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Stock Market Outlook for March 11, 2019


Weakness into the month of March continues a pattern of moves that are counter to seasonal norms.

 

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:

Black Diamond Group Ltd. (TSE:BDI.TO) Seasonal Chart

Black Diamond Group Ltd. (TSE:BDI.TO) Seasonal Chart

Hugoton Royalty Trust (NYSE:HGT) Seasonal Chart

Hugoton Royalty Trust (NYSE:HGT) Seasonal Chart

Southwestern Energy Co. (NYSE:SWN) Seasonal Chart

Southwestern Energy Co. (NYSE:SWN) Seasonal Chart

Bill Barrett Corp. (NYSE:BBG) Seasonal Chart

Bill Barrett Corp. (NYSE:BBG) Seasonal Chart

Tenet Healthcare Corp. (NYSE:THC) Seasonal Chart

Tenet Healthcare Corp. (NYSE:THC) Seasonal Chart

Dover Corp. (NYSE:DOV) Seasonal Chart

Dover Corp. (NYSE:DOV) Seasonal Chart

Annaly Capital Management, Inc. (NYSE:NLY) Seasonal Chart

Annaly Capital Management, Inc. (NYSE:NLY) Seasonal Chart

Apartment Investment and Management Co. (NYSE:AIV) Seasonal Chart

Apartment Investment and Management Co. (NYSE:AIV) Seasonal Chart

Newpark Resources, Inc. (NYSE:NR) Seasonal Chart

Newpark Resources, Inc. (NYSE:NR) Seasonal Chart

 

 

The Markets

Stocks closed mildly lower on Friday as investors shook off concerns pertaining to the economy following a weaker than expected payroll report for the month of February.  The S&P 500 Index closed down by around two-tenths of one percent, rebounding firmly from the decline of almost one percent at the lows of the day.  The benchmark came very close to the level we suggested in recent days of 2715, which represents the target of the broken trading range between 2765 and 2815.  Short-term oversold conditions coming into the session hinted that selling exhaustion following the profit taking over the past week seemed likely.  Previous broken support around 2765 now becomes a potential point of resistance, which, if held, would most likely result in a retest of support around the 50-day moving average at 2673.  At present, risk and reward are about evenly split over the near-term, suggesting no significant impetus to buy or to sell.  The likely course in the weeks ahead is for a higher low above the December bottom, which has gone untested.  A confirmation of this higher low would likely draw remaining investors off the sidelines, thereby reigniting bullish investor sentiment.

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For the week, following the doji (indecision) candlestick charted in the week prior, the large-cap benchmark shed just over 2% for the five-day span, representing the weakest weekly performance of the year, thus far.  The benchmark traded to a low around its 50-week moving average, a logical testing point as the benchmark attempts to regain its footing on the longer-term positive path.  Levels between the 20-week moving average at 2671 and the 50-week moving average at 2735 are fair game in the context of a normal retracement of the substantial move from the December low.  The weekly candlestick encompasses the prior week’s move, essentially achieving an outside reversal, which is typically a negative setup and could suggest further weakness over the weeks ahead.  The last time we noted an outside reversal candlestick on the weekly look was after the first week of December, just prior to the 10% plunge in the weeks that followed.  Obviously, the magnitude of candlestick this time is not as extreme as that prior event.

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From a seasonal perspective, March and April are typically very strong months for the broader equity market and it is rather interesting to observe another round of action that is contrary to seasonal norms.  This has essentially been the pattern for the past year.  Last summer up until the end of the third quarter, the S&P 500 Index realized one of the best summer returns on record, defying seasonal forecasts that call for flat to negative performance over that timeframe.  This unseasonably strong period was followed by weakness in November and December, typically two strong contiguous months for stocks.  Then January and February, which are seasonally softer months, saw tremendous gains, almost record breaking.  And now into March and April, a very strong seasonal timeframe, weakness.  Seasonality is never an absolute, but rather more like a tailwind that can influence direction throughout the year.  For this reason, we always emphasize the use of a three-pronged approach employing technical, fundamental, and seasonal analysis, a strategy that we enact in the Seasonal Advantage Portfolio that we execute in partnership with Castlemoore.  To learn more about our strategy and how to participate, email us at seasonalportfolio@equityclock.com.

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On the economic front, another headline number that makes it very difficult to believe in the results that the seasonally adjustment factor produce, hence our purpose to show the results in an unadjusted manner. The headline print of February’s Nonfarm Payroll report in the US showed that payrolls increased by a meager 20,000, which was nowhere near the 175,000 increase that was forecasted by analysts. The unemployment rate, however, still managed to tick lower by two-tenths of a percent to 3.8% and wages were higher by a better than expected 0.4%. Stripping out the adjustments, nonfarm payrolls were actually higher by 827,000, or 0.6%, in this second month of the year, which is better than the 0.4% increase that has been average for the month over the past 50 years. The year-to-date change continues to maintain an above average pace, a pattern that has been held for the past nine years.  We sent subscribers of our service further analysis intraday, providing insight as to the true state of the labor market that the headline print clearly fails to show.  Subscribe now and we’ll send you this report.

Total Nonfarm Seasonal Chart

Monthly Total Nonfarm Data

Another strong employment report in Canada acts in stark contrast to the results reported south of the border, where headlines suggested only 20,000 payrolls were added. Statscan reported that 55,900 jobs were added in Canada last month, smashing expectations of a mere 11,000 increase. Despite the increase, the unemployment rate remained unchanged at 5.8%. Stripping out the seasonal adjustments, 92,200 jobs were actually added in the second month of the year, representing an increase of 0.5%. This is marginally better than the 0.4% increase that is average for this winter month. The result places the year-to-date change six-tenths of one percent above the seasonal average trend through the first two months of the year, which is actually the best performance since 1981.  Subscribe now and we’ll send you our report showing why caution pertaining to the state of the labour market in Canada may still be warranted.

Canada Employment Seasonal Chart

Sentiment on Friday, as gauged by the put-call ratio, ended close to neutral at 0.97

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Seasonal charts of companies reporting earnings today:

Aspen Group Inc. (ASPU) Seasonal Chart  Avid Bioservices, Inc. (CDMO) Seasonal Chart Blueknight Energy Partners L.P., L.L.C. (BKEP) Seasonal Chart Century Casinos, Inc. (CNTY) Seasonal Chart ChemoCentryx, Inc. (CCXI) Seasonal Chart Commercial Vehicle Group, Inc. (CVGI) Seasonal Chart  Dicerna Pharmaceuticals, Inc. (DRNA) Seasonal Chart  Hallador Energy Company (HNRG) Seasonal Chart  Ituran Location and Control Ltd. (ITRN) Seasonal Chart Luxfer Holdings PLC (LXFR) Seasonal Chart Mistras Group Inc (MG) Seasonal Chart Oxford Immunotec Global PLC (OXFD) Seasonal Chart  Pfenex Inc. (PFNX) Seasonal Chart Tarena International, Inc. (TEDU) Seasonal Chart Zafgen, Inc. (ZFGN) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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