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Stock Market Outlook for October 20, 2020

S&P 500 Index broke below rising trendline support on Monday; horizontal support around 3425 now being tested.


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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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Career Education Corp. (NASD:CECO) Seasonal Chart

Zebra Technologies Corp. (NASD:ZBRA) Seasonal Chart

Moog, Inc. (NYSE:MOG/A) Seasonal Chart

Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) Seasonal Chart

iShares U.S. Aerospace & Defense ETF (NYSE:ITA) Seasonal Chart

First Trust NASDAQ-100-Technology Sector Index Fund (NASD:QTEC) Seasonal Chart


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The Markets

Stocks slipped on Monday as investors monitored the progress of stimulus negotiations amidst the rising case count of coronavirus globally.  The S&P 500 Index ended lower by 1.63%, moving back towards 20 and 50-day moving averages.  Resistance at the previous peak around 3588 stands out like a sore thumb, presenting the risk of a double-top pattern.  A break below support around 3200 would confirm.  Momentum indicators continue to roll over with MACD converging on its signal line in what could be an imminent sell signal.  The relative strength index (RSI) has neutralized around 50.  The rollover of both MACD and RSI at levels lower than the end of August peaks presents a threating setup, further indication that investor conviction to this market is waning, something we have highlighted in recent weeks.  Seasonally, the market tends to hit a significant low around the end of October as uncertainty pertaining to the election pushes investors to the sidelines ahead of the event.  We continue to look for the possibility of an enticing buying opportunity around the end of the month.

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Sentiment on Monday, as gauged by the put-call ratio, ended bullish at 0.78. 



Seasonal charts of companies reporting earnings today:



S&P 500 Index



TSE Composite

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