Stock Market Outlook for August 3, 2023
Let the volatility begin!
*** 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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Innovative Industrial Properties, Inc. (NYSE:IIPR) Seasonal Chart
Global X China Industrials ETF (NYSE:CHII) Seasonal Chart
Capri Holdings Ltd. (NYSE:CPRI) Seasonal Chart
McDonalds Corp. (NYSE:MCD) Seasonal Chart
The Markets
Stocks dropped on Wednesday as a rating downgrade of US debt sent shivers through the market as investors recollected the events of the last downgrade in 2011. The S&P 500 Index closed the day lower by 1.38%, intersecting with support at the rising 20-day moving average. A downside open gap between 4450 and 4575 has instantly defined a zone of resistance as the widely anticipated correction in stocks following the first half of the year strength starts to become realized. MACD has been diverging from the direction of price for well over a month, highlighting waning buying demand even as stocks reached towards new 52-week highs. Below support at the rising 20-day moving average at 4517, the next significant hurdle that investors should be cognizant of is the rising 50-day moving average at 4394. Ultimately, levels all the way back to previous horizontal resistance from which the benchmark broke out from in June at 4200 are fair game as part of this corrective move that was anticipated to play out during this period of normal volatility in August and September. So long as the horizontal barrier remains intact, the benchmark can still be argued to be within a rising intermediate-term trend, warranting being buyers on the dip.
Today, in our Market Outlook to subscribers, we discuss the following:
- A look back to 2011 to see how stocks performed following the last US government debt rating downgrade
- The VIX
- The setup for treasury bonds
- US Petroleum Status and the price of oil
- US Vehicle Sales
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Sentiment on Wednesday, as gauged by the put-call ratio, ended close to neutral at 0.93.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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