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Stock Market Outlook for April 29, 2016

 

Head-and-shoulders topping pattern on the chart of Apple could suggest a move to around $83.

 

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:

McKesson Corporation (NYSE:MCK) Seasonal Chart

CenturyTel, Inc. (NYSE:CTL) Seasonal Chart

Cardinal Health, Inc. (NYSE:CAH) Seasonal Chart

Activision Blizzard, Inc. (NASDAQ:ATVI) Seasonal Chart

 

 

The Markets

Stocks traded lower on Thursday following remarks from Carl Icahn who presented a cautionary tone pertaining to the broad market and Apple, the largest constituent within many benchmarks, in particular.  Icahn told CNBC that he is no longer a shareholder of the company, citing China among the factors that warranted booking profits in the tech titan following a substantial rise in the stock over the past few years.  The impact of the drag that Apple has had on capitalization weighted benchmarks, such as the S&P 500 Index, is probably most apparent in the relative performance of equally weighted counterparts, such as the S&P 500 Equally Weighted Index.  The relative performance of the equal weighted benchmark has spiked over the past couple of weeks, continuing a intermediate trend of higher-highs and higher-lows from the February bottom.  This rotation has been very constructive for stocks, in general, over the past few months as previously unloved names in energy and material sectors catch a bid.  Inevitably, the money has to go somewhere and the liquidation of the hedge-fund favourite has provided a generous source of funds.  Shares of Apple continue to reach towards significant support around $92, a break of which could see an escalation of selling pressures.  An unfulfilled downside target of $83 is presented by a head-and-shoulders topping pattern charted over the past year.

With the weight of Apple once again pulling on the broader market, the S&P 500 Index is back testing short-term support at its 20-day moving average.  Momentum indicators continue to roll over, negatively diverging from the positive trend of the market benchmark.  Drilling deeper, a short-term head-and-shoulders topping pattern has become evident on the hourly chart of the index.  Calculated  downside of the bearish setup points down to 2050, which, if realized, would come close to testing a significant level of horizontal support around 2040.

Touching briefly on the report of jobless claims for the week ending April 23rd, initial claims rose by 9,000 last week to 257,000, coming off of the lowest level since the early 1970’s.  Continuing claims declined by 5,000, holding just above the lows set over the past few decades.  Stripping out seasonal adjustments, the year-to-date change for continued claims remains firmly below average as hiring related to summer employment pressures the economic indicator lower.  Seasonally, continued claims hits a low, on average, at the end of May.  Overall, the report continues to suggest a healthy labour market, a fact that may be realized in next week’s monthly non-farm payroll report.

Sentiment on Thursday, as gauged by the put-call ratio, ended neutral at 1.00.

 

 

 

 

Seasonal charts of companies reporting earnings today:

 

S&P 500 Index

 

 

TSE Composite