Equity Clock

Stock Market Outlook for September 4, 2020

Stocks fall as the tech bubble bursts ahead of the release of the monthly payroll report for August.

 

 

 

*** 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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FRP Holdings, Inc. (NASD:FRPH) Seasonal Chart

VSE Corp. (NASD:VSEC) Seasonal Chart

Argo Group Intl Holdings, Ltd. (NYSE:ARGO) Seasonal Chart

Kenon Holdings Ltd. (NYSE:KEN) Seasonal Chart

Tidewater Midstream and Infrastructure Ltd. (TSE:TWM.TO) Seasonal Chart

ProShares UltraShort Gold (NYSE:GLL) Seasonal Chart

World Fuel Services Corp. (NYSE:INT) Seasonal Chart

HCI Group, Inc. (NYSE:HCI) Seasonal Chart

Financial Institutions, Inc. (NASD:FISI) Seasonal Chart

FSB Bancorp, Inc. (NASD:FSBC) Seasonal Chart

Heritage Insurance Holdings, Inc. (NYSE:HRTG) Seasonal Chart

First Asset Morningstar International Value Index ETF (CAD Hedged) (TSE:VXM.TO) Seasonal Chart

 

 

The Markets

Stocks sold off sharply on Thursday as the technology bubble finally burst.  The S&P 500 Index shed 3.51%, realizing the sharpest one-day decline since June 11th.  The benchmark tested support at its rising 20-day moving average at the lows of the session, instantly correcting the stretched condition that we profiled in yesterday’s report.  The benchmark has held support at this short-term moving average for the past few months, maintaining a short-term trend of higher-highs and higher-lows.  Intermediate support at the 50-day moving average is now 4.7% below current levels, presenting the near-term risk should selling pressures escalate and short-term support break.  The Relative Strength Index (RSI), which had pointed to the most overbought market since January of 2018, has fallen back below the 70-line, triggering a sell signal in the process.  The Full Stochastic Oscillator suggests the same, while Moving Average Convergence-Divergence (MACD) seems soon to trigger a similar bearish crossover.  Seasonally, volatility in the equity market is a hallmark of the month of September, something that we had been highlighting in our recent reports and  preparing for by ramping up exposure to volatility futures ETFs.  So far, so good.

Just Released…

Our Monthly Outlook for September was released to subscribers over the weekend.

Highlights in this report include:

• Equity market tendencies in the month of September
• The risk to a key driver of economic activity through the final months of the year
• The rebound in the business economy
• What the performance of the economy has to say about which party will win the Presidential election
• Are stocks expensive?
• Should you be invested in stocks or bonds?
• The technical status of the S&P 500 Index and the US Dollar
• Sector reviews and ratings
• Notable stocks and ETFs entering their period of strength in September

Subscribe now and we’ll send you this 68-page report.

The improvement in initial and continued claims through the middle of August suggests another solid monthly employment report when the results are released on Friday at 8:30am.  Analysts are expecting the addition of 1.4 million payrolls for August, which is down slightly from the 1.763 million payrolls added in July.  Non-seasonally adjusted, payrolls increased by 0.1%, on average, in this summer month, which would imply the addition, in a normal year, of 139,100.  Clearly this is not a normal year.  The year-to-date change, as of the end of July, was 8.7% below the seasonal norm, the widest dispersion versus the seasonal average trend through this point in the year on record.  We will have the complete breakdown of the payroll report and how it relates to seasonal norms in a report that will be released to subscribers intraday.  Subscribe now to be included on our list.

Sentiment on Thursday, as gauged by the put-call ratio, ended slightly bullish at 0.95.  This is the highest level since June and represents a distinct shift from the excessively complacent levels recorded throughout the month of August. 

 

 

 

 

Seasonal charts of companies reporting earnings today:

• No significant reports scheduled for today.

 

S&P 500 Index

 

 

TSE Composite

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