Equity Clock

Stock Market Outlook for October 27, 2020

Momentum indicators on the S&P 500 Index are all rolling over at levels lower than the September peak, something that was last seen at the market peak in February.

 

 

 

*** 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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CIGNA Corp. (NYSE:CI) Seasonal Chart

USX-US Steel Group, Inc. (NYSE:X) Seasonal Chart

Legg Mason, Inc. (NYSE:LM) Seasonal Chart

Ritchie Bros Auctioneers (NYSE:RBA) Seasonal Chart

Fission Uranium (TSE:FCU.TO) Seasonal Chart

Xylem Inc. (NYSE:XYL) Seasonal Chart

Mosaic Co. (NYSE:MOS) Seasonal Chart

Vanguard S&P Mid-Cap 400 Value ETF (NYSE:IVOV) Seasonal Chart

iShares Russell Mid-Cap Growth ETF (NYSE:IWP) Seasonal Chart

Vanguard Russell 2000 Growth ETF (NASD:VTWG) Seasonal Chart

 

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The Markets

Stocks plunged on Monday as the market became concerned with the rising level of coronavirus cases in the US.  The S&P 500 Index dropped by 1.86%, realizing the weakest session since September 23rd.  The benchmark broke below its 20-day moving average to close around its 50-day; the shorter-term moving average started to hint of support over the past week.  Resistance around the all-time high at 3588 continues to stand out, leaving buyers hesitant about sticking their nose out until a defined trend is derived.  For now, the trend is implied to be flat, until such time as support around 3200 is broken to the downside or resistance around 3588 is broken to the upside.  Momentum indicators continue to roll over following last week’s sell signal with respect to MACD.  The rollover of moving average convergence divergence (MACD) and the relative strength index (RSI) is occurring at a lower level than the overbought peak charted at the start of September, bringing an end to the trend of higher-highs and higher-lows, at least with respect to RSI.  The last time that RSI had shown a shift in trend from higher-highs and higher-lows to lower-highs and lower-lows was at the height of the market in February, an ominous precedent for the near-term path of the benchmark.  For now, with the index below its 20-day moving average, short-term resistance is implied.

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Despite the selloff on Monday, investors did not express much concern.  The change in treasury bonds was rather muted on the day.  The US Dollar, the safe-haven currency, was similarly little changed, showing no significant uptick in demand during the risk-off session.

Sentiment on Monday, as gauged by the put-call ratio, ended bearish at 1.11.  This represents the most bearish read since the middle of May.

 

 

Seasonal charts of companies reporting earnings today:

 

 

S&P 500 Index

 

 

TSE Composite

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