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Stock Market Outlook for February 19, 2020


While the pullback in Apple presents an opportunity to buy, perhaps hold off a bit before pursuing.

 

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.

Essex Property Trust, Inc. (NYSE:ESS) Seasonal Chart

Essex Property Trust, Inc. (NYSE:ESS) Seasonal Chart

George Weston Ltd. (TSE:WN.TO) Seasonal Chart

George Weston Ltd. (TSE:WN.TO) Seasonal Chart

Martin Marietta Materials (NYSE:MLM) Seasonal Chart

Martin Marietta Materials (NYSE:MLM) Seasonal Chart

Avis Budget Group, Inc. (NASD:CAR) Seasonal Chart

Avis Budget Group, Inc. (NASD:CAR) Seasonal Chart

Helix Energy Solutions Group, Inc. (NYSE:HLX) Seasonal Chart

Helix Energy Solutions Group, Inc. (NYSE:HLX) Seasonal Chart

Deutsche X-trackers MSCI EAFE Hedged Equity ETF (NYSE:DBEF) Seasonal Chart

Deutsche X-trackers MSCI EAFE Hedged Equity ETF (NYSE:DBEF) Seasonal Chart

 

 

The Markets

Stocks closed mixed on Tuesday as traders returned from the long weekend and were greeted to a revenue warning from market darling Apple.  The company cited slower production and demand in China, which is being burdened by the coronavirus outbreak. The technology titan saw its shares slip by 3% at the lows of the session, but managed to claw some of that back to close lower by 1.83%.  Momentum indicators on the daily chart of AAPL had been negatively diverging from price for the past month and performance relative to the market had been flat-lining, both suggesting waning buying pressures.  The 20, 50, and 200-day moving averages for the stock continue to point higher, implying positive trends on short, intermediate, and long-term timescales.  Short-term horizontal and 50-day moving average support can be seen around $300, a critical psychological level that if breached could see a move towards open gaps at $295 and $275.  Looking at our proprietary seasonal fundamental charts, the company continues to show year-over-year revenue, free cash flow, and net income growth, fulfilling the fundamental criteria that we desire to see and suggesting that any weakness over the short to intermediate term would create an appealing buying opportunity.  Seasonally, however, the period of seasonal strength for the Technology sector, according to our research, concluded on February 15th, suggesting better opportunities elsewhere over the next couple of months.

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Apple, Inc. (NASD:AAPL) Revenue Seasonality

Apple, Inc. (NASD:AAPL) Free Cash Flow Seasonality

Apple, Inc. (NASD:AAPL) Net Income Seasonality

With the largest weight in most market benchmarks (AAPL) down on the day, it was inevitable that investors were set for a tough session.  The S&P 500 Index ended lower by just less than three-tenths of one percent, charting a rather indecisive doji candlestick. 

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Flipping to the hourly chart, signs of stalling below resistance at 3385 can be seen.  The benchmark has essentially gone nowhere for the past week, trading in a tight range between the gap that was opened at 3352 and the all-time high at 3385.  Momentum indicators have been negatively diverging from price for the past couple of weeks, suggesting waning buying demand.  It appears that price is now trying to reflect the deteriorating technical conditions that have become apparent over the past month (read the Market Outlook for February 18th for more insight).  It may now be prudent to look at risk parameters within portfolios.  To use a traffic light analogy, even though the fundamentals and seasonal parameters for the broader market are still flashing green, the technicals have turned to yellow, suggesting to slow or proceed with caution, at least for the short-term.  Complacency in this market remains elevated, which makes stocks vulnerable should a shock event be realized.  The month of March and April tend to be stronger months for the equity market, therefore the better opportunity to buy any dip that the market may have in store may be around the corner.

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On the economic front, Statscan released its December look at manufacturing sales in Canada.  The headline print indicated that activity declined by 0.7% in the last month of 2019, much weaker than the 0.5% increase that was expected by analysts.  The year-over-year change is essentially flat at 0.1%.  Stripping out the seasonal adjustments, Canada manufacturing sales actually fell by 7.6% in December, which is slightly better than the 8.1% decline that is average for this time of year.  For 2019 overall, sales of goods manufactured actually increased by 0.9%, which is weaker than the 2.3% increase that has been the average for the calendar year going back two decades.  Seasonally, the ramp up in manufacturing activity through the first half of the new year tends to give lift to the pro-cyclical sectors , but this has yet to be seen in any meaningful; energy, industrial, and material sectors stocks are still on a path of underperformance versus the broader market.  Subscribers can login to the chart database to view some of the other seasonal charts for this report at the following link: https://charts.equityclock.com/canada-manufacturing-sales

Sales of goods manufactured (shipments) Seasonal Chart

Sentiment on Tuesday, as gauged by the put-call ratio, ended bullish at 0.78.

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Seasonal charts of companies reporting earnings today:

Petroleo Brasileiro S.A.- Petrobras Seasonal Chart Analog Devices, Inc. Seasonal Chart Energy Transfer L.P. Seasonal Chart Entergy Corporation Seasonal Chart Williams Companies, Inc. (The) Seasonal Chart Realty Income Corporation Seasonal Chart Synopsys, Inc. Seasonal Chart Copart, Inc. Seasonal Chart Telefonica Brasil S.A. Seasonal Chart Pioneer Natural Resources Company Seasonal Chart DISH Network Corporation Seasonal Chart Garmin Ltd. Seasonal Chart Sun Communities, Inc. Seasonal Chart Genuine Parts Company Seasonal Chart Tenaris S.A. Seasonal Chart Host Hotels & Resorts, Inc. Seasonal Chart Alleghany Corporation Seasonal Chart Zillow Group, Inc. Seasonal Chart Kirkland Lake Gold Ltd. Seasonal Chart Nordson Corporation Seasonal Chart Masimo Corporation Seasonal Chart Bausch Health Companies Inc. Seasonal Chart Autohome Inc. Seasonal Chart ICON plc Seasonal Chart Albemarle Corporation Seasonal Chart Hyatt Hotels Corporation Seasonal Chart CyrusOne Inc Seasonal Chart Mosaic Company (The) Seasonal Chart Owens Corning Inc Seasonal Chart Parsley Energy, Inc. Seasonal Chart Ultrapar Participacoes S.A. Seasonal Chart MSA Safety Incorporporated Seasonal Chart SolarEdge Technologies, Inc. Seasonal Chart Life Storage, Inc. Seasonal Chart Companhia Brasileira de Distribuicao Seasonal Chart Allison Transmission Holdings, Inc. Seasonal Chart ONE Gas, Inc. Seasonal Chart Integra LifeSciences Holdings Corporation Seasonal Chart Cosan Limited Seasonal Chart Boston Beer Company, Inc. (The) Seasonal Chart Pan American Silver Corp. Seasonal Chart Five9, Inc. Seasonal Chart Cimarex Energy Co Seasonal Chart Universal Forest Products, Inc. Seasonal Chart Avis Budget Group, Inc. Seasonal Chart Cedar Fair, L.P. Seasonal Chart Alamos Gold Inc. Seasonal Chart First Majestic Silver Corp. Seasonal Chart Iamgold Corporation Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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