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Stock Market Outlook for March 7, 2019


Small-caps pulling back from 200-day moving averages as risk sentiment sours.

 

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:

Ryder System, Inc. (NYSE:R) Seasonal Chart

Ryder System, Inc. (NYSE:R) Seasonal Chart

Tennant Co. (NYSE:TNC) Seasonal Chart

Tennant Co. (NYSE:TNC) Seasonal Chart

Woodward Governor Co. (NASD:WWD) Seasonal Chart

Woodward Governor Co. (NASD:WWD) Seasonal Chart

EastGroup Properties, Inc. (NYSE:EGP) Seasonal Chart

EastGroup Properties, Inc. (NYSE:EGP) Seasonal Chart

LTC Properties, Inc. (NYSE:LTC) Seasonal Chart

LTC Properties, Inc. (NYSE:LTC) Seasonal Chart

LaSalle Hotel Properties (NYSE:LHO) Seasonal Chart

LaSalle Hotel Properties (NYSE:LHO) Seasonal Chart

Coca Cola Femsa, SAB (NYSE:KOF) Seasonal Chart

Coca Cola Femsa, SAB (NYSE:KOF) Seasonal Chart

Capital One Fncl Corp. (NYSE:COF) Seasonal Chart

Capital One Fncl Corp. (NYSE:COF) Seasonal Chart

Huntington Bancshares Inc. (NASD:HBANP) Seasonal Chart

Huntington Bancshares Inc. (NASD:HBANP) Seasonal Chart

 

 

The Markets

Stocks closed lower on Wednesday as markets continue to digest the gains accumulated over the past couple of months.  The S&P 500 Index closed lower by around two-thirds of one percent, testing the 20-day moving average at the lows of the session. A horizontal level of support around 2765 forms the lower limit of a multi-week range that peaked with a double top around 2815.  A break of the span projects a move of around 50 points in the corresponding direction, suggesting downside risks based on this setup down to 2715 and upside potential to 2865.  While it has become apparent that a short-term peak in equity prices is becoming confirmed, it remains encouraging that the price action has been gradual with the benchmark rolling softly lower from horizontal resistance at 2815.  This is in stark contrast to the sharp declines realized in October, November, and December, which resulted in distinctly pointy short-term highs and expressed the extreme anxiety amongst investors.  The price action, thus far, remains quite bullish, perhaps a sign that investors are taking comfort in the fact that support at the 200-day moving average is directly below.  It was the breach of this long-term moving average in the fourth quarter that fuelled massive liquidations of portfolio positions as investors over multiple timeframes sought to step aside.  The 200-day moving average sits at 2750 and the reaction to this hurdle will be monitored closely.

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Not as fortunate to have the 200-day moving average as a level of support are the small-caps, which, according to their benchmarks in both Canada and the US, have been rolling over from this long-term hurdle in the past couple of weeks.  The Russell 200 Index realized a pronounced decline of just over two percent during Wednesday’s session, breaking below its 20-day moving average for the first time since the start of January; the S&P/TSX Small Cap benchmark was down six-tenths of a percent, moving in on the 20-day moving average of its own.  Both had become significantly overbought in the last half of February.  The shift from a trend of outperformance relative to the market to now underperforming the broad market benchmark suggests diminished risk sentiment, something that often precedes more pronounced downdrafts in the broader market.  Transportation stocks have been on the decline for a number of days; semiconductor stocks are no longer outperforming; cyclical sectors are lagging their defensive counterparts.  Add it all up and it hints of further weakness ahead, barring some catalyst that reignites animal spirits.

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On schedule for the Wednesday session, the latest petroleum inventory report was released. The Energy Information Administration (EIA) reported that oil stockpiles increased by 7.1 million barrels last week, while gasoline inventories declined by 4.2 million barrels. The net result elevated the days of supply of oil by seven-tenths to 28.6, while gasoline saw a decline of four-tenths to 28.3. For oil, this is the third highest days of supply for this time of year in over three decades, lagging only behind the glut conditions of 2016 and 2017. The average level for the beginning of the third month of the year is 23.1.  For further analysis and to be included in our intraday distributions, subscribe to either the monthly or yearly membership option via the following link: https://charts.equityclock.com/subscribe

Weekly U.S. Days of Supply of Crude Oil excluding SPR  (Number of Days) Seasonal Chart

Weekly U.S. Days of Supply of Total Gasoline  (Number of Days) Seasonal Chart

Sentiment on Wednesday, as gauged by the put-call ratio, ended bearish at 1.06.  After a number of weeks of generally bullish readings, investors are starting to hedge their books, protecting positions against further weakness.

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Seasonal charts of companies reporting earnings today:

American Outdoor Brands Corporation (AOBC) Seasonal Chart AutoWeb, Inc. (AUTO) Seasonal Chart Burlington Stores, Inc. (BURL) Seasonal Chart Canadian Natural Resources Limited (CNQ) Seasonal Chart CECO Environmental Corp. (CECE) Seasonal Chart Costco Wholesale Corporation (COST) Seasonal Chart Crescent Point Energy Corporation (CPG) Seasonal Chart El Pollo Loco Holdings, Inc. (LOCO) Seasonal Chart FuelCell Energy, Inc. (FCEL) Seasonal Chart H&R Block, Inc. (HRB) Seasonal Chart Hovnanian Enterprises Inc (HOV) Seasonal Chart International Game Technology (IGT) Seasonal Chart  Korn Ferry (KFY) Seasonal Chart Kroger Company (The) (KR) Seasonal Chart Marvell Technology Group Ltd. (MRVL) Seasonal Chart Methode Electronics, Inc. (MEI) Seasonal Chart Obsidian Energy Ltd. (OBE) Seasonal Chart Plug Power, Inc. (PLUG) Seasonal Chart Stage Stores, Inc. (SSI) Seasonal Chart Stratasys, Ltd. (SSYS) Seasonal Chart Superior Industries International, Inc. (SUP) Seasonal Chart Tech Data Corporation (TECD) Seasonal Chart Titan International, Inc. (TWI) Seasonal Chart U.S. Auto Parts Network, Inc. (PRTS) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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