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Stock Market Outlook for July 14, 2017

KBW Bank Index testing the neckline of head-and-shoulders bottoming pattern ahead of earnings results.


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**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 notched minor gains on Thursday as a jump in retail stocks helped to lift major benchmarks.  The Dow Jones Industrial Average charted a fresh all-time closing high at 21,553, while the large-cap S&P 500 Index is knocking on the door of its all-time peak charted in the middle of June just above 2450.  Both benchmarks gapped higher during Wednesday’s session, creating a level of support going into earnings season that kicks into full gear on Friday with reports from Citigroup, Wells Fargo, and JP Morgan (seasonal charts available at the bottom of this report).  Ahead of the reports, the KBW Bank Index is holding above a short-term double-bottom pattern that projects upside towards the highs of the year just below $100.  Seasonally, strength in the banking benchmark following the release of second quarter results typically fades in August and September, struggling amidst the seasonal average trend of declining borrowing rates.

As alluded to, strength in the retail industry helped to inject much needed optimism to this market segment that has been under pressure all year.  The S&P Retail ETF (XRT) jumped by 2.31%, moving back towards its declining 20-day moving average; resistance remains apparent at the 50-day moving average.  The gain follows positive guidance from retailer Target, which saw its stock gap higher by almost 5%, moving above a short-term double bottom pattern that projects upside potential towards $56, or an additional 5% above present levels.  With investors overly pessimistic of retail stocks given Amazon’s dominance over consumer dollars, it would not be out of the question to see a short-covering rally in order to alleviate some of the negative bias.  On the chart of the retail ETF, a move back to the upper limit of the declining trend channel at $42.50 is a reasonable probability.  Seasonally, the retail industry enters a period of strength at the beginning of October.

Sentiment on Thursday, as gauged by the put-call ratio, ended bullish at 0.87.






Seasonal charts of companies reporting earnings today:



S&P 500 Index



TSE Composite