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Stock Market Outlook for February 7, 2018

S&P 500 Index testing the 38.2% Fibonacci retracement level of the 7-day decline.

 

Real Time Economic Calendar provided by Investing.com.

 

*** 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:

Tempur-Pedic Intl Inc. (NYSE:TPX) Seasonal Chart

Tempur-Pedic Intl Inc. (NYSE:TPX) Seasonal Chart

Shutterfly Inc. (NASD:SFLY) Seasonal Chart

Shutterfly Inc. (NASD:SFLY) Seasonal Chart

 

 

The Markets

Stocks closed higher after another wild day for markets around the globe.  The S&P 500 Index gained 1.74%, retracing around 38% of the decline in the large-cap benchmark since the end of January.  This key Fibonacci level at 2700 also coincides with trendline resistance, suggesting a hurdle may be in the way for the next push higher.  Rarely are these waterfall plunges a one-and-done event and they can typically play out over a number of days.  So while the longer-term path is that of higher-highs and higher-lows, it is probably unreasonable to expect a new high in the immediate future.   On the hourly chart, the benchmark is bouncing from the most oversold level, according to the relative strength index, since August of 2015 in the midst of the last market correction.  Back then, the early rebound from the plunge lows played out over the course of a few days before resistance around the 50% Fibonacci retracement level reignited selling pressures to take the benchmark back to the lows of the year in the month that followed.  Keep in mind that back in 2015 much of the move was influenced by diminishing economic fundamentals as the US entered into a manufacturing recession.  Clearly this is not the case today. 

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Helping to fuel the uptick in volatility these past few sessions are the ETFs that were designed to track the movements in the market’s volatility gauge.  Inverse VIX ETFs in Canada and the US essentially collapsed on Tuesday as Credit Suisse announced that it would end trading in the volatility product, bringing an end to the crowded trade that drew in investors betting on the low volatility environment.  The trade had almost become easy money over the past couple of years given the stubbornly low volatility environment and the effects of contango eating away at the value of funds positive correlated with the movement in the volatility Index.  This was clearly an unsustainable scenario and it raises questions regarding the vulnerability of other ETFs that are employing similar exotic strategies. 

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Sentiment on Tuesday, as gauged by the put-call ratio, ended around neutral at 0.99.  The volatility over the past few sessions has yet to fuel a shift towards protective put options.

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Seasonal charts of companies reporting earnings today:

Allstate Corporation (The) (ALL) Seasonal Chart Alpha and Omega Semiconductor Limited (AOSL) Seasonal Chart Apollo Investment Corporation (AINV) Seasonal Chart Ball Corporation (BLL) Seasonal Chart Blue Bird Corporation (BLBD) Seasonal Chart Brink's Company (The) (BCO) Seasonal Chart Brookfield Renewable Partners L.P. (BEP) Seasonal Chart Callaway Golf Company (ELY) Seasonal Chart Cardiovascular Systems, Inc. (CSII) Seasonal Chart Central Garden & Pet Company (CENT) Seasonal Chart Coeur Mining, Inc. (CDE) Seasonal Chart Cognizant Technology Solutions Corporation (CTSH) Seasonal Chart Essex Property Trust, Inc. (ESS) Seasonal Chart  Fiserv, Inc. (FISV) Seasonal Chart Flowers Foods, Inc. (FLO) Seasonal Chart Forward Air Corporation (FWRD) Seasonal Chart GlaxoSmithKline PLC (GSK) Seasonal Chart Hasbro, Inc. (HAS) Seasonal Chart IAC/InterActiveCorp (IAC) Seasonal Chart Intercontinental Exchange Inc. (ICE) Seasonal Chart Jacobs Engineering Group Inc. (JEC) Seasonal Chart Manulife Financial Corp (MFC) Seasonal Chart Michael Kors Holdings Limited (KORS) Seasonal Chart O'Reilly Automotive, Inc. (ORLY) Seasonal Chart Peabody Energy Corporation (BTU) Seasonal Chart Rayonier Inc. (RYN) Seasonal Chart Rio Tinto Plc (RIO) Seasonal Chart Royal Gold, Inc. (RGLD) Seasonal Chart Sanofi (SNY) Seasonal Chart Suncor Energy Inc. (SU) Seasonal Chart Synaptics Incorporated (SYNA) Seasonal Chart Take-Two Interactive Software, Inc. (TTWO) Seasonal Chart The Hain Celestial Group, Inc. (HAIN) Seasonal Chart Torchmark Corporation (TMK) Seasonal Chart Twenty-First Century Fox, Inc. (FOXA) Seasonal Chart Xcel Energy Inc. (XEL) Seasonal Chart Zynga Inc. (ZNGA) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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