Equity Clock

Stock Market Outlook for September 3, 2020

The magnitude that the S&P 500 Index is stretched above both its 20 and 50-day moving averages is something that is typically only seen once in a decade.

 

 

 

*** 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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Auryn Resources Inc. (TSE:AUG.TO) Seasonal Chart

Chatham Lodging Trust (NYSE:CLDT) Seasonal Chart

China Life Insurance Co. Ltd. (NYSE:LFC) Seasonal Chart

SeaChange Intl, Inc. (NASD:SEAC) Seasonal Chart

General Motors Co. (NYSE:GM) Seasonal Chart

Chemung Financial Corp. (NASD:CHMG) Seasonal Chart

VelocityShares 3x Inverse Gold ETN (NASD:DGLD) Seasonal Chart

iShares Russell Top 200 ETF (NYSE:IWL) Seasonal Chart

First Trust NASDAQ ABA Community Bank Index Fund (NASD:QABA) Seasonal Chart

 

 

The Markets

Our target for the S&P 500 Index has been smashed.  The S&P 500 Index gained 1.54% on Wednesday, crossing the 3550 target that we had on our radar.  The level marked rising trendline resistance, as well as an approximately 5% gain above the previous all-time high around 3386.  Gains of this magnitude are common upon crossing significant thresholds as investors that looked to the threshold as resistance are forced to chase and let down their bearish guard.  The trend of the large-cap benchmark is becoming increasingly parabolic, raising concerns of the near-term sustainability of the move higher.  The relative strength index (RSI) has moved up to 82.90, a significantly overbought condition that is the highest since January of 2018. 

The S&P 500 Index continues to stretch above levels of support presented by 20 and 50-day moving averages.  At 3580.84, the large-cap benchmark is now 4.7% above the short-term average and 9.0% above the longer-term hurdle.  There have only been 60 other sessions in the past 50 years when the benchmark has been more stretched above both of these significant hurdles at the same time.  The last time was on June 10th when the benchmark was 5.3% above the 20-day and 10.6% above the 50-day.  Historically, stretched conditions of this magnitude have been a once in a decade type scenario that, in recent history (past three decades), has persisted for a few days before a pullback has ensued.  The pullbacks that followed were typically in the range of 2% to 7%.

On schedule for the Wednesday session, the Energy Information Administration (EIA) released its tally of petroleum inventories for the week just past.  The EIA reported that oil inventories declined by 9.4 million barrels last week, which is far better than the drawdown that analysts were expecting of 1.9 million.  Gasoline stockpiles, meanwhile, declined by 4.3 million barrels.  The result saw the days of supply of oil fall by two-tenths of a day to 34.5, while gasoline days of supply ticked lower by six-tenths to 26.5.  The average days of supply for each at the end of August is 21.8 and 22.9, respectively.  We sent out further insight to subscribers intraday.  Subscribe now to view our report.

Sentiment on Wednesday, 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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