Equity Clock

Stock Market Outlook for August 28, 2020

A rare event just occurred in the market that could be pointing to a change in the trajectory of the Volatility Index (VIX) and the broader equity market.

 

 

 

*** 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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Albemarle Corp. (NYSE:ALB) Seasonal Chart

East West Bancorp, Inc. (NASD:EWBC) Seasonal Chart

Thor Industries, Inc. (NYSE:THO) Seasonal Chart

Glacier Bancorp, Inc. (NASD:GBCI) Seasonal Chart

AtriCure Inc. (NASD:ATRC) Seasonal Chart

Tata Motors Ltd. (NYSE:TTM) Seasonal Chart

Strattec Security Corp. (NASD:STRT) Seasonal Chart

First Asset US & Canada Lifeco Income ETF (TSE:FLI.TO) Seasonal Chart

SPDR S&P Regional Banking ETF (NYSE:KRE) Seasonal Chart

Columbia India Consumer ETF (NYSE:INCO) Seasonal Chart

Invesco BuyBack Achievers ETF (NASD:PKW) Seasonal Chart

SPDR Russell 2000 Low Volatility ETF (AMEX:SMLV) Seasonal Chart

Vanguard Dividend Appreciation ETF (NYSE:VIG) Seasonal Chart

 

 

The Markets

Stocks continue to grind higher as investors let down their guard in bond market allocations.  The S&P 500 Index gained just less than two-tenths of one percent, reaching above the psychologically important 3500 level at the highs of the session.  The benchmark closed the day at 3484, now 100 points above the previous all-time closing high charted in February.  The relative strength index continues to become increasingly overbought and our target of 3550 is close to being fulfilled.  Support at the 20 and 50 day moving averages is now 3.3% and 7.2%, respectively, below present levels, a stretched condition by any measure. 

On the economic front, the latest read of jobless claims in the US indicated some improvement from the week prior, although the headline print remains above the psychologically important one million threshold.  Initial claims showed a seasonally adjusted print of 1.006 million, down from 1.104 million previous.  Stripping out the seasonal adjustments, which are irrelevant in this environment, the initial claimant count showed a drop of 67,958 to 821,591.  Initial claims are higher by 163% year-to-date, which is still well above the seasonal average trend, but it is improving.

As for continued claims, which are more relevant during and coming out of a recession, the count sits at 13,909,872, down 272,941 from the week prior.  Continued claims are now down by 2.9 million in the past month, providing some indication that the payroll report for August should be quite strong when the results are reported next week.  Continued claims are now higher by 548% year-to-date, still an extraordinary result for any timeframe.  So long as this indicator continues to decline, the economy is deemed to be returning to some state of normalcy.  Seasonally, continued claims typically fall through to a low at the start of October.

Sentiment on Thursday, as gauged by the put-call ratio, ended bullish at 0.62.  Yet again, another reading that points to investor complacency at these elevated equity market levels.

 

 

 

 

 

Seasonal charts of companies reporting earnings today:

 

 

S&P 500 Index

 

 

TSE Composite

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