Stock Market Outlook for May 28, 2024
The withdrawal of liquidity from the market is presenting a headwind to equity prices moving forward.
*** 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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American Eagle Outfitters, Inc. (NYSE:AEO) Seasonal Chart
Tecnoglass Inc. (NYSE:TGLS) Seasonal Chart
Equity Residential Property Trust (NYSE:EQR) Seasonal Chart
American Water Works Co. Inc. (NYSE:AWK) Seasonal Chart
Idacorp, Inc. (NYSE:IDA) Seasonal Chart
iShares Russell Top 200 ETF (NYSE:IWL) Seasonal Chart
Amgen, Inc. (NASD:AMGN) Seasonal Chart
Exponent, Inc. (NASD:EXPO) Seasonal Chart
iShares International Treasury Bond ETF (NASD:IGOV) Seasonal Chart
Note: Monday is holiday in the US (Memorial Day) and, as a result, our next report to subscribers will be released on Tuesday. Our weekly chart books will be updated, as per usual, on Sunday and will be available for download in the archive. The commentary pertaining to the chart book updates will be released on Tuesday. Have a great weekend everyone!
The Markets
Stocks rebounded on Friday, erasing much of the loss that was recorded on Thursday that resulted in an outside reversal candlestick on the session. The S&P 500 Index closed with a gain of seven-tenths of one percent, reacting to Thursday’s candlestick setup with an inside day, failing to invalidate the prior day’s bearish pattern. Momentum indicators continue to show signs of rolling over below their March peaks, still showing a divergence versus price that highlights the waning of buying demand around these heights. The MACD histogram is narrowing, threatening to produce a renewed sell signal in the days ahead. The 100-day moving average (5063) remains in a position to support the intermediate-term trend, but with the lack of a confirmation that momentum indicators are expressing towards the new highs on the market benchmark, there is a elevated threat of a topping pattern around this point that could result in an undercut of the of the intermediate-term hurdle ahead. Seasonally, while the days surrounding the Memorial Day holiday and into the start of June are traditionally supportive for stocks, the next period of seasonal weakness is directly around the corner encompassing much of the month of June amidst mean reversion into the end of the second quarter. The market is not providing much to be excited by at this juncture and yesterday we took action in the Super Simple Seasonal Portfolio to reduce risk in order to provide some optionality for the summer rally period that runs through July. Seek to control risks appropriately through the weeks ahead.
Today, in our Market Outlook to subscribers, we discuss the following:
- Weekly look at the large-cap benchmark
- The withdrawal of liquidity from the market
- US Durable Goods Orders, what is driving activity and how to invest
- The topping patterns setting up in the Material and Industrial sectors
- Canada Retail Sales
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Sentiment on Friday, as gauged by the put-call ratio, ended slightly bearish at 1.01.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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