Stock Market Outlook for May 18, 2023
The risk-on shift on Wednesday has caused one defensive play that had been flourishing to lose some traction relative to the market.
*** 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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BRF SA (NYSE:BRFS) Seasonal Chart
Alamos Gold Inc. (NYSE:AGI) Seasonal Chart
Seabridge Gold, Inc. (NYSE:SA) Seasonal Chart
Sportsman’s Warehouse Holdings, Inc. (NASD:SPWH) Seasonal Chart
Workiva Inc. (NYSE:WK) Seasonal Chart
Schwab U.S. Large-Cap Growth ETF (NYSE:SCHG) Seasonal Chart
The Markets
Stocks jumped higher on Wednesday as investors found relief that the Democrats and Republicans were united to avoid a US debt default, even if the two sides are still far apart in their negotiations to rectify the debt ceiling limit. The S&P 500 Index gained 1.19%, moving back to the highs from the past month, but remaining in this range of resistance between 4100 and 4200. Support remains defined around the congestion of moving averages between 3950 and 4050. With each daily gyration, the market has been providing countering views that it may be inching towards a breakout or breakdown, but it remains clear that a catalyst is required to fuel a definitive move beyond the aforementioned limits. A debt limit deal could provide an upside boost to stocks, perhaps during the period that surrounds the Memorial Day holiday when stocks tends to rise anyways. But even if this upside breakout were to occur, there are questions as to what would be on the other side of the event that would take the baton and carry stocks higher sustainably from here as concerns over the trajectory of the economy remain present and headwinds pertaining to the tightening of monetary policy/lending standards remain. The market is certainly not in the wildly bullish backdrop that was apparent through the back half of 2020 and during 2021.
Today, in our Market Outlook to subscribers, we discuss the following:
- The loss of traction in one key defensive play that has been flourishing in recent months
- US Housing Starts and homebuilding industry stocks
- Canada Consumer Price Index (CPI)
- Growth over Value
- US Petroleum Status and stocks in the energy sector
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Sentiment on Wednesday, as gauged by the put-call ratio, ended neutral at 0.99.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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