Stock Market Outlook for May 22, 2025
S&P 500 Index reacting to the band of resistance that overhangs the market around all-time highs; next up is a test of the open gap charted on May 12.
*** 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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Agree Realty Corp. (NYSE:ADC) Seasonal Chart
Clearwater Paper Corp. (NYSE:CLW) Seasonal Chart
Retractable Technologies Inc. (AMEX:RVP) Seasonal Chart
Colliers International Group Inc. (NASD:CIGI) Seasonal Chart
BMO S&P 500 Hedged to CAD Index ETF (TSE:ZUE.TO) Seasonal Chart
BMO India Equity Index ETF (TSE:ZID.TO) Seasonal Chart
The Markets
Stocks traded firmly lower on Wednesday as Treasury Yields at the long end of the curve continued to breakout (diverging from seasonal norms) amidst concern that the US budget bill could further inflate the deficit. The large-cap benchmark closed down by 1.61%, reacting to a band of resistance between 5900 and 6100, effectively the all-time highs. The short-term rising trend stemming from the April lows remains that of higher-highs and higher-lows, but a break of the 50-hour moving average during Wednesday’s session suggests that the good times have come to an end and a digestive period heading into the end of the second quarter is commencing. Upside gap support around 5700 is the critical level to watch over the a short-term timeframe given a violation of the implied level of support would lead to a resumption of the strains that the intermediate-term trend have been portraying since the start of the year. We continue to like the way our list of candidates in the market to Accumulate or to Avoid is positioned and we remain on the lookout for new opportunities, either on the long or short side, heading through this off-season for stocks. On the seasonal timeline, the foreseeable threat to stocks is the mean reversion move lower that is common through the middle of June as quarter-end portfolio rebalancing is enacted. It is possible that the catalyst of rising yields is kick-starting this normal tendency for declines slightly earlier than average. In the meantime, the Super Simple Seasonal Portfolio is effectively mitigating the stresses leaching into the market, maintaining the appropriate risk profile given the fundamental influences of the day and the seasonal dynamics that play out between May and October.
Today, in our Market Outlook to subscribers, we discuss the following:
- Small-Caps testing gap support
- US Housing Starts and the investment implications for homebuilding stocks
- The trend of consumer loans in this high cost of borrowing backdrop
- The surge in revolving home equity loans in April
- Investor sentiment
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Sentiment on Wednesday, as gauged by the put-call ratio, ended bullish at 0.89.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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