Stock Market Outlook for May 19, 2022
Treasury bond prices breaking their trends of lower-highs and lower-lows as the classic safe haven attracts demand amidst the equity selloff.
*** 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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Universal Logistics Holdings, Inc. (NASD:ULH) Seasonal Chart
Vanguard Growth ETF (NYSE:VUG) Seasonal Chart
Chegg, Inc. (NYSE:CHGG) Seasonal Chart
Tanzanian Royalty Exploration Corp. (TSE:TNX.TO) Seasonal Chart
American Elec Pwr Co., Inc. (NYSE:AEP) Seasonal Chart
Coca-Cola Consolidated, Inc. (NASD:COKE) Seasonal Chart
Federal Realty Investment Trust (NYSE:FRT) Seasonal Chart
The Markets
Stocks tumbled on Wednesday as earnings reports from Walmart (WMT) and Target (TGT) elevated concerns pertaining to the strength of consumer facing companies amidst rising costs and ballooning inventory levels. The S&P 500 Index closed lower by just over 4%, intersecting with Friday’s upside open gap between 3930 and 3960. The oversold lows charted last Thursday are being put to the test and this downturn will, quite obviously, confirm or deny whether or not a significant low has been set, as the charts have hinted. The intermediate-term trend of the market remains negative with the 50-day moving average still pointing lower and levels of resistance overhead remaining significant, however, should the market be able to stake support at last Thursday’s low around 3860, the benchmark could pull in broader participation in order to fuel a short-term rally in stocks that, in the past few days, the risk-reward has become favourable for. The market remains on edge and the action certainly appears threatening, but stocks will move in waves and we still see the market as more likely being in the trough of the recent wave lower, suggesting that the next move, at least in the short-term, is for a rebound into the end of the month.
Today, in our Market Outlook to subscribers, we discuss the following:
- Looking at the hourly chart of the large-cap benchmark to narrow down on the price action
- The higher-low in the treasury market, hinting that it may have turned a corner, and the action we are taking in the Super Simple Seasonal Portfolio
- Questioning whether anything has materially changed in the market since Monday when we ramped up risk exposure in the portfolio
- Reviewing the average path of stocks during Mid-Term election years when the new presidential party sees their power put to the test
- US Housing Starts
- Canada Consumer Price Index (CPI)
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Sentiment on Wednesday, as gauged by the put-call ratio, ended overly bearish at 1.19.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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