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Stock Market Outlook for November 16, 2020

The rally is broadening, allowing areas of the market that investors have avoided to outperform for the first time in years.


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*** 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:

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iShares S&P/TSX 60 Index Fund (TSE:XIU.TO) Seasonal Chart

Barrick Gold Corp. (TSE:ABX.TO) Seasonal Chart

Cogeco Cable, Inc. (TSE:CCA.TO) Seasonal Chart

Charles River Laboratorie (NYSE:CRL) Seasonal Chart

Shoe Carnival, Inc. (NASD:SCVL) Seasonal Chart

John Hancock Preferred Income Fund (NYSE:HPI) Seasonal Chart

Autonation, Inc. (NYSE:AN) Seasonal Chart

Mylan N.V. (NASD:MYL) Seasonal Chart

Fidelity MSCI Consumer Discretionary Index ETF (AMEX:FDIS) Seasonal Chart



The Markets

Stocks surged to close the final trading session of the week as investors put pandemic fears aside and looked ahead to the light at the end of the tunnel given recent vaccine news.  The S&P 500 Index rallied by 1.36%, inching back closer to an important psychological hurdle at 3600.  Support at the upper limit of the recently broken trading range has remained intact following the consolidation recorded in the middle of the week.  Simple textbook theory suggests that the break of the 300-point range that was dominant for the past couple of months targets a level of 3800, or almost 6% above present levels.  Keep in mind that reality and textbook theory, in our experience, rarely perfectly align.

On the weekly chart, the breakout of the recent range is much more prominent on this look.  The range, that effectively spanned between 3200 and 3500, has been broken and support at major moving averages at the 20 and 50-week remain intact.  While all of that looks encouraging, the doji candlestick shows that beyond the initial breakout, investors became indecisive through the middle of the week, which, given the magnitude of the move just since the end of October, is not unexpected.  MACD triggered a new buy signal on this weekly look and, despite some stalling of the trend for both RSI and MACD, momentum indicators are showing characteristics of a bullish trend, holding predominantly above their middle lines.

Sentiment on Friday, as gauged by the put-call ratio, ended bullish at 0.81.  As for institutional sentiment, the Dark Index, an indication of dark pool buying activity, ticked lower from 44.9% on Thursday to 43.1% on Friday.  Typically, levels 45% or higher are indicative of institutional buying demand of stocks.



Seasonal charts of companies reporting earnings today:



S&P 500 Index



TSE Composite

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