Equity Clock

Stock Market Outlook for June 3, 2021

One of the critical questions a seasonal investor must answer in the summer is whether a position in the bond market is warranted. Today, we seek to provide the answer.

 

 

 

*** 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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TransEnterix, Inc. (AMEX:TRXC) Seasonal Chart

Westwood Holdings Group, Inc. (NYSE:WHG) Seasonal Chart

IAMGOLD Corp. (NYSE:IAG) Seasonal Chart

Controladora Vuela Compania de Aviacion (NYSE:VLRS) Seasonal Chart

Invesco S&P 500 Top 50 ETF (NYSE:XLG) Seasonal Chart

 

 

The Markets

Stocks closed mixed on Wednesday as strength in energy and REITs offset weakness in materials and consumer discretionary stocks.  The S&P 500 Index added just over a tenth of one percent, continuing to show short-term resistance at 4200.  Short-term support at the 20-day moving average now hovers around 4170.  The benchmark remains in this rising intermediate-term range that now hovers between 4125 and 4325.  Momentum indicators are still pointing higher, but the activity has been tenuous since the MACD buy signal that was triggered a few days ago.  Investors appear to be having difficulty finding the next catalyst to push the broad market definitively higher now that the optimism surrounding the economic reopening is and has been priced in and the areas of perceived value are becoming slimmer.  Our mix between offence and defence in the model portfolio that we provide to subscribers continues to work and remains appropriate, but we do have to be aware that the risk-reward in this market is becoming evenly balanced, giving no real edge to being aggressively long risk nor aggressively long defense.

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

• A look at whether a position in the bond market is warranted and the line that would have to be crossed to warrant a defensive allocation over an intermediate-term
• Short-term expectation for bonds
• The credit market and what the trend of high yield spreads has to say about where we are now
• The bond market alternative: REITs. The segment of the REIT market that we have been enticed by.

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Sentiment on Wednesday, as gauged by the put-call ratio, ended bullish at 0.69.

 

 

Seasonal charts of companies reporting earnings today:

 

 

S&P 500 Index

 

 

TSE Composite

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