Stock Market Outlook for March 12, 2019
Technology sector leading the market higher and contradicting seasonal norms.
*** 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
Magna International Inc. (NYSE:MGA) Seasonal Chart
Crew Energy Inc. (TSE:CR.TO) Seasonal Chart
Pason Systems, Inc. (TSE:PSI.TO) Seasonal Chart
NuVista Energy Ltd. (TSE:NVA.TO) Seasonal Chart
The Markets
Stocks rebounded on Monday as a series of upgrades of a couple of notable Technology companies had investors buying positions in the market’s largest sector. The S&P 500 Index added 1.47%, moving back above its 20 and 200-day moving averages that were broken during last week’s decline. Previous broken support around 2765 was also recouped as the benchmark moves back within the short-term range that peaks around 2815.
For the technology sector benchmark, the index is back to short-term resistance around 1250 following its bounce from support at the 200-day moving average. The sector has been strongly outperforming the market since mid-January, contradicting seasonal norms that call for underperformance of sector constituents into the spring. Solid growth fundamentals and the search for momentum to play catch-up following the pronounced rally in January and February that left many on the sidelines are factors for the positive relative performance. Seasonally, the next period of strength for the sector runs from mid-April through to mid-July.
On the economic front, the report on retail sales continues to show whippy results as the US Census Bureau plays catch-up following the recent government shutdown. The headline print indicated that Retail Sales in the US increased by 0.2% in January, which was better than the unchanged result that was forecasted by analysts. However, December’s result was revised lower from down 1.2% to down 1.6%. Stripping out the seasonal adjustments, total retail trade was actually lower by 20.5% in January, which is better than the 22.9% decline that is average for the month. The 2.4% above average result is the best start to a year since 2013 and helps to offset the weak calendar year performance of last year. To read more about the metrics behind the aggregate result, signup to become an Equity Clock subscriber and we’ll send you our report revealing the areas of strength and weakness leading into this seasonally strong time of year for consumer stocks.
Sentiment on Monday, as gauged by the put-call ratio, ended bullish at 0.82.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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