Tech Talk Financial Network
0
All posts from Tech Talk Financial Network
Tech Talk Financial Network in Equity Clock,

Stock Market Outlook for October 30, 2017

Jump in Technology shares propels the sector benchmark above an eight year rising trend channel.

 

Real Time Economic Calendar provided by Investing.com.

 

**NEW** As part of the ongoing process to offer new and up-to-date information regarding seasonal and technical investing, we are adding a section to the daily reports that details the stocks that are entering their period of seasonal strength, based on average historical start dates.   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:

Starwood Property Trust Inc. (NYSE:STWD) Seasonal Chart

Viad Corp. (NYSE:VVI) Seasonal Chart

Descartes Systems Group Inc (TSE:DSG) Seasonal Chart

Unisys Corp. (NYSE:UIS) Seasonal Chart

Xerox Corporation (NYSE:XRX) Seasonal Chart

KB Home (NYSE:KBH) Seasonal Chart

Rockwell Automation (NYSE:ROK) Seasonal Chart

Thermo Fisher Scientific Inc. (NYSE:TMO) Seasonal Chart

Bemis Company, Inc. (NYSE:BMS) Seasonal Chart

D.R. Horton, Inc. (NYSE:DHI) Seasonal Chart

Toll Brothers, Inc. (NYSE:TOL) Seasonal Chart

Lennox International Inc. (NYSE:LII) Seasonal Chart

Honeywell International Inc. (NYSE:HON) Seasonal Chart

Analog Devices, Inc. (NYSE:ADI) Seasonal Chart

Celestica Inc. (TSE:CLS) Seasonal Chart

Johnson Controls, Inc. (NYSE:JCI) Seasonal Chart

 

The Markets

Stocks jumped on Friday as earnings from Amazon, Microsoft, and Google fuelled a technology driven rally.  Shares of the tech titans soared following their reports, lifting the S&P 500 Technology sector index to the tune of 2.91%.  The move throws the benchmark above trend channel resistance that has been intact since 2009 as the buying pressures in this year’s hottest sector shows no limits.  Momentum indicators on the technology benchmark are overbought, but attempting to take another swing higher following Friday’s rally.  Seasonally, the technology sector remains in a period of seasonal strength that began around the start of October, spanning through to February of the new year, on average.

TECHNOLOGY Relative to the S&P 500

With Technology dominating the market performance through Friday’s session, the returns amongst  the major market benchmarks in the US were quite striking.  The tech heavy Nasdaq Composite gapped higher by 2.2%, bouncing from support around its 20-day moving average.  Meanwhile, the S&P 500 Index and Dow Jones industrial Average saw gains on the day that were a fraction of its tech heavy counterpart.  The benchmarks were higher by 0.81% and 0.14%, respectively.  The S&P 500 Index is pushing back up against rising trendline resistance, continuing to find support at its rising 20-day moving average at 2555.  Volume during Friday’s session was amongst the best levels of the year as portfolio managers window-dressed portfolios ahead of the end of the month.  Markets are in the midst of the best six months of the year, which tends to result in superior results compared to the six months prior.  Cyclical equities are the primary beneficiary of this market tendency as broad economic activity ramps up following the slower summer months.  This year’s trend is going to be heavily reliant on tax reform, something that the republicans are hoping to finalize in the coming months.  Economic and corporate fundamentals remain quite healthy, as is the trend of higher-highs and higher-lows amongst equity benchmarks.  However, should the progress surrounding tax reform hit a stumbling block, a quick give-back of the recent gains remains possible despite the favourable backdrop for stocks.

Turning to data released from the new york stock exchange within the last few days, margin debt expanded in September as investors became more aggressive in the equity market.  Margin debt was higher by 1.6% in the month, following the direction of the broader market as stocks bucked what is typically the weakest period of the year.  The average change in margin debt for September is +1.8%.  Margin is now higher by 14.3% on the year, 6% above the seasonal norm.  While above average, the gauge of investor risk sentiment remains below levels that would be consider euphoric, as would be identified by gains of more than 20%.  Complacency reminiscent of a major market peak is not yet apparent.  With margin debt higher, credit balances were lower, diverging from the seasonal average trend that typically sees higher credit balances through the summer months as investors de-risk.  Margin debt tends to rise through the period of seasonal strength for stocks between October and May.

NYSE Margin debt Seasonal Chart

Sentiment on Friday, as gauged by the put-call ratio, ended bullish at 0.88.

 

Sectors and Industries entering their period of seasonal strength:

INDUSTRIAL Relative to the S&P 500

 

 

Seasonal charts of companies reporting earnings today:

 

 

S&P 500 Index

 

 

TSE Composite