Stock Market Outlook for December 19, 2022
*** 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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iPath S&P GSCI Total Return Index ETN (NYSE:GSP) Seasonal Chart
SPDR Dow Jones International Real Estate ETF (NYSE:RWX) Seasonal Chart
Invesco Municipal Trust (NYSE:VKQ) Seasonal Chart
SPDR S&P Oil & Gas Exploration & Production ETF (NYSE:XOP) Seasonal Chart
First Trust NASDAQ Clean Edge Smart Grid Infrastructure Index Fund (NASD:GRID) Seasonal Chart
VanEck Vectors Gold Miners ETF (NYSE:GDX) Seasonal Chart
Companhia Energetica de Minas Gerais (Cemig) (NYSE:CIG) Seasonal Chart
Magellan Aerospace Corp. (TSE:MAL.TO) Seasonal Chart
iShares Global Industrials ETF (NYSE:EXI) Seasonal Chart
iShares MSCI Canada ETF (NYSE:EWC) Seasonal Chart
iShares MSCI Pacific ex Japan ETF (NYSE:EPP) Seasonal Chart
iShares Emerging Markets Infrastructure ETF (NASD:EMIF) Seasonal Chart
iShares Edge MSCI Min Vol Canada Index ETF (TSE:XMV.TO) Seasonal Chart
The Markets
Stocks dropped again on Friday as traders continue to react to the slate of downbeat economic datapoints that have been released this week, along with the ominous technical setups that has major benchmarks rolling over around levels of significant resistance. The S&P 500 Index posted a loss of 1.11% to close the week, ending marginally below its rising 50-day moving average and starting to close the significant upside gap that was charted at the start of November between 3770 and 3860. The rollover below declining trendline resistance around 4050 continues and a double-top pattern around 4100 can be picked out. But while the technical setup becomes increasingly threatening by the day, something that warranted multiple downgrades in our last weekly chart books, we have reached the point in the calendar that positivity surrounding the end-of-year holidays is typically observed (see the daily pegged seasonal charts at the end of this report) and betting on the continuation of selling pressures through the end of the year is typically inappropriate, despite what the technicals have pointed to. The benchmark reached short-term oversold territory following the declines that capped off the week and, while we cannot rule out final portfolio jockeying attributed to tax-loss selling/end-of-year transactions into the start of next week, there is now a very good likelihood that we will see prices higher between now and the end of the Santa Claus rally period that peaks at the start of the new year. Using the strength attributed to this end-of-year phenomenon is still view as potentially the last opportunity to position for what could be a tougher period for the market ahead, something that we are heavily scrutinizing coincident indicators for to determine the timing of when a negative bias is warranted.
Today, in our Market Outlook to subscribers, we discuss the following:
- Weekly look at the large-cap benchmark
- Equity market performance during yield curve inversions and the time to be concerned of this ominous leading indicator
- Manufacturer sentiment and sectors to avoid during economic recessions
- A look at the position of core-cyclical sectors heading into the end of the year
- Weekly Jobless Claims
- Natural Gas
- Investor Sentiment
Subscribers can look for this report in their inbox or by clicking on the following link and logging in: Market Outlook for December 19
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Sentiment on Friday, as gauged by the put-call ratio, ended overly bearish, again, at 1.35.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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