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Stock Market Outlook for March 9, 2018

Bond ETFs holding support, but the negative setups suggest significant downside potential should these hurdles below break.

 

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:

Salem Media Group, Inc. (NASD:SALM) Seasonal Chart

Salem Media Group, Inc. (NASD:SALM) Seasonal Chart

Entegris, Inc. (NASD:ENTG) Seasonal Chart

Entegris, Inc. (NASD:ENTG) Seasonal Chart

ING Groep NV (NYSE:ISG) Seasonal Chart

ING Groep NV (NYSE:ISG) Seasonal Chart

Developers Diversified Re (NYSE:DDR) Seasonal Chart

Developers Diversified Re (NYSE:DDR) Seasonal Chart

Lumber Liquidators Holdings (NYSE:LL) Seasonal Chart

Lumber Liquidators Holdings (NYSE:LL) Seasonal Chart

Quaker Chemical Corp. (NYSE:KWR) Seasonal Chart

Quaker Chemical Corp. (NYSE:KWR) Seasonal Chart

Expedia, Inc (NASD:EXPE) Seasonal Chart

Expedia, Inc (NASD:EXPE) Seasonal Chart

Churchill Downs, Inc. (NASDAQ:CHDN) Seasonal Chart

Churchill Downs, Inc. (NASDAQ:CHDN) Seasonal Chart

AFLAC Incorporated  (NYSE:AFL) Seasonal Chart

AFLAC Incorporated (NYSE:AFL) Seasonal Chart

Petroquest Energy, Inc. (NYSE:PQ) Seasonal Chart

Petroquest Energy, Inc. (NYSE:PQ) Seasonal Chart

JetBlue Airways Corp. (NASD:JBLU) Seasonal Chart

JetBlue Airways Corp. (NASD:JBLU) Seasonal Chart

Perpetual Energy (TSE:PMT) Seasonal Chart

Perpetual Energy (TSE:PMT) Seasonal Chart

Tenet Healthcare Corporation  (NYSE:THC) Seasonal Chart

Tenet Healthcare Corporation (NYSE:THC) Seasonal Chart

Sempra Energy (NYSE:SRE) Seasonal Chart

Sempra Energy (NYSE:SRE) Seasonal Chart

Brick Brewing Co. (TSE:BRB) Seasonal Chart

Brick Brewing Co. (TSE:BRB) Seasonal Chart

Southwestern Energy Company  (NYSE:SWN) Seasonal Chart

Southwestern Energy Company (NYSE:SWN) Seasonal Chart

Rocky Mountain Chocolate Factory, Inc. (NASD:RMCF) Seasonal Chart

Rocky Mountain Chocolate Factory, Inc. (NASD:RMCF) Seasonal Chart

 

 

The Markets

Stocks closed higher on Thursday as investors showed their acceptance of the Trump tariffs given the exemptions, albeit temporary, granted to Canada and Mexico.  The S&P 500 Index added just shy of half of one percent, closing , almost precisely, at the rising 50-day moving average.  As has been indicated in the past, this is essentially a neutral position that investors will gravitate to in times of uncertainty, such as before a potentially pivotal event.  The action on the day suggested that fears of a trade war have faded and investors are now looking towards the next major event until news indicates the need to refocus on this issue that had gripped markets in recent days.  The Bureau of labor Statistics releases the monthly payroll report on Friday before the opening bell, providing the next catalyst for investors to react to.

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Despite the positive investor bias towards equity markets on Thursday, the session came with a bout of risk aversion as defensive sectors (consumer staples and utilities) outperformed on the day.  Bond prices also closed higher, continuing an advance that began in the middle of February.  Major treasury ETFs (IEF & TLT) continue to hold support at their respective 20-day moving averages, alleviating some of the parabolic move that had seen prices quickly fall to levels of longer-term support.  In many cases, these support levels also form the basis of necklines to head-and-shoulders topping patterns, a setup that could see significantly lower prices ahead.  In the case of the iShares 20+ year treasury bond ETF (TLT), a break of support around $116 would see a calculated move lower to around $90, while the iShares 7-10 year treasury bond ETF (IEF) could see a move lower towards $92, should support at $101 fail to hold.  For the latter, different interpretations of trendline support could suggest that the neckline has already cracked and the current rebound is merely a check-back of broken support.  Either way, a move back towards 50-day moving averages for some of these bond plays may be in order to clear out the crowded short trade and regain the momentum to surpass the hurdles below.  Seasonally, bond prices remain in a period of weakness through May.

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In what could be another pivotal event for the markets, monthly employment reports from both Canada and the US will be released on Friday before the opening bell.  For the US, analysts are expecting the addition of 205,000 jobs in February, a slight improvement from the 200,000 print shown for the month of January.  The unemployment rate is expected to tick lower by one-tenth to 4.0% and average hourly earnings are expected to advance by 0.2%.  Non-seasonally adjusted, payrolls increase by 0.4% on average in this second month of the year, which would imply the actual addition of approximately 582,000 jobs.  The change in payrolls in the first month of the year was inline with the seasonal average as strength in manufacturing related industries offset weakness in the transportation, utilities, and health care sectors.  This push and pull between the manufacturing and consumer economy is expected to continue through this mid-winter month as transportation employment continues to unwind following the holiday surge.  The change in initial unemployment claims have been running below average since the year began, which bodes well for strength in the payroll report.  We’ll have the complete breakdown of the report, from a seasonal perspective, in our next market outlook.

Total Nonfarm Seasonal Chart

Monthly Total Nonfarm Data

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Sentiment on Thursday, as gauged by the put-call ratio, ended bullish at 0.90.

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Sectors and Industries entering their period of seasonal strength:

Insurance Industry Seasonal Chart
S5INSU Index Relative to the S&P 500S5INSU Index Relative to the Sector

S5INSU Index Monthly Averages

 

 

Seasonal charts of companies reporting earnings today:

American Woodmark Corporation (AMWD) Seasonal Chart Big Lots, Inc. (BIG) Seasonal Chart Century Casinos, Inc. (CNTY) Seasonal Chart Contango Oil & Gas Company (MCF) Seasonal Chart   Revlon, Inc. (REV) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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