Stock Market Outlook for June 2, 2022
Economic data continues to point to strength in manufacturing alongside ongoing degradation of the consumer, providing a theme to tailor investment portfolios around.
*** 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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Abbott Laboratories (NYSE:ABT) Seasonal Chart
Consolidated Edison, Inc. (NYSE:ED) Seasonal Chart
Iron Mountain, Inc. (NYSE:IRM) Seasonal Chart
Southern Co. (NYSE:SO) Seasonal Chart
Winmark Corp. (NASD:WINA) Seasonal Chart
Highway Holdings Ltd. (NASD:HIHO) Seasonal Chart
The Markets
Stocks had difficulty staying afloat on Wednesday as investors start to digest some of the gains that had been recorded over the past week. The S&P 500 Index shed three-quarters of one percent, continuing to react to horizontal resistance at 4150. While the threat of a rollover of the benchmark from around this hurdle is a possibility, we currently view the trading action as more of a flagging pattern above support at the 20-day moving average following the sharp move higher in the past week. This could result in an upside resolution towards the next level of resistance around the declining 50-day moving average (~4265) before this rebound attempt becomes exhausted and we start to hunker down again for the weakness that is still probable through the first half of June. These moves could happen quickly as the market remains on edge, but our next major buy window is directly around the corner around the middle of the month. A more substantial low into the end of the quarter, similar to what was observed in the middle of March, could set the stage for a robust mean reversion/summer rally through the end of June and into the middle of July. We remain with our ramped up equity exposure in the Super Simple Seasonal Portfolio that was enacted prior to last week’s snap-back, but we have to be prepared for some gyrations before we can become comfortable with a more prolonged risk-on bias through the middle of the year.
Today, in our Market Outlook to subscribers, we discuss the following:
- Trend of lower-lows and lower-highs in advance decline lines
- The stabilization of the performance of treasury bonds versus stocks
- Job Openings and Labor Turnover Survey (JOLTS) and the investment implications
- US Construction Spending and the opportunities that the trends are presenting
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Sentiment on Wednesday, as gauged by the put-call ratio, ended bearish at 1.06.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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