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Equity Clock - Market Outlook for January 4, 2023
At the start of an economic recession, it is normal for treasury yields to decline alongside the price of stocks as the US Dollar continues to appreciate.
*** 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 struggled in the first session of the new year as strength in the US Dollar and weakness in two market heavyweights, Apple and Tesla, dragged on the broader market. The S&P 500 Index closed down by four-tenths of one percent, charting a rather indecisive doji candlestick pattern within the recent consolidation range below the 50-day moving average and horizontal resistance at 3900. The aforementioned hurdles overhead remain vital pivot points for the market to overcome to allow a bullish resolution to play out, in absence of which the path of least resistance is lower, aligned with long-term declining trendline resistance just above 4000. Momentum indicators on the daily chart are still showing signs of near-term downside exhaustion as MACD converges back on its signal line and RSI stabilizes. Depending on your view of the span of the Santa Claus rally period, you are either looking for the positivity attributed to this timeframe to wane after today or after the end of this week (January 6th), following which weakness in the market, particularly core cyclical bets, is the norm. Excessively bearish sentiment continues to stand in the way of the sustainability of the declining trend of stocks that began a year ago, but the fundamentals have us poised to enter into recession at some point in the year ahead, an event that typically fuels a sustainable declining path for stocks.
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Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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