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Stock Market Outlook for March 21, 2019


Banks fall sharply following FOMC announcement as the fundamental backdrop for the seasonal trade continues to deteriorate.

 

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:

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DENTSPLY Intl Inc. (NASD:XRAY) Seasonal Chart

DENTSPLY Intl Inc. (NASD:XRAY) Seasonal Chart

HealthStream, Inc. (NASD:HSTM) Seasonal Chart

HealthStream, Inc. (NASD:HSTM) Seasonal Chart

SL Green Realty Corp. (NYSE:SLG) Seasonal Chart

SL Green Realty Corp. (NYSE:SLG) Seasonal Chart

Kraft Heinz Co. (NASD:KHC) Seasonal Chart

Kraft Heinz Co. (NASD:KHC) Seasonal Chart

NutriSystem, Inc. (NASD:NTRI) Seasonal Chart

NutriSystem, Inc. (NASD:NTRI) Seasonal Chart

Perry Ellis Intl, Inc. (NASD:PERY) Seasonal Chart

Perry Ellis Intl, Inc. (NASD:PERY) Seasonal Chart

 

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The Markets

Stocks closed generally lower on Wednesday as investors reacted to the latest FOMC announcement.  The Fed indicated that rates will not be increased further this year and that the balance sheet unwind program will conclude by the end of September.  The S&P 500 Index dipped by three-tenths of one percent, weighed down by financials, which struggled amidst a sharp drop in treasury yields.  The large-cap benchmark continues to consolidate above previous resistance around 2815, however, sector rotation away from some economically sensitive areas of the market are raising concerns as to whether the benchmark can move definitively higher from here.

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One of those areas of concern is the downfall in the financial sector, which has abruptly declined in the past two sessions.  We highlighted the outside reversal on the KBW bank index in yesterday’s report.  The bearish setup was followed by an over 3% decline during Wednesday’s session as the benchmark confirms resistance around the 200-day moving average. Immediately, the benchmark has moved back to support around 96, a break of this short-term hurdle projects a downside target towards the open gap around 92.65.  The financial sector and bank industry group have been underperforming the market since the end of January and momentum indicators have negatively diverged from price, each suggesting waning buying demand.  Seasonally, financials typically rise through to the start of May, on average, but the fundamental backdrop is providing influences contrary to seasonal norms.  In the Seasonal Advantage Portfolio that we manage in partnership with CastleMoore, we have chosen to underweight the US sector, instead focussing on individual names that provide better potential.   To learn more about our three pronged approach incorporating seasonal, technical, and fundamental analysis, email us at seasonalportfolio@equityclock.com.

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KBW Bank Index Seasonal Chart

On schedule for the Wednesday session, the latest petroleum inventory report was released.  The Energy Information Administration (EIA) reported that oil stockpiles fell by 9.6 million barrels last week, while gasoline inventories declined by 4.6 million barrels. The drawdown resulted in a pronounced decline in the days of supply of each commodity. Oil fell by eight-tenths of a day to 27.4, while gasoline fell by a full day to 26.4. The average level for each at this time of year is 23.5 and 26.1, respectively. Oil inventories are now lower than where they ended 2018, the first time that a drawdown has been realized through the middle of March since 2001.  Subscribers received an update on the state of the seasonal trade in the energy sector on Wednesday.  Want to be included in future distributions?  Subscribe now 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 bullish at 0.89.

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Seasonal charts of companies reporting earnings today:

Actuant Corporation (ATU) Seasonal Chart Caleres, Inc. (CAL) Seasonal Chart Canadian Solar Inc. (CSIQ) Seasonal Chart Cintas Corporation (CTAS) Seasonal Chart Commercial Metals Company (CMC) Seasonal Chart ConAgra Brands, Inc. (CAG) Seasonal Chart CorePoint Lodging Inc. (CPLG) Seasonal Chart Covia Holdings Corporation (CVIA) Seasonal Chart Darden Restaurants, Inc. (DRI) Seasonal Chart Dynagas LNG Partners LP (DLNG) Seasonal Chart G-III Apparel Group, LTD. (GIII) Seasonal Chart Intellicheck, Inc. (IDN) Seasonal Chart Neovasc Inc. (NVCN) Seasonal Chart Nike, Inc. (NKE) Seasonal Chart Opiant Pharmaceuticals, Inc. (OPNT) Seasonal Chart RTW Retailwinds, Inc. (RTW) Seasonal Chart Scholastic Corporation (SCHL) Seasonal Chart Superconductor Technologies Inc. (SCON) Seasonal Chart WidePoint Corporation (WYY) Seasonal Chart Worthington Industries, Inc. (WOR) Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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Seasonal Advantage Portfolio by CastleMoore

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