Stock Market Outlook for October 14, 2022
Reversal sessions in the equity market to the magnitude realized on Thursday are very rare, but they typically indicate indecision resulting in a spotty track record of forward returns 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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First Trust Nasdaq Bank ETF (NASD:FTXO) Seasonal Chart
iShares U.S. Insurance ETF (NYSE:IAK) Seasonal Chart
iShares MSCI USA Equal Weighted ETF (NYSE:EUSA) Seasonal Chart
AdvisorShares DoubleLine Value Equity ETF (AMEX:DBLV) Seasonal Chart
Stantec, Inc. (TSE:STN.TO) Seasonal Chart
Wesco Intl, Inc. (NYSE:WCC) Seasonal Chart
Taro Pharmaceutical Industries Ltd. (NYSE:TARO) Seasonal Chart
Clear Channel Outdoor Holdings Inc. (NYSE:CCO) Seasonal Chart
Champion Iron Ltd. (TSE:CIA.TO) Seasonal Chart
SNC-Lavalin Group, Inc. (TSE:SNC.TO) Seasonal Chart
Schwab U.S. Large-Cap Value ETF (NYSE:SCHV) Seasonal Chart
Invesco KBW Bank ETF (NASD:KBWB) Seasonal Chart
Mattel, Inc. (NASD:MAT) Seasonal Chart
Canadian Life Companies Split Corp. (TSE:LFE.TO) Seasonal Chart
BMO Equal Weight U.S. Banks Hedged to CAD Index ETF (TSE:ZUB.TO) Seasonal Chart
Metlife, Inc. (NYSE:MET) Seasonal Chart
Illumina, Inc. (NASD:ILMN) Seasonal Chart
PNC Financial Services Gr (NYSE:PNC) Seasonal Chart
The Markets
Stocks surged on Thursday following a reversal in the trajectory of the US Dollar and as market participant brace for the start of earnings season on Friday. The S&P 500 Index surged by 2.60%, reversing sharp early day losses that followed another hot read of inflationary pressures in the US. The benchmark bounced from support at 3500 to retake levels above the recently broken June lows, charting an outside reversal candlestick and raising doubt over whether the breakdown realized in the first half of this week was legitimate. Momentum indicators are curling back higher, instantly showing a positive divergence compared to price and suggesting that selling pressures are waning. Major moving averages are directly overhead, including the 20-day moving average at 3710, a short-term hurdle that has rejected each rally attempt since the middle of August. The declining 50-day moving average at 3944 remains the significant threat overhead, according to our intermediate process, providing a hurdle to sell into in order to alleviate equity exposure so long as this negative intermediate trajectory persists. The 50-day moving average is poised to cross back below its 100-day moving average, an event that was last triggered on February 24th, which, coincidentally also saw a significant reversal session in stocks. From our experience, reversal sessions, such as what was observed on Thursday, seem to occur quite often around moving average crossover events, something that may be chalked up to a reactionary response from trading algorithms that rely heavily on major moving averages in their process.
Today, in our Market Outlook to subscribers, we discuss the following:
- The reversal of stocks on Thursday and what an event like that has meant for returns 30, 60, and 90 days forward
- US Consumer Price Index (CPI)
- The price of Oil and the state of supply and demand in the US
- Signs of upside exhaustion for yields and the US Dollar
- Weekly Jobless Claims and the health of the labor market
Subscribers can look for this report in their inbox or by clicking on the following link and logging in: Market Outlook for October 14
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Sentiment on Thursday, as gauged by the put-call ratio, ended slightly bullish at 0.89.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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