Stock Market Outlook for February 3, 2023
*** 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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Factset Research Sys, Inc. (NYSE:FDS) Seasonal Chart
Rent-A-Center, Inc. (NASD:RCII) Seasonal Chart
SilverSun Technologies, Inc. (NASD:SSNT) Seasonal Chart
Verastem Inc. (NASD:VSTM) Seasonal Chart
Absolute Software Corp. (TSE:ABST.TO) Seasonal Chart
Plexus Corp. (NASD:PLXS) Seasonal Chart
InterActiveCorp (NASD:IAC) Seasonal Chart
Restaurant Brands International Inc. (TSE:QSR.TO) Seasonal Chart
Invesco Dynamic Food & Beverage ETF (NYSE:PBJ) Seasonal Chart
iShares Currency Hedged MSCI United Kingdom ETF (AMEX:HEWU) Seasonal Chart
The Markets
Stocks rallied on Thursday as strength in shares of Meta Platforms (META) unleashed animal spirits in the formerly beaten down growth segments of the market. The S&P 500 Index closed with a gain of 1.47%, advancing beyond horizontal resistance that was presented by the December highs of around 4100. Increasingly, levels of resistance are being violated, including the declining trendline that was broken last week and now the horizontal limit that had been keeping the path of lower-highs intact. A bit of an indecisive candlestick charted during the session provides a hint of near-term upside exhaustion, but, gradually, this market is showing the characteristic that is desired of a bullish trend, which is the ease of movement above levels of resistance rather than below levels of support. The neutral, narrowing range with respect to various momentum indicators has been broken to the upside and now they are nearing levels around overbought territory. The relative strength index (RSI) sits at 69 following Thursday’s rally, which is the highest level since August of last year and just below the 70 threshold that would consider the benchmark as being overbought on an intermediate basis. The index has developed a bit of a parabolic slope in recent weeks, which places the near-term trajectory into the unsustainable camp and a pause/digestion may be in order. The rising 20 and 50-day moving averages are in positions of support at 3990 and 3953, respectively. The intermediate moving average (the 50-day) has now crossed above its 200-day moving average, triggering a golden crossover, but, as has been highlighted in the past, the immediate timeframe surrounding these crossover events typically result in poor buy or sell signals.
Today, in our Market Outlook to subscribers, we discuss the following:
- The breakout of the QQQ ETF above declining trendline resistance
- Dow Jones Industrial Average showing struggle around resistance
- Weekly Jobless Claims and the health of the labor market
- A look ahead to the monthly payroll report
- US Factory Orders
- Investor Sentiment
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Sentiment on Thursday, as gauged by the put-call ratio, ended bullish at 0.79.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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