Equity Clock

Stock Market Outlook for August 5, 2020

Natural gas prices have exploded by around 20% since we provided favourable comments on the commodity on Thursday of last week.

 

 

 

*** 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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Emerson Electric Co. (NYSE:EMR) Seasonal Chart

Sierra Wireless, Inc. (TSE:SW.TO) Seasonal Chart

John Bean Technologies Corp. (NYSE:JBT) Seasonal Chart

Primoris Services Corp. (NASD:PRIM) Seasonal Chart

Primoris Services Corp. (NASD:PRIM) Seasonal Chart

iShares US Dividend Growers Index ETF (CAD-Hedged) (TSE:CUD.TO) Seasonal Chart

 

 

The Markets

Stocks gained on Tuesday as investors anticipated that the Republicans and Democrats would come to an agreement on the next economic stimulus bill.  The S&P 500 Index added around a third of one percent, continuing to grind away at the range of resistance that spans between 3250 and 3325.  Support on the large-cap benchmark remains firm at the rising 20-day moving average.  Financials and health care were the only sectors to close in the red, while energy, staples, utilities and REITs posted gains in excess of one percent.  The session, once again, had a risk-off tone as investors attempt to rotate away from the market leaders over the past few months and into some of the laggards.

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On the economic front, the tally of vehicle sales for July was released on Tuesday.  The Bureau of Economic Analysis (BEA) has indicated that total vehicle sales in the US increased by 11.2% in July to a seasonally adjusted annualized rate of 14.9 million. The result is now 14.9% below last July’s pace of 17.5 million. Stripping out the seasonal adjustments, Total Vehicle Sales actually increased by 11.0% last month, which is a significant positive divergence compared to the 4.0% decline that is average for July. The year-to-date change is now down 19.1%, which is 19.3% below the seasonal average trend through the first seven months of the year.  We sent out further insight to subscribers intraday.  Subscribe now to determine how to take advantage of this fundamental trend.

Sentiment on Tuesday, as gauged by the put-call ratio, ended bullish at 0.74.  Earlier in the session, the ratio once again flirted with levels around 0.50, representing an elevated level of complacency amongst equity investors.  The 20-day moving average of the ratio at 0.76 is the lowest level since the start of 2014, just ahead of an over 5% drawdown in the broader market over the month that followed.  In this market, a 5% gyration represents a mere blip in the overall trend, but a short-term fluctuation of this magnitude over the next six to eight weeks is to be expected.

 

 

 

Seasonal charts of companies reporting earnings today:

 

 

S&P 500 Index

 

 

TSE Composite

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