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Stock Market Outlook for March 15, 2017

More pain for seasonal trades in Transportation and Energy.

 

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:

SCANA Corporation  (NYSE:SCG) Seasonal Chart

SCANA Corporation (NYSE:SCG) Seasonal Chart

PPL Corporation  (NYSE:PPL) Seasonal Chart

PPL Corporation (NYSE:PPL) Seasonal Chart

Pfizer Inc.  (NYSE:PFE) Seasonal Chart

Pfizer Inc. (NYSE:PFE) Seasonal Chart

ConAgra Foods, Inc.  (NYSE:CAG) Seasonal Chart

ConAgra Foods, Inc. (NYSE:CAG) Seasonal Chart

 

 

The Markets

Stocks ended lower on Tuesday as investors await the outcome of the two-day Fed meeting.  The S&P 500 Index declined by a third of a percent, closing marginally below its rising 20-day moving average.  Losses in the Canadian market were even heavier with the S&P/TSX 60 Index lower by just over one percent.  The benchmark is presently sitting on the neckline of a head-and-shoulders topping pattern, a break of which could see a swift move lower by around 3.7% to previous resistance, now support, at 875.

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More pain for two important seasonal trades at this time of year: energy and transportation.  The S&P 500 Energy Sector Index shed just over 1% on Tuesday, once again acting as the worst performing sector on the day.  The move follows another dip in the price of oil as investors reacted to news that OPEC oil inventories rose in February, accompanied by a production increase from OPEC member Saudi Arabia.  The price of WTI Crude charted the lowest level since last November, now testing rising trendline support that has spanned the past year.  The commodity will once again draw the attention of investors during Wednesday’s session as the EIA releases their weekly inventory report and the Fed releases its rate decision, potentially impacting the US dollar, one way or the other.  We’ll have the breakdown of the weekly petroleum status report in tomorrow’s Market Outlook.  The energy sector remains in a period of seasonal strength through to the start of May.

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Energy Sector Seasonal Chart

ENERGY Relative to the S&P 500
ENERGY Relative to the S&P 500

ENERGY Monthly Averages

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And with the winter weather impacting travel on the US east coast, transportation stocks, particularly airlines, saw losses exceed one percent on the day.  The transportation industry typically benefits from a period of seasonal strength between the end of January and the beginning of May, gaining amidst the pickup in industrial production in the first half of the year.  However, following a significant post election rally, the Dow Jones Transportation Average has recently consolidated and is now moving below its 50-day moving average for the first time since last summer.  The transportation benchmark closed at the lower limit of its recent consolidation range.  The strength of the benchmark versus the broader market has been fading since mid-December, raising some concern pertaining to the cyclical bias amongst investors amidst strong economic data and the recovery in the manufacturing industry.  The relative strength of this benchmark had acted as a leading indicator to equity market strength into the back half of last year, running higher well ahead of the election day catalyst the sent stocks soaring; now, it may be suggesting the opposite.

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Transportation Industry Seasonal Chart
S5TRAN Index Relative to the S&P 500S5TRAN Index Relative to the Sector

S5TRAN Index Monthly Averages

Sentiment on Tuesday, as gauged by the put-call ratio, ended bullish at 0.93.

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Seasonal charts of companies reporting earnings today:

 WSMTWIPWEORCLKLDXJBLGESCBKAXAS

 

S&P 500 Index

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TSE Composite

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