Stock Market Outlook for August 31, 2022
Abnormal June declines of home prices in various regions is suggestive of a peak in the housing market, something that threatens to weigh on stocks in the year ahead.
*** 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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Parex Resources Inc. (TSE:PXT.TO) Seasonal Chart
Kaman Corp. (NYSE:KAMN) Seasonal Chart
SPDR S&P 1500 Value Tilt ETF (AMEX:VLU) Seasonal Chart
iShares China Index ETF (TSE:XCH.TO) Seasonal Chart
SPDR Russell 1000 Yield Focus ETF (AMEX:ONEY) Seasonal Chart
Vanguard International High Dividend Yield ETF (NASD:VYMI) Seasonal Chart
The Markets
Stocks drifted lower on Tuesday as the retracement following the summer rally continues. The S&P 500 Index closed lower by 1.10%, breaking below its rising 50-day moving average, a hurdle that we had been monitoring closely as a level of potential support. The 20-day moving average is rolling over, confirming the negative short-term trend that had been suggested by last week’s decline and rejection from gap resistance between 4195 and 4218. Momentum indicators remain pointed lower, not showing any indications, yet, that this short-term downside shift is waning. Below the 50-day moving average, levels down to the June lows are fair game. We remain on the lookout for a higher intermediate low above the June bottom in order to provide comfort that the intermediate trend of the market has shifted positive, warranting more aggressive risk-taking in portfolios for our back half of the year strength that we have forecasted. We are not there yet and it remains prudent to remain on guard until the turn above the June low is, in fact, realized. Seasonally, September is the most volatile month of the year, one that warrants a certain amount of caution, particularly during the last two weeks of the month.
Today, in our Market Outlook to subscribers, we discuss the following:
- Recent stability of treasury yields and the US Dollar
- Job Openings and Labor Turnover Survey (JOLTS)
- Case-Shiller Home Price Index
- Investor sentiment
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Sentiment on Tuesday, as gauged by the put-call ratio, ended bearish at 1.20.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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