated going into the middle of summer.  Subscribe now.

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Just Released…

Our monthly outlook for July tells you everything you need to know for the month(s) ahead.

Highlights in this report include:

  • Equity market tendencies in the month of July
  • Resiliency of the market in the midst of tremendous uncertainty
  • The influence of the retail investor
  • The recovery of economic data
  • The disparity between the rebound in consumer and business data
  • The hedge against summer volatility
  • Opportunities outside of the US
  • 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 July

Subscribe Now.

On the economic front, a report on home prices in the US was released during Tuesday’s session.  The headline print indicated that home prices increased by 0.3% in April, which was weaker than the consensus analyst estimate that called for a gain of 0.5%.  The year-over-year change now sits higher by 4.0%, which is a tenth of a percent better than forecast.  Stripping out the seasonal adjustments, home prices actually increased by 0.9% in April, which is inline with the average change for this time of year.  The year-to-date change now sits 1.6% above the seasonal average trend, representing one of the stronger rates over the past decade.  Cities across the country are showing this same above average increase, in a pandemic nonetheless, except for one.  Dallas Texas is showing a year-to-date change that is higher by 1.47% through the end of April, marginally below the 1.51% increase that is average.  If things are bigger in Texas, apparently it is not with respect to home price increases.  Subscribers can login to the chart database to view the seasonal charts of the cities covered by this report: https://charts.equityclock.com/sp-corelogic-case-shiller-home-price-index-city-breakdown

S&P/Case-Shiller 20-City Composite Home Price Index Seasonal Chart

North of the border, we are just now receiving data that encapsulates the downturn of the Canadian economy in April.  Statscan indicates that GDP in Canada fell by 11.6% in April, which is actually stronger than the consensus analyst estimate that called for a decline of 13.0%.  The year-over-year change is now lower by 17.1%.  Stripping out the seasonal adjustments, GDP actually fell by 11.1% in April, which is much weaker than the 0.9% increase that is average for the spring month.  The year-to-date change is down by 17.9%.  This is, quite obviously, the weakest year-to-date change in at least two decades.  Very few categories were unscathed by the economic downturn; only a few staple areas managed to buck the weakness through the first four months of the year, including forestry/logging, fishing, iron ore mining, potash mining, natural gas distribution, dairy product manufacturing, pharmaceutical/medicine manufacturing, food/beverage store sales, non-store (online) retailers, and banking/monetary authorities.  For the rest of the 100+ categories covered by this report, the disconnect versus seasonal norms is obvious. Subscribers can login to the database to view the seasonal charts for this report at https://charts.equityclock.com/canada-monthly-gross-domestic-product-gdp-by-industry.

Canada GDP - All industries Seasonal Chart

Sentiment on Tuesday, as gauged by the put-call ratio, ended bullish at 0.88.

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Seasonal charts of companies reporting earnings today:

General Mills, Inc. Seasonal Chart Constellation Brands Inc Seasonal Chart Unifirst Corporation Seasonal Chart Capri Holdings Limited Seasonal Chart Schnitzer Steel Industries, Inc. Seasonal Chart Culp, Inc. Seasonal Chart Korn Ferry Seasonal Chart Lindsay Corporation Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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