Equity Clock

Stock Market Outlook for September 8, 2020

Investors showing indecision with stocks at all-time highs.

 

 

 

*** 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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Concert Pharmaceuticals, Inc. (NASD:CNCE) Seasonal Chart

Dicerna Pharmaceuticals, Inc. (NASD:DRNA) Seasonal Chart

Deutsche X-trackers MSCI Japan Hedged Equity ETF (NYSE:DBJP) Seasonal Chart

Home BancShares Inc. (NASD:HOMB) Seasonal Chart

Renaissance RE Holdings Ltd. (NYSE:RNR) Seasonal Chart

National HealthCare Corp. (AMEX:NHC) Seasonal Chart

Invesco FTSE RAFI Global+ Index ETF (TSE:PXG.TO) Seasonal Chart

Vanguard FTSE Developed Asia Pacific All Cap Index ETF (TSE:VA.TO) Seasonal Chart

Vanguard FTSE Global All Cap ex Canada Index ETF (TSE:VXC.TO) Seasonal Chart

iShares Currency Hedged MSCI Japan ETF (AMEX:HEWJ) Seasonal Chart

Invesco S&P 500 Value with Momentum ETF (AMEX:SPVM) Seasonal Chart

Alphabet Inc. (NASD:GOOGL) Seasonal Chart

Evercore Partners Inc. (NYSE:EVR) Seasonal Chart

Greenhill & Co. Inc. (NYSE:GHL) Seasonal Chart

Sterling Bancorp (NYSE:STL) Seasonal Chart

51job Inc. (NASD:JOBS) Seasonal Chart

Omega Flex Inc (NASD:OFLX) Seasonal Chart

iShares Core MSCI All Country World ex Canada Index ETF (TSE:XAW.TO) Seasonal Chart

 

 

The Markets

Stocks dipped further on Friday as investors remained jittery following Thursday’s abrupt selloff.  The S&P 500 Index closed down by eight-tenths of one percent, closing around its 20-day moving average.  At the lows of the day, the large-cap benchmark was down by over 3% as market participants got shaken out of overbought technology positions.  However, as the benchmark neared its rising 50-day moving average, along with recent horizontal support at 3350, investors stepped back in to pick up beaten down names.  Support at the 50-day moving average, indicative of the intermediate-term trend, remains intact and the 20-day moving average has yet to be definitively violated, despite the undercut intraday.  This is still a market that has yet to define a level of resistance, or a point that investors are more inclined to sell into rather than buy.  The opposite is actually the case where intermediate levels of support are still presenting buying opportunities on a reset.  It would take a break of the rising 50-day moving average, as what occurred at the end of February, in order to raise concerns pertaining to the intermediate-term trend that would warrant aggressive defensive action.   Subscribers to our service are encouraged to track intermediate levels of support for the benchmarks/industries that we track within our weekly chart books, published at the start of each week.  Links to these books are below:

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

For the week, the large-cap benchmark was lower by 2.31%, merely giving up the gains recorded in the prior week.  The candlestick charted during the week is indicative of investor indecision.  The long upper and lower wicks points to the lack of conviction to either the bullish or bearish camp.  The benchmark is stretched well above moving averages, suggesting further froth could come out of the market before appealing risk-reward levels for the rising intermediate-term trend are hit.   Momentum indicators are hinting of rolling over, although bullish characteristics can still be derived.

The continued downfall in stocks on Friday followed the release of the monthly non-farm payroll report for August.  The Bureau of Labor Statistics indicates that 1.371 million payrolls were added last month, which was approximately inline with the consensus analyst estimate that called for an increase of 1.4 million. The unemployment rate showed a pronounced drop from 10.2% to 8.4%, which places the metric back inline with values that are typical coming out of an economic recession. Average hourly earnings, meanwhile, increased by 0.4%, which is stronger than the unchanged result that was forecast. Stripping out the seasonal adjustments, payrolls actually increased by 1.535 million, or 1.1%, in August, which is much stronger than the 0.1% increase that is average for this time of year. The year-to-date change is now down by 8.1%, or 7.9% below the seasonal average trend through the first eight months of the year. This remains the sharpest drop through this timeframe on record.  We sent out further insight to subscribers intraday.  Signup now to access our report.

North of the border, Statscan released employment metrics of their own.  The headline print of August’s Labour Force Survey in Canada indicates that employment increased by 245,800, which is about inline with the consensus estimate that called for a rise of 250,000. The unemployment rate ticked lower from 10.9% in July to 10.2% last month. Analysts had expected the unemployment rate to come in at 10.2%. Stripping out the seasonal adjustments, which are irrelevant in this environment, employment actually increased by 219,900, or 1.2%, in August. The average change for the month is a decline of 0.1%. Year-to-date, employment is down by 4.2%, a drawdown not matched by any time in at least the past four decades of data that we have on record; never before has employment declined through the first eight months of the year. The average change through the end of August is an increase of 3.1%.  Further insight was sent to subscribers intraday.  Subscribe now to view this report within our archive.

Sentiment on Friday, as gauged by the put-call ratio, ended bearish at 1.03.

 

 

 

 

Seasonal charts of companies reporting earnings today:

 

 

S&P 500 Index

 

 

TSE Composite

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