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Stock Market Outlook for November 17, 2015

 

Declining megaphone pattern on the S&P 500 Index suggests resistance around 2065, also equivalent to the 200-day moving average.

 

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:

  • No stocks identified for today

 

The Markets

Stocks posted substantial gains on Monday as investors shook off concerns relating to the terrorist attacks in Paris.  The S&P 500 Index gained 1.49%, charting a bullish engulfing candlestick and eliminating the losses recorded on Friday.  Flipping to an hourly look at the large cap benchmark, momentum indicators had reached the most oversold levels since late August, in the midst of the summer plunge, leading to downside exhaustion.  The loss of selling pressure combined with declining trendline support gave the index the catalyst it needed to claw back some of its recent losses as it once again attempts to battle with the all-time highs.  However, a new hurdle may exist in that attempt.  While joining the lows on the hourly chart shows declining trendline support from which the benchmark bounced on Monday, joining the peaks presents trendline resistance, which is also leaning lower.  Trendline support and resistance is presently resembling a declining megaphone pattern, which could act to restrict the upside move closer to 2065, also around the 200-day moving average.

Back on the daily chart, the S&P 500 Index is presently in the middle of the confluence of support and resistance presented by the 50 and 200-day moving averages.  While maintaining support at the rising 50-day moving average presents bullish implications for the intermediate term, resistance at the 200-day would open up the bearish implications.  The battle lines have been drawn and the winner, either the bulls or the bears, will soon become known.

Despite the substantial one-day return, Monday’s session appeared quite risk averse.  Defensive sectors of Consumer Staples and Utilities outperformed the broad market move.  Even telecommunication stocks, another defensive industry, charted healthy returns.  The more cyclical industrial, material, and consumer discretionary sectors lagged the market performance on the day.  The absence of risk-taking raises concerns pertaining to the investor conviction behind the move.

Symbol 
Name 
% Chg 
XLE Energy Sector 3.33
XLP Consumer Staples Sector 1.71
XLU Utilities Sector 1.69
XLK Technology Sector 1.53
  S&P 500 Index 1.49
XLI Industrials Sector 1.29
XLB Materials Sector 1.28
XLV Health Care Sector 1.25
XLF Financials Sector 1.21
XLY Cyclicals Sector 1.21

 

On the economic front, the news on the day didn’t help investor risk sentiment.   The Empire State Manufacturing Survey missed expectations, posting another negative print of –10.74.  Stripping out seasonal adjustments, the level was significantly lower at –25.45.  The year-to-date trend for this gauge of manufacturing in the New York region remains well below average, a trend that has also become apparent in manufacturing gauges in other regions.  Manufacturing typically reaches the lows of the year in December as activity winds down for the year.

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

 

 

 

 

Seasonal charts of companies reporting earnings today:

 

 

S&P 500 Index

 

 

TSE Composite