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Equity Clock - Market Outlook for December 19, 2022
We have our eye on Natural Gas as it progresses through its period of seasonal weakness with inventory drawdowns in recent weeks that are much less than what is average for this time of year.
*** 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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The Markets
Stocks dropped again on Friday as traders continue to react to the slate of downbeat economic datapoints that have been released this week, along with the ominous technical setups that has major benchmarks rolling over around levels of significant resistance. The S&P 500 Index posted a loss of 1.11% to close the week, ending marginally below its rising 50-day moving average and starting to close the significant upside gap that was charted at the start of November between 3770 and 3860. The rollover below declining trendline resistance around 4050 continues and a double-top pattern around 4100 can be picked out. But while the technical setup becomes increasingly threatening by the day, something that warranted multiple downgrades in our last weekly chart books, we have reached the point in the calendar that positivity surrounding the end-of-year holidays is typically observed (see the daily pegged seasonal charts at the end of this report) and betting on the continuation of selling pressures through the end of the year is typically inappropriate, despite what the technicals have pointed to. The benchmark reached short-term oversold territory following the declines that capped off the week and, while we cannot rule out final portfolio jockeying attributed to tax-loss selling/end-of-year transactions into the start of next week, there is now a very good likelihood that we will see prices higher between now and the end of the Santa Claus rally period that peaks at the start of the new year.Using the strength attributed to this end-of-year phenomenon is still view as potentially the last opportunity to position for what could be a tougher period for the market ahead, something that we are heavily scrutinizing coincident indicators for to determine the timing of when a negative bias is warranted.
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Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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