Stock Market Outlook for June 6, 2024
The Computer Hardware industry is breaking out of a prolonged trading range, re-adding breadth to the growth/technology sector.
*** 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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EastGroup Properties, Inc. (NYSE:EGP) Seasonal Chart
Novavax, Inc. (NASD:NVAX) Seasonal Chart
Corts Tr – Credit Enhance (NYSE:KTN) Seasonal Chart
Palo Alto Networks Inc. (NYSE:PANW) Seasonal Chart
ProShares Ultra 20+ Year Treasury (NYSE:UBT) Seasonal Chart
Mackenzie US Large Cap Equity Index ETF (TSE:QUU.TO) Seasonal Chart
The Markets
Stocks jumped higher on Wednesday as traders welcomed the continued push lower in interest rates. The S&P 500 Index closed with a gain of 1.18%, achieving a fresh record high and attempting to offset much of the negativity that had entered the market technicals in recent weeks (particularly in core-cyclical segments). Traders have been content with pegging support at the recently retaken 50-day moving average (5185), moving their stops up from the more intermediate-term hurdle at the 100-day average (5102). Momentum indicators have yet to confirm the new heights, however, remaining on a declining path and diverging from the trend of prices as buying demand wanes around these historical levels. The Relative Strength Index (RSI) has found position above its middle line, attempting to keep characteristics of a bullish trend intact. There remains questions as to how far the equity market may be able to stretch its legs here given the negativity that tends to weigh on market performance through the middle of June as portfolio managers rebalance their books before the end of the quarter and the end of the first half of the year. The broader technical backdrop (beyond growth heavy segments) is not providing much incentive to be aggressive in stocks in the near-term (between now and the 27th of June). The desire is to take advantage of weakness in equity prices over the next three weeks to ramp up risk again for the summer rally period that dominates through the first few weeks of July. Whether or not the market delivers on those desires has yet to be seen. In our portfolios, we have taken down risk in the past couple of weeks and this is still viewed to be the ideal stance while risk-aversion persists and as recent evidence of complacency is worked off.
Today, in our Market Outlook to subscribers, we discuss the following:
- Defensive segments (including technology) continue to be the market drivers, aligning with seasonal norms for this time of year
- Treasury yield curve remains inverted and has become more negative in recent months.
- US Vehicle sales and Automobile stocks
- Energy supply and demand
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Sentiment on Wednesday, as gauged by the put-call ratio, ended close to neutral at 0.95.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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