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Stock Market Outlook for February 20, 2019


Evidence of a weakening trend for the US dollar bodes well for commodities and related stocks.


 

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:

Portland General Electric Co. (NYSE:POR) Seasonal Chart

Portland General Electric Co. (NYSE:POR) Seasonal Chart

Helix Energy Solutions Group, Inc. (NYSE:HLX) Seasonal Chart

Helix Energy Solutions Group, Inc. (NYSE:HLX) Seasonal Chart

New Residential Investment Corp. (NYSE:NRZ) Seasonal Chart

New Residential Investment Corp. (NYSE:NRZ) Seasonal Chart

 

 

The Markets

Stocks in the US posted marginal gains on Tuesday as investors continue to monitor revelations pertaining to trade negotiations between the US and China.  The S&P 500 Index added just over a tenth of a percent, continuing to hold ground above its 200-day moving average. 

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The more notable moves on the day were not amongst stocks, but rather commodities as the US dollar rolled over.  The price of Gold and Platinum added over 1.5%; Copper and Palladium surged by around 3%.  For copper, the industrial metal moved back above its 200-day moving average for the first time since June of last year and is edging past the upper limit to its trading range from the past eight months.  A double-bottom pattern projects upside towards $3.20.  Seasonally, the price of the metal tends to rise into the month of May as manufacturing activity ramps up into the spring.

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Copper Futures (HG) Seasonal Chart

Circling back to the currency that influenced the positive move in the commodity market during Tuesday’s session, the US dollar may be showing signs of topping.  The US Dollar Index has maintained a mildly positive trend for the past ten months, but over this timeframe momentum indicators, such as MACD and RSI, have been negatively diverging from price.  The result suggests waning buying pressures, typically a precursor to a change in the intermediate-term trend.  The setup on the chart could be argued to show a head-and-shoulders topping pattern, which would be confirmed by a break below the neckline around 95.  Dollar weakness would be bullish for commodities and commodity sensitive markets, something that investors are beginning to speculate upon.  Seasonally, the rollover in the US Dollar Index around this time of year is fairly typical; the currency benchmark peaks, on average, in the month of March.

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US Dollar Index Futures (DX) Seasonal Chart

On the economic front, a report from CASS Information Systems provided insight into shipping activity in the US.  The report indicated that shipping activity declined by 1.2% in January, while expenditures fell by 3.8%.  Both results are approximately inline with the average change for the first month of the year.  The result follows a weak year for growth in shipping activity as capacity issues and slowing global growth weighed.  Shipping activity by this metric was lower by 0.8% in 2018, a divergence from the 0.9% average calendar year increase.  Expenditures, or the amount spent to ship goods, however, managed to overcome the weakness in volumes, rising by 10.0% for the calendar year.  Net-net, the results are showing some moderation in growth following a number of years of above average activity coming out of the manufacturing recession of 2015.  Shipping activity tends to act as a leading indicator to broader economic strength, but, while the results have cooled, they have yet to definitively suggest anything as detrimental as the results realized prior to last recession in 2008/2009.  Seasonally, shipping activity tends to rise through June as manufacturing activity rebounds into the spring; transportation stocks tend to benefit as a result.

Cass Freight Index: Shipments  Seasonal Chart

Cass Freight Index: Expenditures Seasonal Chart

Sentiment on Tuesday, as gauged by the put-call ratio, ended bullish at 0.86.

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Seasonal charts of companies reporting earnings today:

Agilent Technologies, Inc. (A) Seasonal Chart Alamos Gold Inc. (AGI) Seasonal Chart Alleghany Corporation (Y) Seasonal Chart Analog Devices, Inc. (ADI) Seasonal Chart Avis Budget Group, Inc. (CAR) Seasonal Chart Bausch Health Companies Inc. (BHC) Seasonal Chart Boston Beer Company, Inc. (The) (SAM) Seasonal Chart CAI International, Inc. (CAI) Seasonal Chart Career Education Corporation (CECO) Seasonal Chart Carriage Services, Inc. (CSV) Seasonal Chart Cimarex Energy Co (XEC) Seasonal Chart Coeur Mining, Inc. (CDE) Seasonal Chart CVS Health Corporation (CVS) Seasonal Chart Extra Space Storage Inc (EXR) Seasonal Chart Flowserve Corporation (FLS) Seasonal Chart HollyFrontier Corporation (HFC) Seasonal Chart Iamgold Corporation (IAG) Seasonal Chart Jack In The Box Inc. (JACK) Seasonal Chart Kaiser Aluminum Corporation (KALU) Seasonal Chart Noble Corporation (NE) Seasonal Chart Owens Corning Inc (OC) Seasonal Chart Pan American Silver Corp. (PAAS) Seasonal Chart Rogers Corporation (ROG) Seasonal Chart Southern Company (The) (SO) Seasonal Chart Sturm, Ruger & Company, Inc. (RGR) Seasonal Chart Sunoco LP (SUN) Seasonal Chart Trinity Industries, Inc. (TRN) Seasonal Chart Universal Forest Products, Inc. (UFPI) Seasonal Chart Vishay Precision Group, Inc. (VPG) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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