Stock Market Outlook for May 18, 2022
An island reversal pattern on the chart of the US Dollar fund suggests a peak for the currency, thereby alleviating the significant head-wind against risk assets since the year began.
*** 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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Boston Beer Co. Cl A (NYSE:SAM) Seasonal Chart
Otter Tail Power Co. (NASD:OTTR) Seasonal Chart
Alamos Gold Inc. (NYSE:AGI) Seasonal Chart
Eldorado Gold Corp. (NYSE:EGO) Seasonal Chart
New Gold Inc. (AMEX:NGD) Seasonal Chart
Seabridge Gold, Inc. (NYSE:SA) Seasonal Chart
RCM Technologies, Inc. (NASD:RCMT) Seasonal Chart
Boot Barn Holdings Inc. (NYSE:BOOT) Seasonal Chart
Clearway Energy, Inc. (NYSE:CWEN) Seasonal Chart
VanEck Vectors Biotech ETF (NASD:BBH) Seasonal Chart
The Markets
Stocks posted strong gains on Tuesday as investors start to venture back into risk given the appearance of a significant low in the market in the past week. The S&P 500 Index added just over 2%, continuing to reach back to the first level of resistance at the March lows around 4,150. Momentum indicators continue to curl higher with MACD quickly closing in on its signal line in what could present a renewed buy signal in the days ahead. While we have become bullish of equities in the past few days, the intermediate-term trend of the market is still deemed to be negative and the number of points of resistance overhead could easily turn traders back into sellers should they start to question whether or not the lows for the year are in. A retest of last Thursday’s low would help to draw in broader participation to the market rebound, something that we could easily foresee over the course of the next month. For now, we are sitting with our increased equity exposure following signs of selling exhaustion observed last week, but we are always prepared to shift should things start to sour again before the summer rally period closer to the end of June begins.
Today, in our Market Outlook to subscribers, we discuss the following:
- The Island Reversal Pattern on the chart of the US Dollar Index Fund
- Pursuing segments of the market that are rebounding from levels of significant horizontal support
- US Retail Sales and what the data has to say about the state of the consumer
- US Industrial Production and the opportunity to become re-involved in a trade that delivered significant profits to portfolios earlier this year
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Sentiment on Tuesday, as gauged by the put-call ratio, ended slightly bearish at 1.03.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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