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Stock Market Outlook for March 14, 2019


MSCI World ex US Index showing a head-and-shoulders bottoming pattern as period of seasonal strength begins.

 

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:

Kansas City Southern Corp. (NYSE:KSU) Seasonal Chart

Kansas City Southern Corp. (NYSE:KSU) Seasonal Chart

American Elec Pwr Co., Inc. (NYSE:AEP) Seasonal Chart

American Elec Pwr Co., Inc. (NYSE:AEP) Seasonal Chart

Pepsico, Inc. (NASD:PEP) Seasonal Chart

Pepsico, Inc. (NASD:PEP) Seasonal Chart

LifePoint Health, Inc (NASD:LPNT) Seasonal Chart

LifePoint Health, Inc (NASD:LPNT) Seasonal Chart

Storm Resources Ltd. (TSE:SRX.TO) Seasonal Chart

Storm Resources Ltd. (TSE:SRX.TO) Seasonal Chart

Manulife Financial Corp. (NYSE:MFC) Seasonal Chart

Manulife Financial Corp. (NYSE:MFC) Seasonal Chart

Entergy Corp Hldg Co. (NYSE:ETR) Seasonal Chart

Entergy Corp Hldg Co. (NYSE:ETR) Seasonal Chart

Kelt Exploration Ltd. (TSE:KEL.TO) Seasonal Chart

Kelt Exploration Ltd. (TSE:KEL.TO) Seasonal Chart

 

 

The Markets

Stocks gained on Wednesday as strength in Energy and Health Care pushed major benchmarks up to the highest closing levels of the year. The S&P 500 Index gained seven-tenths of one percent, closing just below horizontal resistance at 2815.  Increasingly, the charts are showing what appears to be head-and-shoulders bottoming patterns, which, if confirmed, would seemingly open the upside potential for stocks.  For the large-cap benchmark, neckline resistance is that 2815 level already highlighted.  On the Dow Jones Industrial Average, the equivalent level is 26,200.  Investors have remained hesitant about buying around these hurdles, but a breakout would clear out the pessimists who have been forced to cover shorts and/or buy back into equity positions following the rally since the December low that caught many off-guard.

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A similar bottoming setup is apparent on the chart of the MSCI World ex-US Index, which has rebounded back to levels around its 200-day moving average.  The pattern projects upside potential to the July highs around 2000.  From a seasonal perspective, the implied 7% move has the best chance of succeeding over the next six to eight weeks.  Between mid-March and the start of May, the global benchmark has historically realized strong returns as funds flow into risk assets around the change of the quarter.  For the MSCI World ex US Index, the gain for April alone has been 2.7%, on average, over the past 20 years, which is a full percentage point above the average change for the S&P 500 Index in the same month.  Global equities have significantly underperformed the US for quite some time, but gradually evidence is materializing to show that demand for the beaten down names is turning around.

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On the economic front, a report on durable goods indicated a bounce back following the slump that was realized at the end of last year. New orders of durable goods are indicated to have increased by 0.4% in January, beating the consensus analyst estimate that called for a decline of 0.6%. Core orders are indicated to have gained 0.8%, better than the 0.1% increase that was expected and offsetting the 0.9% decline reported for the month prior. Stripping out the seasonal adjustments, the Value of Manufacturers’ New Orders for Durable Goods Industries actually declined by 10.1%, which is much better than the 12.9% decline that is average for the month. This is the best January change since 2010. The result helps to offset the weakness recorded in the month prior when the monthly increase of 4.9% was about half of what is average for the end of the year. Equity Clock subscribers received greater insight pertaining to the metrics behind the aggregate result in a report released during Wednesday’s session.  To receive this and other reports that provide guidance for your seasonal investing process, Subscribe Now.

Value of Manufacturers' New Orders for Durable Goods Industries Seasonal Chart

Monthly Value of Manufacturers' New Orders for Durable Goods Industries Data

In other economic news, construction spending bounced back in January, but housing remains a significant area of drag. In a report released during Wednesday’s session, the headline print indicated that construction spending in the US jumped 1.3% in the first month of the year, which is better than the 0.3% increase that was forecasted by analysts. Stripping out the seasonal adjustments, construction spending actually declined by 7.5%, which is better than the 9.1% decline that is average for the first month of the year. Construction spending came under pressure in the last half of 2018 as residential projects waned amidst rising mortgage rates and limited affordability.  We sent out a report to subscribers providing investment implications and highlighting why one segment of construction activity is providing warning for the health of the broader economy.  Don’t miss our next distribution.  Signup now.

Total Construction Spending  Seasonal Chart

Monthly Total Construction Spending  Data

Sentiment on Wednesday, as gauged by the put-call ratio, ended bullish at 0.85.

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Seasonal charts of companies reporting earnings today:

Adobe Inc. (ADBE) Seasonal Chart Ascena Retail Group, Inc. (ASNA) Seasonal Chart Avid Technology, Inc. (AVID) Seasonal Chart Broadcom Inc. (AVGO) Seasonal Chart  Dollar General Corporation (DG) Seasonal Chart Embraer S.A. (ERJ) Seasonal Chart Genesco Inc. (GCO) Seasonal Chart Infinity Pharmaceuticals, Inc. (INFI) Seasonal Chart Jabil Inc. (JBL) Seasonal Chart Noodles & Company (NDLS) Seasonal Chart Oracle Corporation (ORCL) Seasonal Chart PAR Technology Corporation (PAR) Seasonal Chart PC-Tel, Inc. (PCTI) Seasonal Chart Progenics Pharmaceuticals Inc. (PGNX) Seasonal Chart Tilly's, Inc. (TLYS) Seasonal Chart Ulta Beauty, Inc. (ULTA) Seasonal Chart Zumiez Inc. (ZUMZ) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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