Stock Market Outlook for June 8, 2022
The next week will be a critical test as the runoff of assets from the Fed’s balance sheet withdraws liquidity from the market.
*** 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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Procter & Gamble Co. (NYSE:PG) Seasonal Chart
Masimo Corp. (NASD:MASI) Seasonal Chart
SBA Communications Corp. (NASD:SBAC) Seasonal Chart
Andrew Peller Ltd. (TSE:ADW/A.TO) Seasonal Chart
BlackRock Core Bond Trust (NYSE:BHK) Seasonal Chart
The Markets
Stocks closed firmly higher on Tuesday as investors shook off concerns pertaining to the health of the consumer following news that Target would have to take aggressive steps to trim unwanted inventories, including markdowns and the cancellation of orders. The S&P 500 Index ended with a gain of nearly one percent, once again attempting to make progress above horizontal resistance at 4150. As has been highlighted in recent days, a bull-flag setup remains on the chart, a pattern that has a higher probability of an upside resolution than a downside failure. The flag portion to the setup continues to play out above the recently broken 20-day moving average, which provides an appropriate stop to our ramped up equity exposure enacted around the middle of May. The upshoot to the bullish setup are to levels around the declining 50-day moving average, now at 4233, and horizontal resistance around 4280. From there, we are likely to see another digestion of the price action before the average summer rally period begins around the end of June. Our ramped up equity exposure continues to allow us to benefit from this rebound attempt, however, our desire remains to hold a higher allocation to risk for the summer rally period that is quickly approaching.
Today, in our Market Outlook to subscribers, we discuss the following:
- Core-cyclical sectors continue to provide a positive influence to the broader market
- Bullish engulfing candlestick on the Industrial Sector ETF
- The rollover in the Fed’s balance sheet and the critical test for the market ahead
- A pair trade to take advantage of the balance sheet unwind
- Risk aversion in the bond market often leads to risk aversion in stocks
- Record high on the Dark Index
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Sentiment on Tuesday, as gauged by the put-call ratio, ended neutral at 0.99.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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