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Dow may join other records on record when high seasonality occurs



Traders and financial professionals work on the floor of the New York Stock Exchange (NYSE) at the opening bell on August 19, 2019 in New York.

Drew Angerer | Getty Images

With November approaching, stocks should continue to earn in one of the best months of the year for the market and it is highly likely that Dow will soon join other indexes in setting new peaks.

The S&P 500 and Nasdaq traded in record territory over the past trading week, fueled by some better economic news, better-than-expected earnings season, and hope that trade talks will soon lead to a first phase agreement between US and China. On Friday, China said it had reached consensus with the United States, in general, after a high-level phone call.

Analysts argue that stocks can follow seasonal trends to a greater extent by hampering trade negotiation problems. The market starts the best three months of the year in historical terms and has several catalysts over the next week. There are a number of economic reports, the most important of which will be PMI on Tuesday's ISM services.

The third quarter earnings season continues, with about 80 S&P 500 companies reporting, including media companies Disney and News Corp. and chipmaker Qualcomm.

Best Stocks Months

November is the third best month for the S&P 500, higher than two thirds since World War II with an average 1

.3% profit, according to the CFRA. As much as November, December is even better, and at # 1 month, it is 76% of the time with an average 1.6% gain. November, however, is the month when the latest S&P highs are observed, according to the CFRA.

"Investors are likely to remain too skeptical about the impact of Brexit, the US-China trade talks and impeachment hearings. They are too skeptical for the market to prosper, "said Sam Stawal, CFRA's chief investment strategist. Many strategists say Democrats' efforts to impeach Trump are not hurting stock prices right now, but they could come "If there are any developments that would call into question his re-election.

An emotional trend right now. The market is telling us he wants to go up," Stoval says.

Of the more than 350 S&P companies that reported profits, 76% estimate profits according to I / B / E / S Refinitive data. Profit decreased by about 0.8% for the quarter, based on companies that have already reported forecasts.

"This will be the 31st consecutive quarter in which actual data exceeds forecasts, but as profits increase for the quarter, they decrease in Q4 and 2020. This is not good," Stoval said. But he said the shares could be lifted by the end of the trade war, the impact of reduced interest rates and a possible reduction in White House taxes.

"I think that because the market is doing so well, that may be telling us we are underestimating the growth we have. Prices are fundamental, "he said.

S&P and Nasdaq jumped into record territory on Friday after a report in October showed that unpaid wages rose 128,000, much higher than expected. weaker because of the strike against General Motors but not as weak as he feared.

The Fed also added positive sentiment with interest cuts on Wednesday, but the central bank went out of its way to signal a pause in politics. 19659002] "The rally is definitely expanding. The measured move is 3200 over the S&P 500 by the end of the year. In the last two sessions we repeated each other and spent some time above the 3,025 area. Today's move showed some strength after a job report that was Goldilocks: It had something for everyone, not too hard for the Fed to go backwards, but strong enough to keep fears of a recession, "Scott said Redler, a partner at T3Live.com. "Today's move is giving the Bulls some power."

Redler said Apple's performance this week was a big boost in sentiment, ending the week up 3.7%, a new high of all-time highs. , after strong revenue. "Traders love it when Apple leads the way," he says. 19659002] The S&P 500 was higher for the fourth consecutive week, the longest winning streak since March, the S&P closed the week at 3,066, up 1.5% for the week, while the Nasdaq closed at a record 8,386, up 1.7% The Dow gained 1.4% for the week, lifted by a 301-point rebound on Friday, ending the week at 27 347, 0.2% below its highest period of 27 398.

Historically, industrialists had the best profits averaged in November, returning in 1995. Industrial stocks averaged 2.9%, followed by material, by 2.7%, at consumer discretion, by 2.6% and after t Device technology with 2.4 percent, according to CFRA.

"The cliche is that everyone is focused on breakthroughs. I think the key technical event that goes on for weeks is really this turn to the cycle," says Robert Slamer, technical strategist at Fundstrat.

He stated that he expects the Dow to fail to new peaks soon. "We think the market is strong at the end of the year and well into 2020. We continue to believe that the market cycle is underdeveloped at the end of 2018. This is the next leg of the bull market," he said.

What do bonds say?

The bond market did not respond in the same way as shares in the number of jobs. Revenues were slightly higher on Friday, but remained close to or below what they were shortly before the interest rate cut on Wednesday.

"We are actually down during the week. This tells you what the bond market thinks about the economic landscape, especially with the jobs report. I know there is a lot of enthusiasm about this, "says Peter Bukvar, Chief Investment Officer of Bleakley Advisory Group." The bond market continues to send a much different message than optimism in the stock market. The growth rate of jobs is still slowing and this number will be revised several times. Everything points to a slowdown in growth. "[19659002] The ten-year yield at the box office was 1.73% on Friday afternoon and was at 1.80% at the end of the previous week.

" I think it's a bit of a moderation from last week's sell-off. . The Fed was largely in line with what people were expecting, "says Ben Jeffery, a tariff strategist at BMO." I think the stock is likely to be able to look at it, since the Fed is comfortable leaving interest rates retained so that many fears of the recession are a little over-fulfilled. You can argue that the bond market is less convinced. "

However, Stoval said, positive for stocks when the 10-year yield is lower than the yield on the S&P 500 is now about 2%.

"I would say another positive for Shares are historic when the dividend yield of the S&P 500 exceeds that of the 10-year note. The average 12-month return for the S&P exceeds 22%, "he said.

Calendar for the week

Monday

Revenue : Occident Petroleum, Uber, Prudmental Financial, Shake Shack, Tenet Healthcare, Marriott, Consolidated Edison, Bausch Health, Group , Ryanair, Hertz Global, Tenet Healthcare, Under Armor

10:00 AM Factory Orders [19659002] 2:00 PM Senior Lending Survey

Tuesday

Revenue : Allergan, Becton Dickinson, Regeneron, Mylan, Arconic, Tapestry, Ratler Midstream, Hersha Hospitality, Caesars, MBIA, WW International, Whiting Petroleum, Assurant, Devon Energy, Virtu Financial, Diamondback Energy, Microchip Tech, Match Group [19659002] 8:00 AM Richmond Fed President Thomas Barkin

8:30 AM International Trade

9:45 AM Us UGI PMI

10:00 AM ISM Non-Production

10:00 AM JOLTS

12:40 PM Dallas Federation President Rob Kaplan

6:00 AM President of the Minneapolis Federal Minister Neil Kashkari

Wednesday

Profits : Qualcomm, CVS Health, Baidu, Wendy & # 39; s, Humana, Capri Holdings, Expedia, Adidas, Softbank, TripAdvisor, Square , Household Brands, Valvoline, Elanco Animal Health, Liberty Global, AXA Equitable, IAC / Interactive, Papa John's

8:00 AM Chicago President Fed Charles Evans

8:30 p.m. and expenses

9:30 AM New York Fed President John Williams

3:15 PM Philadelphia Fed President Patrick rocker

Thursday

revenue: Disney, News Corp., Activision Blizzard, Zillow, Monster Beverage, booking reservations, Toyota, Air Products, AmerisourceBergen, Cardinal Health, Johnson Controls, Keurig Dr. Pepper, Teva Pharma, Norwegian Cruise Line, Discovery, NRG Energy, Ralph Lauren, Zoetis, Tradeweb Markets, Sturm Ruger, Cloudfare, Dropbox

8:30 a.m. Initial Claims

1: 05:00 The Federation President at Dallas Kaplan

3:00 PM Consumer Credit

7:10 p.m. Atlanta Federal President Rafael Bostic

Friday

Profits : Allianz, Ameren, Duke Energy, Honda

10:00 AM Consumer Confidence

00 h. Wholesale Trade

11:45 h. Federal President of the San Francisco Federation Mary Dali

8:30 pm Fed Governor Lael Brynard


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