November tends to be a strongly positive month for stocks with the S&P 500 Index gaining an average of 1.9%, based on performance from the past five decades.
*** 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 closed sharply lower in the last trading session of October as a poor reaction to earnings from Microsoft (MSFT) and Meta (META) weighed heavily on the Technology sector. The S&P 500 Index ended down by 1.86%, gapping below short term support at the rising 20-day moving average (5805). A level of resistance has been derived between Thursday’s open at 5775 and Wednesday’s close at 5816. The ultra-short-term topping pattern that was derived below resistance at 5870 has seen its downside projection easily fulfilled at 5745 and we will now be scrutinizing whether the 50-day moving average (5698) will support the benchmark out of this short-term slump. Despite the recent stall, this market is not showing any broader topping setups and there remains greater evidence of support than resistance over an intermediate-term timeframe, presenting characteristics of a bullish trend. What remains concerning to the prevailing path is the waning of upside momentum, something that we have seen more evidence of with another MACD sell signal in recent days; the momentum indicator has shown a negative divergence versus price through the current calendar year, highlighting the fading enthusiasm towards the risk profile that equities encompass. The risk-reward, broadly, remains unattractive, but this pullback should provide us with an entry point to the strength that is normal of the equity market through the last couple of months of the year. We continue to like the groups that are on our list of Accumulate candidates, but there are certainly segments of the market to Avoid. With the start of the best six months of the year for stocks slated to get underway, we will be seeking to use weakness to ramp up risk exposure, preferably when metrics of volatility/fear alleviate their rising path that has evolved over the past few months (see our commentary of the Volatility Index (VIX) in our November monthly report).
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Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
