Equity Clock

Stock Market Outlook for July 28, 2020

In our weekly chart books, we just upgraded a cryptocurrency for the first time ever from Neutral to Accumulate. 

 

 

 

*** 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:

Subscribers – Click on the relevant link to view the full profile. Not a subscriber? Signup here.

Toro Co. (NYSE:TTC) Seasonal Chart

Accenture Ltd. (NYSE:ACN) Seasonal Chart

Cubic Corp. (NYSE:CUB) Seasonal Chart

Universal Forest Products, Inc. (NASD:UFPI) Seasonal Chart

Choice Hotels Intl, Inc. (NYSE:CHH) Seasonal Chart

Telus Corp. (NYSE:TU) Seasonal Chart

Vanguard FTSE Canada Index ETF (TSE:VCE.TO) Seasonal Chart

Vanguard FTSE Canadian High Dividend Yield Index ETF (TSE:VDY.TO) Seasonal Chart

BMO Canadian Dividend ETF (TSE:ZDV.TO) Seasonal Chart

 

 

The Markets

Stocks closed higher on Monday as investors look forward to earnings to be released in the week ahead, as well as await the release of the FOMC announcement on Wednesday.  The S&P 500 Index closed higher by around three-quarters of one percent, maintaining levels above the psychologically important 3200 level.  But despite the positive tape, a bearish MACD crossover was triggered, an indication to sell stocks.  The Full Stochastic Oscillator recorded a similar sell signal and the relative strength index is rolling over.  Momentum indicators have been negatively diverging from price for over a month now, suggesting waning buying demand, typically a precursor to a change of trend.  A similar negative momentum divergence was apparent between January and February, which, of course, led to the dramatic plunge in markets through the weeks thereafter.  The rising 20 and 50-day moving averages continue to support the positive trend, thereby alleviating near-term risks to these hurdles, but reason to be aggressively long stocks at this juncture, beyond the summer rally period, is absent. 

In our weekly chart books released to subscribers on Monday, for the first time ever we upgraded our view of a cryptocurrency from Neutral to Accumulate.  Ethereum has been consolidating for about a year and a half between rising support and resistance around 300; it has now broken out.  The breakout presents a calculated upside target of around 500, or approximately 53% above Monday’s close.  Bitcoin is nearing a similar breakout, however, we have not upgraded our rating of this crytocurrency yet, but arguably if one is going to move higher, the other is expected to go along with it.  While the historical data that we have on file is extremely limited, Etherium has shown a positive trend, on average, between mid-July and the end of August.  The technical setup suggests that this move is already well underway.

Want to know which areas of the market to buy or sell?  Our Weekly Chart Books have just been updated, providing a clear Accumulate, Avoid, or Neutral rating for currencies, cryptocurrencies, commodities, broad markets, and subsectors/industries of the market.  Subscribers can login and click on the relevant links to access.

• Currencies
• Cryptocurrencies
• Commodities
• Major Benchmarks
• Sub-sectors / Industries

Subscribe now.

On the economic front, a report on durable goods orders was released before Monday’s opening bell.  The headline print of June’s Durable Goods Orders report indicated that new orders in the US increased by 7.3% last month, which was stronger than the consensus analyst estimate that called for an increase of 6.5%. Core capital goods orders, meanwhile, showed an increase of 3.3%, which slightly missed the consensus analyst estimate of an increase of 3.5%. Stripping out the seasonal adjustments, the value of manufacturers’ new orders for durable goods industries actually increased by 20.7% in June, which is more than double the 8.8% increase that is average for this time of year. The year-to-date change is down by 7.9% through the first six months of the year, which is now 12.6% below the seasonal average trend.  We sent out further insight to subscribers intraday. Subscribe now.

Sentiment on Monday, as gauged by the put-call ratio, ended bullish at 0.63.  Another low ratio raising concerns of complacency in the market.

 

 

Seasonal charts of companies reporting earnings today:

 

 

S&P 500 Index

 

 

TSE Composite

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