Stock Market Outlook for May 3 2022
Defensive sectors may be down, but they certainly are not out.
*** 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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Verisk Analytics Inc. (NASD:VRSK) Seasonal Chart
Fresh Del Monte Produce (NYSE:FDP) Seasonal Chart
Herbalife Nutrition Ltd. (NYSE:HLF) Seasonal Chart
Novartis A G (NYSE:NVS) Seasonal Chart
Seagen (NASD:SGEN) Seasonal Chart
iShares Canadian Growth Index ETF (TSE:XCG.TO) Seasonal Chart
Invesco DWA Consumer Staples Momentum ETF (NASD:PSL) Seasonal Chart
The Markets
Stocks shook off intraday weakness on Monday to close modestly higher as investors used weakness realized in recent days to purchase some depressed names. The S&P 500 Index added just less than six-tenths of one percent, coming back to test the March lows around 4157 as a level of resistance. The more threatening level of resistance remains at 4280, which we have pegged as marking the neckline to the threatening head-and-shoulders topping pattern that could see a retracement all the way down to 3780, if completed. Reversals, such as what was observed on Monday, are always interesting, more often than not indicating a near-term unwind of a extreme. The essential element of the unwind to make it sustainable as a trade is follow-through in subsequent sessions. With the first week of May typically positive for stocks and major market moving events on the calendar over the next few days, including the FOMC announcement on Wednesday and the payroll report on Friday, it would be difficult for investors to sustain a cemented negative bias into these fairly uncertain events. This could easily lead to a near-term reprieve of the recent string of sharp selling pressures, which have been extreme. Market sentiment has shifted from neutral to bearish in just the past couple of weeks, much faster than we had anticipated, therefore, while Monday’s low is an interesting prospect of being “the low” this year, the weight of the evidence still leaves many doubts. The first half of the year has been viewed as being a weak period for stocks, overall, and we still have another six weeks or so before we get into that window where sustainable gains in stocks are likely to follow. We are monitoring the market dynamics carefully and will keep subscribers abreast of any changes to positioning that may be appropriate.
Today, in our Market Outlook to subscribers, we discuss the following:
- The selloff in defensive sectors on Monday
- New multi-year lows for bond prices
- Notable ratings changes in this weeks chart books
- US Construction Spending and stocks in the homebuilding industry
- Investor sentiment
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Sentiment on Monday, as gauged by the put-call ratio, ended bearish at 1.25.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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