Stock Market Outlook for July 12, 2024
The revelation of the start of a disinflationary path may have been the catalyst to unleash the third quarter bond trade that is seasonally typical during the period of volatility for stocks.
*** 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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iShares S&P/TSX Capped Financials Index ETF (TSE:XFN.TO) Seasonal Chart
ZYNEX Inc. (NASD:ZYXI) Seasonal Chart
TechPrecision Corp. (NASD:TPCS) Seasonal Chart
BMO Mid Corporate Bond Index ETF (TSE:ZCM.TO) Seasonal Chart
iShares Edge MSCI USA Quality Factor ETF (AMEX:QUAL) Seasonal Chart
RBC Quant U.S. Dividend Leaders ETF (TSE:RUD.TO) Seasonal Chart
iShrs Core MSCI US Quality Dividend Index ETF (TSE:XDU.TO) Seasonal Chart
International General Insurance Holdings Ltd. (NASD:IGIC) Seasonal Chart
Construction Partners, Inc. (NASD:ROAD) Seasonal Chart
The Markets
Stocks closed mixed on Thursday as a rotation away from recent overbought leaders in the technology sector fuelled strong gains in some of the more value oriented segments of the market. The S&P 500 Index closed lower by nearly nine-tenths of one percent, offsetting much of Wednesday’s rise as the first hint of upside exhaustion to this summer rally timeframe is realized. Short-term support can continue to be pegged at the rising 20-day moving average (5499), working in a position to support this mid-year period of strength that normally runs into the middle of July. Major moving averages continue to fan out in a positive manner, which is characteristic of a bullish trend and is conducive to providing the positive backdrop that is upon us. Thursday’s decline has instantly pulled the Relative Strength Index (RSI) out of overbought territory above 70 a day after the momentum indicator hit the highest level since the middle of December. The period of average volatility follows this strong mid-year period for stocks, therefore planning out stops on current holdings may be prudent to assure that risk mitigation efforts through August, September, and October are deployed effectively while looking for the opportunity to overweight bond market allocations.
Today, in our Market Outlook to subscribers, we discuss the following:
- The significant moderation of inflationary pressures in June and the investment implications of the results
- The disruption of the status quo of overweighting growth and underweighting value
- Bank stocks on the eve of the start of their earnings season
- Weekly Jobless Claims and the health of the labor market
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Sentiment on Thursday, as gauged by the put-call ratio, ended bullish at 0.82.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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