Equity Clock

Stock Market Outlook for November 9, 2020

The surge in equity benchmarks last week is something that is typically only seen around significant market lows.

 

 

 

*** 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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Teva Pharmaceutical Industries Ltd. (NYSE:TEVA) Seasonal Chart

Leons Furniture Ltd. (TSE:LNF.TO) Seasonal Chart

Fortune Brands Home & Security, Inc. (NYSE:FBHS) Seasonal Chart

Monster Beverage Corp. (NASD:MNST) Seasonal Chart

Endo Pharmaceuticals Holdings, Inc. (NASD:ENDP) Seasonal Chart

HD Supply Holdings, Inc. (NASD:HDS) Seasonal Chart

iShares Global Infrastructure Index ETF (TSE:CIF.TO) Seasonal Chart

iShares U.S. Small Cap Index ETF (CAD-Hedged) (TSE:XSU.TO) Seasonal Chart

iShares S&P 500 Value ETF (NYSE:IVE) Seasonal Chart

SPDR Russell 2000 ETF (AMEX:SPSM) Seasonal Chart

Maple Leaf Foods, Inc. (TSE:MFI.TO) Seasonal Chart

Badger Daylighting Ltd. (TSE:BAD.TO) Seasonal Chart

Churchill Downs, Inc. (NASD:CHDN) Seasonal Chart

InterContinental Hotels Group PLC (NYSE:IHG) Seasonal Chart

Ag Growth International Inc. (TSE:AFN.TO) Seasonal Chart

Schwab US Broad Market ETF (NYSE:SCHB) Seasonal Chart

Vanguard Russell 2000 ETF (NASD:VTWO) Seasonal Chart

SPDR S&P Homebuilders ETF (NYSE:XHB) Seasonal Chart

 

 

The Markets

Stocks ended close to unchanged on Friday as the market continues to monitor any news pertaining to the ongoing vote count in the US.  The S&P 500 Index closed lower by a mere 0.03%, showing no real desire to move higher or lower now that the benchmark has returned back to around the highs of the year.  Resistance at 3588 and support at 3200 has defined the limits of this market over the past couple of months, implying a trading range that is expected to remain intact until a catalyst emerges.  Major moving averages of the 20 and 50-day have started to flat-line, reiterating the stagnant intermediate-term trend that remain intact until such point as when, quite simply, it is broken.  MACD triggered a buy signal on Thursday, but momentum indicators are showing characteristics of the flat trend that we are presently in.  The benchmark had become short-term overbought in recent days, leading to the loss of momentum during the Friday session.  Seasonally, a short-term period of weakness is the norm following the start of November/election days surge, therefore it would not be unexpected to see some consolidation in the days/weeks ahead.  The intermediate seasonal trend remains positive, however.

Other than the election, the headlines that investors reacted to during the Friday session pertained to the monthly employment report for October.  The Bureau of Labor Statistics indicates that 638,000 payrolls were added last month, which was stronger than the consensus analyst estimate that called for an increase of 575,000.  The unemployment rate dropped from 7.9% to 6.9%, levels that are typical coming out of an economic recession.  Average hourly earnings, meanwhile, increased by 0.1%, which is weaker than the 0.2% increase that was forecast.  Stripping out the seasonal adjustments, payrolls actually increased by 1.605 million, or 1.1%, in October, which is almost twice as strong as the 0.6% increase that is average for this time of year.  The year-to-date change is now down by 6.2%, or 7.0% below the seasonal average trend through the first ten months of the year.  This is still the weakest performance through this point in the year since 1945, amidst the end of the Second World War.  We sent further insight and analysis to subscribers intraday.  Signup now to receive this and other distributions that can provide a valuable input to your investment decision making.

North of the border, Statscan released an employment report of its own.  The headline print of October’s Labour Force Survey in Canada indicates that employment increased by 83,600, which was much stronger than the consensus analyst estimate that called for a rise of 50,000.  The unemployment rate ticked mildly lower from 9.0% to 8.9% last month.  Analysts had expected the unemployment rate to remain unchanged.  Stripping out the seasonal adjustments, which are irrelevant in this environment, employment actually increased by 72,400, or 0.4%, in October.  The average change for the month is an increase of 0.1%.  Year-to-date, employment is down by 2.4%, a result that is still unmatched by any other period through the first ten months of the year on record.  Over the past 40 years, there has only been two other instances when employment in Canada has fallen through the first ten months of the year: 1982, resulting in 1.9% drop in the level of employment through the end of October and 2009, resulting in a 0.6% decline.  The average change through the end of October is an increase of 2.1%.  We sent out further insight to subscribers intraday.  Subscribe now.

On Friday, we had the privilege of presenting virtually at the Money Show on the topic of “Using Seasonality to Invest During a Pandemic.”  Response to this presentation has been overwhelmingly positive.  Thank you for the feedback that we have received.  If you missed our presentation, we have uploaded the slide deck to browse at your leisure in our archive.  The link as follows (Subscribers, please login to access): https://charts.equityclock.com/featured/to_money_show_webinar_november_2020

Sentiment on Friday, as gauged by the put-call ratio, ended bullish at 0.85.  The Dark Index, our gauge of institutional sentiment, ticked mildly lower to 41.7%.  Typically, levels above 45% indicate institutional buying demand, conducive for periods of sustained strength in equity markets.

 

 

 

 

Seasonal charts of companies reporting earnings today:

 

 

S&P 500 Index

 

 

TSE Composite

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