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Stock Market Outlook for March 14, 2018

Trade war threatens to heat-up inflationary pressures, which are already running above average on the year.

 

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:

Home Bancorp, Inc. (NASD:HBCP) Seasonal Chart

Home Bancorp, Inc. (NASD:HBCP) Seasonal Chart

Obsidian Energy Ltd. (NYSE:OBE) Seasonal Chart

Obsidian Energy Ltd. (NYSE:OBE) Seasonal Chart

SunOpta, Inc. (TSE:SOY) Seasonal Chart

SunOpta, Inc. (TSE:SOY) Seasonal Chart

Pepco Holdings, Inc.  (NYSE:POM) Seasonal Chart

Pepco Holdings, Inc. (NYSE:POM) Seasonal Chart

PPL Corporation  (NYSE:PPL) Seasonal Chart

PPL Corporation (NYSE:PPL) Seasonal Chart

Entergy Corporation  (NYSE:ETR) Seasonal Chart

Entergy Corporation (NYSE:ETR) Seasonal Chart

Manulife Financial Corp. (NYSE:MFC) Seasonal Chart

Manulife Financial Corp. (NYSE:MFC) Seasonal Chart

Macquarie Infrastructure Company (NYSE:MIC) Seasonal Chart

Macquarie Infrastructure Company (NYSE:MIC) Seasonal Chart

PepsiCo, Inc.  (NYSE:PEP) Seasonal Chart

PepsiCo, Inc. (NYSE:PEP) Seasonal Chart

Kelt Exploration (TSE:KEL) Seasonal Chart

Kelt Exploration (TSE:KEL) Seasonal Chart

 

 

The Markets

Stocks in the US closed lower on Tuesday amidst renewed trade war concerns, particularly with China.  The technology sector led the decline, retracing much of Friday’s gain that followed the better than expected payroll report for February.  The S&P 500 Technology Sector Index shed 1.21%, testing Friday’s breakout level around 1215 at the lows of the session.  The reversal on the technology sector benchmark comes at the upper limit of a rising trend channel that has spanned the past year and a half.  The approximately 100-point range finds support again around 1165, or 4.4% below Tuesday’s close.  Negative momentum divergences with respect to MACD and RSI have been apparent for the past few months, signalling waning buying pressures.  Loss of leadership from this sector could act as a significant burden on broad market benchmarks given the weight that it holds within US indices.  Seasonally, the technology sector tends to underperform the S&P 500 Index through to mid-April.

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Technology Sector Seasonal Chart

TECHNOLOGY Relative to the S&P 500
TECHNOLOGY Relative to the S&P 500

TECHNOLOGY Monthly Averages

In economic news, the report on the Consumer Price Index (CPI) for the month of February initially had investors cheering the result, which appeared calm.  The headline print indicated that CPI increased by 0.2% in the month, matching analyst estimates.  The 2.2% year-over-year gain was also inline with forecasts and just marginally above the 2.1% reported previously.  Stripping out the seasonal adjustments, the consumer price index actually increased by 0.5%, above the 0.4% gain that is average for the second month of the year.  Year-to-date, CPI is higher by 1.0%, the second strongest start to a year in the past decade.  Only 2013’s 1.1% increase in the first two months of the year saw a larger result.  The average increase by this point in the year is 0.7%.  Excluding the more volatile components of food and energy, the result is a bit more subdued at +0.9% year-to-date, two-tenths of one percent above the seasonal norm.  So while the headline print may have not raised any concerns, the above average pace indicated by the non-adjusted data certainly suggests that inflationary pressures are here, taking a toll on the pocketbooks of consumers, as well as real returns of investment vehicles.  The threat of a trade war certainly does not help with the prospect of keeping inflation tame.  Seasonally, the first half of the year tends to see stronger inflationary pressures than the back half as the ramp-up in manufacturing activity through the spring typically gives lift to commodity prices.

Consumer Price Index for All Urban Consumers: All Items Seasonal Chart

Monthly Consumer Price Index for All Urban Consumers: All Items Data

Consumer Price Index for All Urban Consumers: All Items Less Food and Energy Seasonal Chart

Sentiment on Tuesday, as gauged by the put-call ratio, ended bullish at 0.87.  Earlier in the session, the ratio hit an overly bullish low of 0.61, just prior to the giveback of gains amongst major equity indices.

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Seasonal charts of companies reporting earnings today:

3D Systems Corporation (DDD) Seasonal Chart Arena Pharmaceuticals, Inc. (ARNA) Seasonal Chart Arotech Corporation (ARTX) Seasonal Chart CAS Medical Systems, Inc. (CASM) Seasonal Chart Catalyst Pharmaceuticals, Inc. (CPRX) Seasonal Chart Cogint, Inc. (COGT) Seasonal Chart Del Taco Restaurants, Inc. (TACO) Seasonal Chart Express, Inc. (EXPR) Seasonal Chart Iconix Brand Group, Inc. (ICON) Seasonal Chart Information Services Group, Inc. (III) Seasonal Chart Klondex Mines Ltd. (KLDX) Seasonal Chart Monroe Capital Corporation (MRCC) Seasonal Chart Noodles & Company (NDLS) Seasonal Chart Papa Murphy's Holdings, Inc. (FRSH) Seasonal Chart Signet Jewelers Limited (SIG) Seasonal Chart Smart (SFS) Seasonal Chart Tailored Brands, Inc. (TLRD) Seasonal Chart Tidewater Inc. (TDW) Seasonal Chart Vera Bradley, Inc. (VRA) Seasonal Chart Williams-Sonoma, Inc. (WSM) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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