Equity Clock

Stock Market Outlook for January 21, 2021

While the jump in the Technology sector reinvigorated the stalling momentum trade on Wednesday, we are entering the weakest time of the year for this market segment.

 

 

 

*** 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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Firstenergy Corp. (NYSE:FE) Seasonal Chart

Canadian National Railway Co. (TSE:CNR.TO) Seasonal Chart

PVH Corp. (NYSE:PVH) Seasonal Chart

Myers Industries, Inc. (NYSE:MYE) Seasonal Chart

Wolverine World Wide Inc. (NYSE:WWW) Seasonal Chart

Columbia Sportswear Co. (NASD:COLM) Seasonal Chart

Hexcel Corp. (NYSE:HXL) Seasonal Chart

American Shared Hospital Services (AMEX:AMS) Seasonal Chart

ProShares Ultra Consumer Services (NYSE:UCC) Seasonal Chart

Coherus BioSciences Inc. (NASD:CHRS) Seasonal Chart

VanEck Vectors Fallen Angel High Yield Bond ETF (AMEX:ANGL) Seasonal Chart

Invesco DB Commodity Index Tracking Fund (NYSE:DBC) Seasonal Chart

iShares China Large-Cap ETF (NYSE:FXI) Seasonal Chart

 

 

The Markets

Stocks jumped on Wednesday as investors flooded back into technology names following strong earnings from streaming giant Netflix.  Shares of Netflix (NFLX) soared by almost 17%, closing above a consolidation pattern that spanned the past six months between $460 and $560.  The breakout of the approximately $100 range projects an upside target of $660, or another 12% above present levels.  The approximately $50 point gap between $500 and $550 charted on the day provides a range for investor to shoot off of as support.  Seasonally, shares of Netflix tend to strengthen between January 8 and April 9, a trade that got a big shot in the arm with Wednesday’s bounce.  January is, by far, the strongest month of the year for this momentum stock, rising by an average of 19.3% in the month alone.  The response to fourth quarter earnings is indicative of why.

With technology back in the driver’s seat, broad market benchmarks closed at fresh all-time highs on the day.  The S&P 500 Index added 1.39%, continuing its bounce from the rising 20-day moving average.  Intermediate downside risks remain to the rising 50-day moving average, now at 3681.  A negative momentum divergence with respect to MACD remains intact, suggesting that buying pressures have waned in recent weeks, typically a precursor to a market consolidation/pullback.

Today, in our Market Outlook to subscribers, we discuss the following:

• The limits of the short-term trend for the S&P 500 Index
• Utilities
• Water ETFs
• Consumer Prices in Canada and what they have to say about the economic recovery
• Economic recovery plays
• Is now the time to rotate towards technology names following Wednesday’s jump higher in prices?

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Sentiment on Wednesday, as gauged by the put-call ratio, ended bullish at 0.71.

 

 

Seasonal charts of companies reporting earnings today:

 

 

S&P 500 Index

 

 

TSE Composite

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