Equity Clock

Stock Market Outlook for July 20, 2020

Signs of risk-aversion starting to appear as investors start rotate following the risk-on rally from the March low.

 

 

 

*** 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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Pfizer, Inc. (NYSE:PFE) Seasonal Chart

Fortis, Inc. (TSE:FTS.TO) Seasonal Chart

Regis Corp. (NYSE:RGS) Seasonal Chart

Medley Management Inc. (NYSE:MDLY) Seasonal Chart

Invesco Senior Loan ETF (NYSE:BKLN) Seasonal Chart

VanEck Vectors Investment Grade Floating Rate ETF (NYSE:FLTR) Seasonal Chart

ProShares S&P 500 Dividend Aristocrats ETF (NYSE:NOBL) Seasonal Chart

SkyWest, Inc. (NASD:SKYW) Seasonal Chart

Carnival Plc. (NYSE:CUK) Seasonal Chart

ProShares UltraPro Short Dow30 (NYSE:SDOW) Seasonal Chart

ProShares Short Russell2000 (NYSE:RWM) Seasonal Chart

Phillips 66 (NYSE:PSX) Seasonal Chart

Allied Properties Real Estate Investment Trust (TSE:AP/UN.TO) Seasonal Chart

Primerica Inc. (NYSE:PRI) Seasonal Chart

Sprott Physical Gold Silver Trust (TSE:CEF.TO) Seasonal Chart

iShares Canadian Universe Bond Index ETF (TSE:XBB.TO) Seasonal Chart

 

 

The Markets

Stocks closed marginally higher on Friday as the average summer rally period officially comes to a close.  The S&P 500 Index has gained 7.17% since the average summer rally period began on June 29th, making this the fourth best summer rally in the past 70 years.  Only 1962, 1999, and 2016 saw stronger rallies with gains reaching around 8% for the approximately three-week span around the start of the second half of the year.  In our report released to subscribers at the start of the summer rally period, we noted that while “the headlines of increasing cases of the coronavirus seem threatening and the uncertainties are tremendous […], we are in a seasonally strong period, with a market that is holding intermediate support at the 50-day moving average, and the fundamental dataflow continues to come in better than expected and better than average.” Unlike others, we had no room to speculate that the seasonally strong timeframe would not play out.  Our approach is simple, using a combination of seasonal, technical, and fundamental analysis, therefore when each of the three prongs to the approach are checked, reason to aggressively pursue the trade is achieved.  Subscribe now to follow along with us.

For the week, the S&P 500 Index was higher by 1.25%, continuing to make progress elevating above the 50-week moving average.  The 20-week moving average is now starting to curl higher following a multi-month declining trend that began in March and momentum indicators continue to point higher.  The open gap between 3250 and 3325 is the big hurdle overhead, a zone that the benchmark has been flirting with a number of times over the past seven weeks.  The benchmark has gotten as high as 3238, just a mere three-tenths of one percent away from this threatening range.  While this market continues to show more signs of support, right now, than resistance, the market benchmark may need a bigger running start before the momentum is sufficient to break the zone of resistance overhead.

On the economic front, a report on housing starts in the US was released before Friday’s opening bell.  The headline print of June’s report indicated that activity increased by 17.3% last month to a seasonally adjusted annualized rate of 1.186 million. Analysts were expecting an increase of 18.2% to a rate of 1.195 million. Stripping out the adjustments, starts actually increased by 20.9% in June, which is much stronger than the 1.3% increase that is average for this time of year. The year-to-date change is now higher by 3.6% through the first half of the year, which is still significantly weaker than the 41.9% increase that is average during this timeframe.  We sent out further insight to subscribers intraday.  Subscribe now.

Sentiment on Friday, as gauged by the put-call ratio, ended bullish at 0.74.

 

 

 

 

Seasonal charts of companies reporting earnings today:

 

 

S&P 500 Index

 

 

TSE Composite

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