Stock Market Outlook for May 17, 2022
Neutralizing our bearish bias that has been maintained year-to-date as the risk-reward in the market becomes favourable.
*** 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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SoftBank Corp. (OTCMKT:SFTBF) Seasonal Chart
Sunrun Inc. (NASD:RUN) Seasonal Chart
Schwab U.S. Large-Cap Growth ETF (NYSE:SCHG) Seasonal Chart
Applied Optoelectronics Inc. (NASD:AAOI) Seasonal Chart
Kimco Realty Corp. (NYSE:KIM) Seasonal Chart
Consolidated Water Co. Ltd. (NASD:CWCO) Seasonal Chart
Tesla Inc. (NASD:TSLA) Seasonal Chart
The Markets
Stocks closed mixed on Monday as traders digested the sharp gains recorded on Friday. The S&P 500 Index shed just less than four-tenths of one percent, charting a rather indecisive candlestick on the day as the bulls and the bears battle for control of this market. Momentum indicators continue to attempt to curl higher from near oversold levels as signs of selling exhaustion become apparent following Thursday’s rebound from the lows of the day. Friday’s upside gap between 3930 and 3960 continues to provide a level to shoot off of on the long side for a rebound trade that could play out over the weeks ahead. The March lows at 4150 and the neckline to the head-and-shoulders topping pattern at 4280 remain hurdles overhead to watch on the upside should selling pressures re-materialize, thereby capping the upside potential in the near-term. While the risk-reward of the market has improved substantially in the past week, significant market bottoms can be a process, often coinciding with a confirmation re-test of lows in order for broader participation in the rebound attempt, such as what was observed through the middle of March. With this being said, we could foresee a shallow rebound in the market now through to the start of June, followed by a re-test of the lows in the month ahead before the ultimate opportunity to ramp up risk is observed before the mean reversion rally around the middle of June. For now, our Super Simple Seasonal Portfolio reflects the enticing risk-reward that we see of the market presently, but should the pendulum swing back the other way in the near-term, we will react accordingly.
Today, in our Market Outlook to subscribers, we discuss the following:
- Notable ratings changes in this week’s chart books
- Home Construction stocks
- Waning downside momentum in the technology sector
- Canada Manufacturing Sales
- Empire State Manufacturing Survey
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Sentiment on Monday, as gauged by the put-call ratio, ended slightly bullish at 0.94.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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