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Stock Market Outlook for February 28, 2019


Now that leveraged bets have unwound, a more equal playfield has been created.

 

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:

Quest Diagnostics Inc. (NYSE:DGX) Seasonal Chart

Quest Diagnostics Inc. (NYSE:DGX) Seasonal Chart

Cott Corp. (NYSE:COT) Seasonal Chart

Cott Corp. (NYSE:COT) Seasonal Chart

B&G Foods Inc. (NYSE:BGS) Seasonal Chart

B&G Foods Inc. (NYSE:BGS) Seasonal Chart

Calpine Corp. (NYSE:CPN) Seasonal Chart

Calpine Corp. (NYSE:CPN) Seasonal Chart

 

 

The Markets

Another day with little movement amongst major market indices as investors watched for highlights of the testimonies from  Robert Lighthizer, Jerome Powell, and Michael Cohen.  The S&P 500 Index dipped by 0.05%, continuing to hold below resistance just above 2800.

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Following the spring-back in stocks since the December low, there are certainly not the signs of excess in the market that have been seen around major market peaks.  FINRA recently released margin statistics for the month of January and following the 13.8% decline in margin debt for 2018, this gauge of leverage only showed a 2.6% rise to start 2019.  This is inline with seasonal norms.  Typically during periods of investor confidence, or rather complacency, this measure of leverage within portfolios will rise well above average as investors seek to juice their desired market exposure.  The rapid unwind of these borrowed positions in 2018 lead to the volatility that we saw in the fourth quarter.  As of present, the leveraged bets have been unwound, creating a more balanced playfield.  Interesting that while margin debt has been unwinding for the past year, credit balances have also been trending below average.  Credit balances are indicative of short positions in accounts, suggesting a negative bias amongst investors.  Sentiment extremes provided by these types of indicators can provide excellent signals to buy and sell, but, as of present, little can be concluded.

NYSE Margin debt Seasonal Chart

NYSE Credit balances in margin accounts Seasonal Chart

On the economic front, the December report on US Factory Orders showed exceptional weakness in the last month of the year. The headline print indicated that orders increased by 0.1% in this final print of 2018, missing the consensus analyst estimate that called for a 0.6% increase. Stripping out the seasonal adjustments, the Value of Manufacturers’ New Orders for All Manufacturing Industries actually increased by 0.9% in December, which is well below the 3.6% average increase for the last month of the year. This is the second weakest December change in the past 15 years, falling just behind the December 2002 increase of 0.2% in the midst of a recession. For the year overall, the increase for 2018 was 2.5%, which is precisely inline with the seasonal average trend. Factory orders had been showing above average activity since March of 2017 and, until December, it looked as if 2018 would achieve the same feat, but market conditions denied a similar outcome as the year prior.  Subscribers of our service received further insight of what stands out amongst the results.  Join now to receive future updates.

Value of Manufacturers' New Orders for All Manufacturing Industries Seasonal Chart

Monthly Value of Manufacturers' New Orders for All Manufacturing Industries Data

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

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Seasonal charts of companies reporting earnings today:

Anheuser-Busch Inbev SA (BUD) Seasonal Chart Toronto Dominion Bank (The) (TD) Seasonal Chart ABB Ltd (ABB) Seasonal Chart Canadian Imperial Bank of Commerce (CM) Seasonal Chart Keurig Dr Pepper Inc. (KDP) Seasonal Chart Encana Corporation (ECA) Seasonal Chart Pacific Gas & Electric Co. (PCG) Seasonal Chart Marriot Vacations Worldwide Corporation (VAC) Seasonal Chart Vermilion Energy Inc. (VET) Seasonal Chart Stantec Inc (STN) Seasonal Chart California Water Service Group Holding (CWT) Seasonal Chart Endo International plc (ENDP) Seasonal Chart Shenandoah Telecommunications Co (SHEN) Seasonal Chart SeaWorld Entertainment, Inc. (SEAS) Seasonal Chart AAON, Inc. (AAON) Seasonal Chart Sotheby's (BID) Seasonal Chart J.C. Penney Company, Inc. Holding Company (JCP) Seasonal Chart Tetra Technologies, Inc. (TTI) Seasonal Chart Vmware, Inc. (VMW) Seasonal Chart Marriott International (MAR) Seasonal Chart Gap, Inc. (The) (GPS) Seasonal Chart Nordstrom, Inc. (JWN) Seasonal Chart Algonquin Power & Utilities Corp. (AQN) Seasonal Chart Stericycle, Inc. (SRCL) Seasonal Chart Ritchie Bros. Auctioneers Incorporated (RBA) Seasonal Chart Southwestern Energy Company (SWN) Seasonal Chart 3D Systems Corporation (DDD) Seasonal Chart AMC Entertainment Holdings, Inc. (AMC) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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