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Stock Market Outlook for October 20, 2015

 

By this point in Q3 earnings season, investors will often pull the rug out from beneath stocks after bidding them higher into early reports.

 

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:

PHX Energy Services Corp (TSE:PHX) Seasonal Chart

Chipotle Mexican Grill, Inc. (NYSE:CMG) Seasonal Chart

CGI Group Inc. (TSE:GIB.A) Seasonal Chart

Sempra Energy (NYSE:SRE) Seasonal Chart

Sunoco, Inc. (NYSE:SUN) Seasonal Chart

Honeywell International Inc. (NYSE:HON) Seasonal Chart

EMC Corporation (NYSE:EMC) Seasonal Chart

The Walt Disney Company (NYSE:DIS) Seasonal Chart

 

The Markets

Stocks ended mixed on Monday with little presented to move equities one way or the other.  The S&P 500 Index gained a mere three basis points, holding below critical resistance presented around 2040.  Looking at the hourly chart of the large-cap index, momentum indicators, including stochastics and MACD, are rolling over, suggesting a retracement of the recent gains may be on the horizon.  Typically, by this point in the earnings season, investors will have gained a reasonable understanding of the strength of corporate America and subsequently pull the rug out from below stocks after driving them higher into the early releases.  Between the close of October 21st and the close of October 27th, the S&P 500 Index has declined by 0.78%, on average, with losses recorded in 11 of the past 20 periods.  This brief pullback in the broad market clears way for the positive six month seasonal trend that starts on October 28th, on average.  As reported yesterday, the key hurdle overhead remains the 200-day moving average and the risks that are present when the best six months of the year starts below this long-term level.  It may take a catalyst to achieve this significant break; whether the market can obtain this catalyst is anybody’s guess.

S&P 500 Index Returns mid-way through third quarter earnings season
From To Return
10/21/14 10/27/14 1.05%
10/21/13 10/27/13 0.87%
10/21/12 10/27/12 -1.48%
10/21/11 10/27/11 3.74%
10/21/10 10/27/10 0.19%
10/21/09 10/27/09 -1.66%
10/21/08 10/27/08 -11.11%
10/21/07 10/27/07 2.31%
10/21/06 10/27/06 0.64%
10/21/05 10/27/05 -0.06%
10/21/04 10/27/04 1.71%
10/21/03 10/27/03 -1.42%
10/21/02 10/27/02 -0.23%
10/21/01 10/27/01 2.90%
10/21/00 10/27/00 -1.24%
10/21/99 10/27/99 1.02%
10/21/98 10/27/98 -0.43%
10/21/97 10/27/97 -9.80%
10/21/96 10/27/96 -1.26%
10/21/95 10/27/95 -1.32%
Average: -0.78%

 

Sentiment on Monday, as gauged by the put-call ratio, ended bullish at 0.89.

 

 

Seasonal charts of companies reporting earnings today:

 

 

S&P 500 Index

 

TSE Composite