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Stock Market Outlook for April 8, 2019


Stocks close in on previous highs as the VIX falls to long-term support.

 

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:

Subscribers – Click on the relevant link to view the full profile. Not a subscriber? Signup here.

Ingredion Inc. (NYSE:INGR) Seasonal Chart

Ingredion Inc. (NYSE:INGR) Seasonal Chart

Ship Finance Intl Ltd. (NYSE:SFL) Seasonal Chart

Ship Finance Intl Ltd. (NYSE:SFL) Seasonal Chart

American Express Co. (NYSE:AXP) Seasonal Chart

American Express Co. (NYSE:AXP) Seasonal Chart

ITT Inc. (NYSE:ITT) Seasonal Chart

ITT Inc. (NYSE:ITT) Seasonal Chart

Sparton Corp. (NYSE:SPA) Seasonal Chart

Sparton Corp. (NYSE:SPA) Seasonal Chart

ABIOMED, Inc. (NASD:ABMD) Seasonal Chart

ABIOMED, Inc. (NASD:ABMD) Seasonal Chart

 

 

The Markets

Stocks gained on Friday as a better than expected payroll report in the US calmed concerns pertaining to the risk of an imminent recession.  The S&P 500 Index added almost half of one percent, inching closer to the all-time highs charted last September.  For the week, the large-cap benchmark was higher by 2.06%, making progress above support and the recent consolidation zone around the 50-week moving average.  The gains come as the volatility index falls back to support around 12 as the fear that dominated the fourth quarter fades.  Seasonally, the volatility index tends to decline through the month of April, then flat-lines into the summer.  One of the strategies that we’ve presented to investors in the past is to sell stocks when the VIX bottoms below 12 and subsequently buy stocks when the fear gauge peaks above 21.  This simple strategy would have taken investors out of equity positions at the start of October and re-invested at the start of the year.

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Volatility Index (VIX) Seasonality

Leading the action on Friday was strength in the energy sector as the price of crude oil advanced beyond its 200-day moving average.  Energy stocks have predominantly lagged the advance in the commodity since the start of the year, but Friday’s surge suggests that investors may now be becoming enticed by sector constituents.  The S&P 500 Energy Sector Index bounced from support around its rising 20-day moving average, now closing in on the 200-day moving average of its own.  To read more of our analysis pertaining to the state of the seasonal trade in the energy sector, subscribe now and request a copy of our energy report.

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Energy Sector Seasonal Chart

On the economic front, a more normal headline print for payroll growth in the US maintains the strong pace that the non-seasonally adjusted results have been suggesting all this time. The headline for March’s employment situation report indicated that payrolls increased by 196,000, which is firmly above the 170,000 increase that was forecasted by analysts. The unemployment rate remained unchanged at 3.8% and average hourly earnings increased by 0.1%, below estimates calling for a 0.2% increase. Stripping out the seasonal adjustments, payrolls actually increased by 724,000, or an increase of 0.5%, which is below the average increase for the third month of the year of 0.6%. The result maintains an above average pace on the year, which is now 0.13% above the seasonal norm through the first quarter.  Subscribe now and access the report that we sent out to subscribers in our new Intraday Report Archive.

Total Nonfarm Seasonal Chart

Monthly Total Nonfarm Data

While the US realized better than expected employment growth for the month of March, Canada saw results that missed expectations. The headline print of March’s Labour Force Survey indicated that employment declined by 7,200 last month, a miss versus estimates for no change. The unemployment rate remain unchanged at 5.8%. Stripping out the seasonal adjustments, Canada actually saw the addition of 2,700 jobs in March, representing an increase of a mere 0.01%. The average increase for this month is 0.2%. The result leaves the year-to-date change four-tenths of one percent above average through the first quarter, which is actually the best performance since 2007. Signup now and we’ll send you our analysis of this important gauge of the health of the Canadian economy.

http://charts.equityclock.com/seasonal_charts/economic_data/v2064890_seasonal_chart.PNG

Sentiment on Friday, as gauged by the put-call ratio, ended bullish at 0.82.

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Seasonal charts of companies reporting earnings today:

  • No significant earnings scheduled

 

S&P 500 Index

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TSE Composite

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