Equity Clock

Stock Market Outlook for July 30, 2020

The US Dollar ETF has become the most oversold in history as the parabolic decline continues to become more stretched.

 

 

 

*** 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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Sysco Corp. (NYSE:SYY) Seasonal Chart

Molson Coors Brewing Co. (NYSE:TAP) Seasonal Chart

Xcel Energy (NASD:XEL) Seasonal Chart

Ameresco Inc. (NYSE:AMRC) Seasonal Chart

Allied Capital Corp. (NYSE:AFC) Seasonal Chart

iShares 1-3 Year Treasury Bond ETF (NASD:SHY) Seasonal Chart

 

 

The Markets

Stocks closed higher on Wednesday as investors monitored comments from Fed Chair Jerome Powell, as well as the testimonies of tech executives in front of congress.  The S&P 500 Index ended higher by 1.24%, erasing the prior session’s loss and maintaining support at the rising 20-day moving average.  The benchmark closed back within the band of resistance between 3250 and 3325, representing the downside gap that was opened in February that led to the massive decline that followed.  Negative momentum divergences remain intact as buying pressures show signs of fading around this overhead hurdle.  With price being pinned between rising moving average support and horizontal resistance, inevitably, a break, one way or the other, will be realized.

The ongoing decline in the US Dollar continues to be a significant factor behind the strength in the equity and commodity markets in recent weeks.  The US Dollar Index ETF fell by another half of a percent on Wednesday as investors perceived the Fed’s comments following their two-day policy meeting as being dovish.  The parabolic trend lower on the currency ETF continues to become increasingly stretched, which is quite simply unsustainable.  Momentum indicators remain significantly oversold, however, hints that they have bottomed are starting to emerge.  A mean reversion gain in the currency would be expected to have negative implications in the equity and commodity market.  However, beyond this potentially short-term fluctuation, a longer-term negative trend is developing, which would be expected to be supportive of stocks ahead.

On schedule for the Wednesday session, the Energy Information Administration reported petroleum inventories for the week just past.  The EIA reported that oil inventories declined by 10.6 million barrels last week, which has once again caught analysts off guard. The consensus analyst estimate was for an increase of 357,000. Gasoline stockpiles, meanwhile, increased by 654,000 barrels, while distillates increased by 503,000 barrels. The result saw the days of supply of oil fall by over a full day to 36.6, while gasoline days of supply dipped by a tenth to 28.5. The average days of supply for each near the end of July is 22.0 and 23.8, respectively.  We sent out further insight to subscribers intraday.  Subscribe now.

Sentiment on Wednesday, as gauged by the put-call ratio, ended bullish at 0.73.

 

 

 

 

Seasonal charts of companies reporting earnings today:

 

 

S&P 500 Index

 

 

TSE Composite

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