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Stock Market Outlook for February 11, 2020


Momentum ETF showing renewed signs of buying demand.

 

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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Murphy Oil Corp. Holding Co. (NYSE:MUR) Seasonal Chart

Murphy Oil Corp. Holding Co. (NYSE:MUR) Seasonal Chart

Southwestern Energy Co. (NYSE:SWN) Seasonal Chart

Southwestern Energy Co. (NYSE:SWN) Seasonal Chart

Surge Energy Inc. (TSE:SGY.TO) Seasonal Chart

Surge Energy Inc. (TSE:SGY.TO) Seasonal Chart

GEO Group, Inc. (NYSE:GEO) Seasonal Chart

GEO Group, Inc. (NYSE:GEO) Seasonal Chart

Cna Financial Corp. (NYSE:CNA) Seasonal Chart

Cna Financial Corp. (NYSE:CNA) Seasonal Chart

Howard Hughes Corp. (NYSE:HHC) Seasonal Chart

Howard Hughes Corp. (NYSE:HHC) Seasonal Chart

Unilever N V (NYSE:UN) Seasonal Chart

Unilever N V (NYSE:UN) Seasonal Chart

iShares MSCI ACWI ETF (NASD:ACWI) Seasonal Chart

iShares MSCI ACWI ETF (NASD:ACWI) Seasonal Chart

SPDR MSCI ACWI ex-US ETF (NYSE:CWI) Seasonal Chart

SPDR MSCI ACWI ex-US ETF (NYSE:CWI) Seasonal Chart

Vanguard Total World Stock ETF (NYSE:VT) Seasonal Chart

Vanguard Total World Stock ETF (NYSE:VT) Seasonal Chart

 

 

The Markets

Stocks moved higher on Monday, led by a rebound in Technology and Consumer Discretionary shares.  The S&P 500 Index gained nearly three-quarters of one percent to chart a fresh record close.  The session derived a bullish engulfing candlestick where the open and close exceeded the span of the previous day’s range.  These are typically reversal patterns, often seen around significant lows as investors buy the dip at the open and bid stocks higher through the course of the day.  The fact that this candlestick formation is being realized around an all-time high doesn’t mitigate the bullish implications.  Investors were able to eat through supply overhead presented by resistance at the all-time high, as well as the gap that was charted during Friday’s selloff between 3335 and 3345.  Gap resistance threatened to cap market returns in the short-term as investors use the opportunity to sell into the hole where the market failed to price given the abrupt uptick in fear related to the coronavirus.  Investors are taking comfort in the fact that new cases of the contagious virus are no longer trending in a parabolic manner, as they were into the end of January.  The case count, while growing, remains contained.  Of course, there are legitimate questions as at how far the virus is spreading beyond those that have been confirmed.  Regardless of the driver, this continues to be a market that is respecting levels of support, while investors are less concerned with levels of resistance.  This trend of greater buying than selling demand will continue, quite simply, until it doesn’t.

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The strength in the technology and consumer areas of the economy is something we have been highlighting to subscribers of our service for some time.  In fact, just on Friday we noted in our report on non-farm payrolls that “strength in technology and consumer areas of the economy warrant exposure in investment portfolios.” Subscribe now to read our report for more insight.  The simple fact is that the fundamental backdrop for both of these sectors remains on a growth path and, while the valuation of many of these names is difficult to entertain, investors are likely to keep a bid under these segments until there is no growth left to be had.  These high growth, high valuation companies are often encapsulated in momentum ETFs, the most actively traded of which is showing renewed buying demand.   Similar to the broad market, the iShares MSCI Momentum ETF (MTUM) charted a new all-time high on Monday, outperforming the market return in the process.  The ETF recently started a new trend of relative performance after it fell off of the pace of the market return though the last quarter of 2019.  While momentum has implications of a high level of risk, momentum stocks have actually exhibited more defensive characteristics than cyclical.  Over the past six years of data that we have on record, the optimal holding period for the momentum ETF (MTUM) has been during the second and third quarters, typically the weaker time of year for stocks.  The performance of the momentum segment of the equity market just reiterates our contention that growth is defensive and will continue to be in demand so long as the economy remains out of recession and/or the threat of recession remains low.

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iShares MSCI USA Momentum Factor ETF (AMEX:MTUM) Seasonality

MTUM Relative to the S&P 500

Sentiment on Monday, as gauged by the put-call ratio, ended bullish at 0.84.

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Seasonal charts of companies reporting earnings today:

Dominion Energy, Inc. Seasonal Chart Exelon Corporation Seasonal Chart Hilton Worldwide Holdings Inc. Seasonal Chart Arch Capital Group Ltd. Seasonal Chart Healthpeak Properties, Inc. Seasonal Chart Amcor plc Seasonal Chart Martin Marietta Materials, Inc. Seasonal Chart Omnicom Group Inc. Seasonal Chart Akamai Technologies, Inc. Seasonal Chart UDR, Inc. Seasonal Chart Masco Corporation Seasonal Chart Hasbro, Inc. Seasonal Chart Exact Sciences Corporation Seasonal Chart Western Union Company (The) Seasonal Chart National Retail Properties Seasonal Chart TIM Participacoes S.A. Seasonal Chart Under Armour, Inc. Seasonal Chart Jones Lang LaSalle Incorporated Seasonal Chart Euronet Worldwide, Inc. Seasonal Chart Assurant, Inc. Seasonal Chart Charles River Laboratories International, Inc. Seasonal Chart Sensata Technologies Holding plc Seasonal Chart Douglas Emmett, Inc. Seasonal Chart Ingredion Incorporated Seasonal Chart Sealed Air Corporation Seasonal Chart Rexford Industrial Realty, Inc. Seasonal Chart Capital Trust, Inc. Seasonal Chart Primerica, Inc. Seasonal Chart DCP Midstream LP Seasonal Chart NCR Corporation Seasonal Chart AutoNation, Inc. Seasonal Chart TEGNA Inc. Seasonal Chart Louisiana-Pacific Corporation Seasonal Chart Insperity, Inc. Seasonal Chart Viper Energy Partners LP Seasonal Chart Virtu Financial, Inc. Seasonal Chart The Goodyear Tire & Rubber Company Seasonal Chart CNO Financial Group, Inc. Seasonal Chart LCI Industries Seasonal Chart American Assets Trust, Inc. Seasonal Chart Diodes Incorporated Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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