Equity Clock

Stock Market Outlook for September 24, 2020

Crude Oil ends relatively unchanged amidst Wednesday’s commodity market rout, but, with resistance overhead, the trend is still deemed to be negative.

 

 

 

*** 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:

Subscribers – Click on the relevant link to view the full profile. Not a subscriber? Signup here.

KLA-Tencor Corp. (NASD:KLAC) Seasonal Chart

Rockwell Automation (NYSE:ROK) Seasonal Chart

Cisco Systems, Inc. (NASD:CSCO) Seasonal Chart

Oshkosh Corp. (NYSE:OSK) Seasonal Chart

DXC Technology Company (NYSE:DXC) Seasonal Chart

Taoping, Inc. (NASD:TAOP) Seasonal Chart

Just Energy Group, Inc. (NYSE:JE) Seasonal Chart

Direxion Daily Gold Miners Index Bear 3x Shares (AMEX:DUST) Seasonal Chart

iShares U.S. Basic Materials ETF (NYSE:IYM) Seasonal Chart

Invesco Aerospace & Defense ETF (NYSE:PPA) Seasonal Chart

 

 

The Markets

Stocks closed sharply lower on Wednesday as the technology reallocation continues.  The S&P 500 Index dropped by 2.37%, falling back to around the lows of the week.  Momentum indicators continue to push further into bearish territory with the relative strength index (RSI) now at the lowest level since the end of March.  While we’ve drawn the level of horizontal support in recent days as a range around 3250, the precise hurdle has been violated.  The short-term trend was already deemed to be negative upon rejection of the 20-day moving average, but now the intermediate-term trend is under threat with rejection around the 50-day moving average.  Next levels of significance are the 100 and 200-day moving averages at 3197 and 3105, respectively.  The bulls will likely make some effort to defend these longer-term hurdles and reaction will be closely monitored.

As highlighted, it was technology that was amongst the sectors leading the broader market lower on Wednesday.  The SPDR Technology ETF (XLK) was rejected from resistance around its 50-day moving average as “dip-buyers” from the past few days were shaken loose of positions.  As investors adopt the belief that this is not merely a short-term pullback, but rather a standard correction of the imbalances that were generated throughout the past quarter, more traders may show their skittishness and sell positions.  Equivalent long-term support at the 100 and 200-day moving averages can be seen at $106.61 and $97.87, respectively, presenting a logical point for long-term holders to defend.  Seasonally, the sector tends to remain weak into the start of October, at which point the average trend turns positive again.

On schedule for the Wednesday session, the Energy Information Administration released petroleum inventory data for the week just past.  The EIA reported that oil inventories declined by 1.6 million barrels last week, which is less than the 2.3 million barrel draw that was expected by analysts. Gasoline stockpiles, meanwhile, declined by 4.0 million barrels, while distillates were down by 3.4 million barrels. The result saw the days of supply of oil increase by eight-tenths to 37.0, while gasoline days of supply was unchanged at 26.6. The average days of supply for each at this point in September is 21.5 and 23.2, respectively.  We sent out further insight to subscribers intraday.  Subscribe now for insight on how to play the seasonal shift in the energy market.

Sentiment on Wednesday, as gauged by the put-call ratio, ended bullish at 0.89.  We are still waiting for that shakeout of bullish sentiment that would improve the risk-reward to re-accumulate equity exposure.

 

 

 

Seasonal charts of companies reporting earnings today:

 

 

S&P 500 Index

 

 

TSE Composite

Sponsored By...