The bullish outside reversal in this classic inflation hedge provides an opportunity to take a stab as the period of seasonal strength gets set to begin.
*** 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 tumbled on Friday following a much stronger read of inflationary pressures in the economy for the month of May. The S&P 500 Index fell by 2.91%, reaching back to levels around the lows of the year. The benchmark has made further progress below its 20-day moving average, which we had been using as a stop to our ramped up equity exposure that had been implemented in the middle of May. Following weeks of watching levels overhead as points of resistance for the rebound attempt, we are back to watching levels below as points of support. The most notable is obviously the May low at 3810, which is aligned with the 38.2% retracement level of the entire pandemic rally for stocks between March of 2020 and December of 2021. While a difficult bias to maintain after Friday’s treacherous price action, we do not think that there is a high probability of a material break of this horizontal hurdle in the near future, but we are also not holding our breath that this level will be maintained. This hurdle remains the logical level to act as the floor to the summer rally period for stocks that is set to occur in a couple week’s time. Between now and then, let the dust settle from this tornado that is creating an uncertain market through the middle of June; the decline will provide more enticing levels to put our cash/bond allocation back to work in risk (stocks) at some point in the back half of June.
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Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
