Equity Clock

Stock Market Outlook for September 22, 2020

S&P 500 Index back testing the open gap that it broke down from back in February.

 

 

 

*** 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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Infosys Technologies Ltd. (NYSE:INFY) Seasonal Chart

Fang Holdings Ltd. (NYSE:SFUN) Seasonal Chart

Associated Banc-Corp. (NYSE:ASB) Seasonal Chart

Lancaster Colony Corp. (NASD:LANC) Seasonal Chart

Big 5 Sporting Goods Corp. (NASD:BGFV) Seasonal Chart

Emergent BioSolutions Inc. (NYSE:EBS) Seasonal Chart

NetGear, Inc. (NASD:NTGR) Seasonal Chart

Entravision Communications Corp. (NYSE:EVC) Seasonal Chart

Lear Corp. (NYSE:LEA) Seasonal Chart

DIRTT Environmental Solutions Ltd. (TSE:DRT.TO) Seasonal Chart

Invesco S&P SmallCap Industrials ETF (NASD:PSCI) Seasonal Chart

 

 

The Markets

Stocks sold off on Monday as investors monitored the rising levels of new cases of the coronavirus around the globe.  The S&P 500 Index shed 1.16%, weighed down by core cyclical sectors of the market (industrials, materials, and energy).  The large-cap benchmark has followed through to the downside following Friday’s break of the 50-day moving average, an important level of support for the intermediate-term trend.  Horizontal support around 3250 was tested around the lows of the session, enticing some dip-buyers to take advantage of the weakness.  Next hurdles below are presented by the 100 and 200-day moving averages, now at 3189 and 3104, respectively.  These are critical hurdles in the long-term path that could roil markets further if broken.  Previous support at the 50-day moving average is now in a position of resistance, which, if confirmed, would point to a negative intermediate-term path.  Given the intermediate-term implications that a seasonal mandate entails, reaction to the 50-day average will be closely monitored.

Bucking the losses on Monday was the technology sector, which actually closed higher on the day.  The technology SPDR ETF (XLK) ended with a gain of eight-tenths of one percent, charting a reversal candlestick on the day.  Broken intermediate support at the 50-day moving average is in a position of resistance, threatening to keep the negative short-term trend intact. 

Sentiment on Monday, as gauged by the put-call ratio, ended close to neutral at 0.94.  We have yet to see a bearish capitulation event that would provide the best risk-reward to get long this market again.  Bearish capitulation would be realized upon a spike in the put-call ratio to levels above 1.20, and/or a pronounced selloff in a given session followed by a reversal, and/or a spike followed by a reversal in the volatility index.  For now, the put-call ratio has been rather neutral, suggesting that investors are not reaching for portfolio hedges, and the VIX is not far off from its recovery lows.  We’ll be looking for that ideal risk-reward entry point for risk assets, but we don’t feel that we’ve seen it yet.

 

 

Seasonal charts of companies reporting earnings today:

 

 

S&P 500 Index

 

 

TSE Composite

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