Equity Clock

Stock Market Outlook for September 2, 2020

MSCI World ex-US Index is testing significant resistance and is at risk of rolling over.

 

 

 

*** 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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Eaton Vance Corp. (NYSE:EV) Seasonal Chart

Juniper Networks (NYSE:JNPR) Seasonal Chart

CNO Financial Group Inc. (NYSE:CNO) Seasonal Chart

National Instruments Corp. (NASD:NATI) Seasonal Chart

Inuvo, Inc. (AMEX:INUV) Seasonal Chart

Murphy USA Inc. (NYSE:MUSA) Seasonal Chart

WisdomTree U.S. Quality Dividend Growth Fund (NASD:DGRW) Seasonal Chart

iShares Russell Top 200 Value ETF (NYSE:IWX) Seasonal Chart

Vanguard Mega Cap Value ETF (NYSE:MGV) Seasonal Chart

 

 

The Markets

Stocks gained to start the month of September as fund inflows provided the fuel to keep the rally going.  The S&P 500 Index gained three-quarters of one percent, making progress above the psychologically important hurdle of 3500.  The benchmark is now just two-thirds of one percent away from our proposed target of 3550, which represents rising trendline resistance and a 5% gain from the previous all-time high charted in February.  The benchmark continues to hover within overbought territory, according to the relative strength index (RSI), and levels of support at 20 and 50-day moving averages are now 3.4% and 7.1% below present levels.

We are at the point that global benchmarks need to get into gear in order to avoid headwinds related to negative handoffs from stocks overseas.  The MSCI World ex-US Index closed lower on Tuesday by around a quarter of one percent, continuing a trend of underperformance versus benchmarks closer to home.  The benchmark is presently testing significant resistance around 1920, which represents the peaks from which the upward momentum stalled through the first half of 2019.  Momentum indicators have been negatively diverging from price for a few months, hinting of waning buying demand.  Price remains around 8% below January’s high.  A break below the 50-day moving average would change the direction of the intermediate-term trend.  The longer-term path remains that of lower-lows and lower-highs and the 200-day moving average is pointing lower.  The period of seasonal strength begins in the next month, running through to a peak at the start of May.  Outside of the US, global stocks have much to prove.

On the economic front, a report on construction spending in the US was released during Tuesday’s session.  The headline print of July’s report indicates that activity increased by 0.1% for the month, which was much weaker than the consensus estimate that called for a 1.0% rise.  The year-over-year change now sits underwater at -0.1%.  Stripping out the seasonal adjustments, construction spending in the US actually increased by 0.9% in July, which is weaker than the 1.5% increase that is average for this time of year.  The year-to-date change is higher by 17.3%, which is much weaker than the 29.4% increase seen through this point last year and weaker than the seasonal norm that calls for an increase of 24.4%.  We sent out further insight to subscribers intraday.  Subscribe now to be included on our distributions.

Sentiment on Tuesday, as gauged by the put-call ratio, ended bullish at 0.62.

 

 

 

Seasonal charts of companies reporting earnings today:

 

 

S&P 500 Index

 

 

TSE Composite

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