Equity Clock

Stock Market Outlook for October 2, 2020

Two economic barometers fell sharply on Thursday as investors grow sceptical of the recovery.

 

 

 

*** 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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Deere & Co. (NYSE:DE) Seasonal Chart

Robert Half Intl, Inc. (NYSE:RHI) Seasonal Chart

Champion Iron Ltd. (TSE:CIA.TO) Seasonal Chart

Regal-Beloit Corp. (NYSE:RBC) Seasonal Chart

Silicon Laboratories, Inc. (NASD:SLAB) Seasonal Chart

Trinity Industries Inc. (NYSE:TRN) Seasonal Chart

Kelly Services, Inc. (NASD:KELYA) Seasonal Chart

LPL Financial Holdings Inc. (NASD:LPLA) Seasonal Chart

iShares S&P-TSX Capped Information Technology Index ETF (TSE:XIT.TO) Seasonal Chart

BMO Equal Weight U.S. Banks Index ETF (TSE:ZBK.TO) Seasonal Chart

iPath US Treasury 10-Year Bear ETN (AMEX:DTYS) Seasonal Chart

iShares North American Tech-Multimedia Networking ETF (NYSE:IGN) Seasonal Chart

First Trust Nasdaq-100 Equal Weighted Index Fund (NASD:QQEW) Seasonal Chart

Invesco Dynamic Large Cap Growth ETF (NYSE:PWB) Seasonal Chart

Danaher Corp. (NYSE:DHR) Seasonal Chart

Freeport-McMoRan, Inc. (NYSE:FCX) Seasonal Chart

Aegion Corp. (NASD:AEGN) Seasonal Chart

Resources Connection Inc. (NASD:RECN) Seasonal Chart

L.B. Foster Co. (NASD:FSTR) Seasonal Chart

Cameco Corp. (NYSE:CCJ) Seasonal Chart

iShares Global Agriculture Index ETF (TSE:COW.TO) Seasonal Chart

Invesco S&P 500 Equal Weight Materials ETF (NYSE:RTM) Seasonal Chart

 

 

The Markets

Stocks closed higher on Thursday in typical start of the month/start of the quarter fashion.  The S&P 500 Index added half of one percent, moving back to the highs set in the prior day’s session.  The large-cap benchmark continues to hold above the convergence of resistance around 20 and 50-day moving averages, however, the lack of enthusiasm above these hurdles is not very convincing that a definitive breakout has been realized.  The market remains dependent on the headlines, particularly those relating to further economic stimulus.  Without the catalyst of additional stimulus, it is likely that the benchmark will fall below these hurdles rather abruptly.  In this binary market dependent on one catalyst, it is very difficult to make any near-term bets.  Seasonally, the start of month/start of quarter flows typically support stocks for the first few days, beyond which weakness is the norm into the middle of October.

One of the headlines that investors will likely react to in the Friday session is the result of the employment situation report.  Analysts are expecting the headline to show the addition of 894,000 payrolls for September, weaker than the 1.371 million increase recorded in the month prior.  On average, stripping out the seasonal adjustments, payrolls increase by 0.4% in this last month of the third quarter, which would imply the actual addition of 562,000 jobs.  The year-to-date change in payrolls still has a long way to go in order to fill the void that was created from the pandemic shutdown/restrictions in the spring.  We will have the complete breakdown of the results in our report to subscribers that will be released intraday.  Subscribe now to be included on our list.

Just released…

Our 82-page monthly report for October has just been released to subscribers.  Here are the highlights:

• Equity market tendencies in the month of October
• The setup for the best six months of the year for stocks
• Fundamental drivers of the market then and now
• Focussed on the spread of respiratory illnesses
• Seasonal tendencies during Presidential Election years
• Stalling consumer momentum removing a tailwind behind the economy
• The dominant theme expected of the market through year-end
• Bottoming pattern on the chart of the US Dollar Index
• Strains growing in the credit market
• The technical status of the S&P 500 Index
• Positioning for the months ahead
• Sector reviews and ratings
• Notable stocks and ETFs entering their period of strength in October

Subscribe now and we’ll send you our report.

On the economic front, a report on construction spending in the US was released during Thursday’s session.  The headline print of August’s report indicates that activity increased by 1.4% for the month, which was much stronger than the consensus estimate that called for a rise of 0.7%.  The year-over- year change now sits at +2.5%.  Stripping out the seasonal adjustments, construction spending in the US actually increased by 2.3% in August, which is marginally stronger than the 2.2% increase that is average for this time of year.  The year-to-date change is higher by 22.4%, which is weaker than the 31.8% increase seen through this point last year and weaker than the seasonal norm that calls for an increase of 27.2%.  We sent out further insight to subscribers intraday.  Signup now to access this report.

While stocks closed marginally higher on Thursday, two important gauges of the health of the economy broke down during the session.  Copper and Oil fell sharply on Thursday as investors grow concerned of demand given rising case counts of coronavirus globally.  The energy commodity traded lower from resistance around $40 and copper broke sharply below support at its 50-day moving average.  Each are pointing to the start of short to intermediate-term trends of lower-lows and lower-highs.  Both commodities are highly dependent on the strength of the economy and will tend to rise or fall inline with economic momentum.  The rebound from the spring lows has been swift, but investors are indicating a shift in the trajectory ahead.  Copper has instantly pulled back towards support at $2.85, while support for the price of oil is not apparent until $36.  Seasonally, the price of oil declines between now and the start of December, while copper tends to weaken slightly into the end of November.  The commodity market is saying something and we must listen.

Sentiment on Thursday, as gauged by the put-call ratio, ended bullish at 0.78.

 

 

 

 

Seasonal charts of companies reporting earnings today:

• No significant reports scheduled for today

 

S&P 500 Index

 

 

TSE Composite

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