The bond market and gold are testing some critical levels of support as their upside gaps from March get filled.
*** 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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Super Simple Seasonal Portfolio
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The Markets
Stocks traded abruptly lower on Thursday following a sharp jump in interest rates as investors become concerned again of what the cost of borrowing may do to the economy. The S&P 500 Index closed lower by just less than eight-tenths of one percent, reaching back to rising variable support at the 20-day moving average at 4375. The snap-gap lower on the day charts an island reversal pattern, which is, essentially, a non-confirmation setup of last week’s breakout to the new 52-week high. Similarly failing to confirm the recent breakout to new multi-month highs last week are hints of negative divergences with respect to MACD and RSI. Keep in mind that both momentum indicators are remaining above their middle lines and support remains persistent at the 20-day moving average, keeping the bullish thesis for the summer rally timeframe alive, for now. Thursday’s price action merely warrants monitoring, for now, and if we see further downside follow-through in the days ahead, reason to cut short our mid-year optimism may be revealed. Seasonally, stocks tend to remain afloat between the last week of June and the first three weeks of July in what is known as the summer rally, but this mid-year strength gives way to the most volatile period of the year through the months of August and September. Any equity exposure that has been added in recent weeks should be perceived as a trade given this ominous period in the calendar ahead.
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Sectors and Industries entering their period of seasonal strength:
Analysis of the Banks Industry seasonal charts above shows that a Buy Date of July 7 and a Sell Date of November 11 has resulted in a geometric average return of 1.27% above the benchmark rate of the S&P 500 Total Return Index over the past 20 years. This seasonal timeframe has shown positive results compared to the benchmark in 13 of those periods. This is a good rate of success and the return strongly outperforms the relative buy-and-hold performance of the stock over the past 20 years by an average of 9% per year.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
