Equity Clock

Stock Market Outlook for November 24, 2020

Retail stocks surged on Monday following forecasts of upbeat holiday sales, but we’ll show you where to rotate to next.

 

 

*** 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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Bombardier (TSE:BBD/B.TO) Seasonal Chart

American Realty Investors Inc. (NYSE:ARL) Seasonal Chart

Mesoblast Ltd. (NASD:MESO) Seasonal Chart

Bausch Health Cos. Inc. (NYSE:BHC) Seasonal Chart

 

 

The Markets

Stocks closed higher on Monday as investors remained encouraged by upbeat retail forecasts for the holiday season, as well as the revelation that Janet Yellen would join the Biden administration as Treasury Secretary.  The S&P 500 Index closed higher by just over half of one percent, continuing to hold previous trend channel resistance as support around 3550.  The breakout of the approximately 300-point span between 3200 and 3500 projects a calculated upside target of 3800, or just over 6% above present levels.  Short and intermediate-term support at the 20 and 50-day moving averages now hover at 3484 and 3431, respectively.  Seasonally, the next couple of weeks tend to be a strong time for stocks as the US Thanksgiving holiday and start of month inflows support stocks into the beginning of December.  We broke down the stats for the US Thanksgiving trade in our last report to subscribers released on Saturday.

Consumer discretionary was one of the sectors that lifted the broader market higher as retail stocks surged following headlines that indicated the National Retail Foundation is forecasting sales this holiday season to increase 3.6% to 5.2% over 2019 levels.  The Retail ETF (XRT) jumped by 3.73%, charting a new record high and continuing a trend of outperformance that has been persistent since April.  The retail ETF is a holding in the model portfolio that is included at the back of our monthly report. 

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Sentiment on Monday, as gauged by the put-call ratio, ended bullish at 0.65.  This is the lowest level since the start of September, suggesting that complacency has begun to re-emerge in the market.  As for our gauge of institutional sentiment, the dark index, a gauge of dark pool buying activity, dropped from 43.8% on Friday to 38.9% on Monday.  It appears that institutions are not showing any excitement by these gains in the midst of ongoing pandemic uncertainty.  Typically, levels above 45% indicate institutional buying demand.

 

Seasonal charts of companies reporting earnings today:

 

 

S&P 500 Index

 

TSE Composite

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