Contact | RSS Feed

Stock Market Outlook for February 20, 2020


US Dollar Index breaking out to a new multi-year high, but seasonal tendencies suggesting a peak may be near.

 

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.

Ecolab, Inc. (NYSE:ECL) Seasonal Chart

Ecolab, Inc. (NYSE:ECL) Seasonal Chart

Portland General Electric Co. (NYSE:POR) Seasonal Chart

Portland General Electric Co. (NYSE:POR) Seasonal Chart

New Residential Investment Corp. (NYSE:NRZ) Seasonal Chart

New Residential Investment Corp. (NYSE:NRZ) Seasonal Chart

Osisko Gold Royalties Ltd. (TSE:OR.TO) Seasonal Chart

Osisko Gold Royalties Ltd. (TSE:OR.TO) Seasonal Chart

 

 

The Markets

Stocks jumped to another record closing high on Wednesday as fears surrounding the coronavirus faded.  The S&P 500 Index added just less than half of one percent, moving marginally above the previous short-term trading range that peaked in the recent week at 3385.  The large-cap benchmark closed the session at 3386.15.  Still, despite the new record closing high, the charts continue to suggest that buying momentum is waning.  The Relative Strength Index (RSI) and MACD on the hourly chart are negatively diverging from price.  Failure to gain a momentum spurt in the next few sessions will inevitably trigged a momentum sell signal on the daily chart, as represented by a bearish MACD crossover.  The levels of support below the market remain many, therefore the risk of some pronounced decline is low, however, waning momentum suggests that investors are not as enticed as they were previous to buy stocks, typically the precursor to a pullback.  It has been almost half a year since the market realized a pullback of between 5% to 10%, a typical gyration in any positive long-term trending market.

image

One aspect of the market that may be creating angst amongst investors is the ongoing rise of the US Dollar.  The US Dollar Index broke above previous resistance at 99.33 during Wednesday’s session, charting a multi-year high.  The currency has caught a bid amidst a bout of risk-aversion, which has seen assets flow into the US amidst concerns pertaining to the global growth prospects as the coronavirus takes a toll.  Seasonally, the strength in the US currency through the first two months of the year is typical, but the catalyst for the strength (the virus) is not.  The domestic currency tends to reach a peak by the end of February, then declines into the spring.

image

US Dollar Index Futures (DX) Seasonal Chart

The assets that are demanding US Dollars are finding their way into stocks and bonds, which are yielding higher than equivalent fixed income assets overseas.  The yield on the 10-year treasury note continues to hover around major support at 1.5%, a break of which would likely fuel another leg higher in bond prices and a leg lower in yields.  By comparison, the yield on the equivalent bond in Germany is –0.42%.  It is clear to see the relative value of investments in the US.  Seasonally, treasury bonds remain out of favour until later in the spring, however, investors can find opportunities in corporate bonds, which tend to be more correlated to the movement of equities than their sovereign counterparts.

image

iShares 7-10 Year Treasury Bond ETF (NASD:IEF) Seasonality

iShares Canadian Corporate Bond Index ETF (TSE:XCB.TO) Seasonality

On the economic front, a report on housing starts in the US was released before Wednesday’s opening bell.  The headline print of January’s report indicated that activity declined by 3.6% last month to a seasonally adjusted annualized rate of 1.567 million. Analysts were expecting a decline of 12.7% to a rate of 1.42 million. Stripping out the adjustments, starts actually declined by 0.5% in January, which marginally better than the 0.9% decline that is average for this time of year. The result follows the best calendar year gain since 2012. Starts were higher by 44.3% in 2019, which is much stronger than the unchanged result that has been the norm for the calendar year going back two decades.  We sent out further insight to subscribers intraday, including investment implications.  Signup now for either a monthly or yearly subscription to be included on this and other distributions.

Housing Starts Seasonal Chart

Also released to subscribers on Wednesday was a special report on precious metals.  Given the renewed attention for this area of the commodity market, be sure to catch our insight on how to proceed from here.

Sentiment on Wednesday, as gauged by the put-call ratio, ended bullish at 0.81.

image

 

 

 

 

Seasonal charts of companies reporting earnings today:

Southern Company (The) Seasonal Chart VALE S.A. Seasonal Chart American Electric Power Company, Inc. Seasonal Chart Lloyds Banking Group Plc Seasonal Chart Newmont Corporation Seasonal Chart SBA Communications Corporation Seasonal Chart Consolidated Edison Inc Seasonal Chart Eversource Energy Seasonal Chart Hormel Foods Corporation Seasonal Chart Fresenius Medical Care Corporation Seasonal Chart Ventas, Inc. Seasonal Chart Teleflex Incorporated Seasonal Chart Galapagos NV Seasonal Chart Alliant Energy Corporation Seasonal Chart BanColombia S.A. Seasonal Chart EPAM Systems, Inc. Seasonal Chart Domino's Pizza Inc Seasonal Chart Norwegian Cruise Line Holdings Ltd. Seasonal Chart Henry Schein, Inc. Seasonal Chart Gaming and Leisure Properties, Inc. Seasonal Chart LKQ Corporation Seasonal Chart Lamar Advertising Company Seasonal Chart STORE Capital Corporation Seasonal Chart Targa Resources, Inc. Seasonal Chart Universal Display Corporation Seasonal Chart Wix.com Ltd. Seasonal Chart Reliance Steel & Aluminum Co. Seasonal Chart AptarGroup, Inc. Seasonal Chart PRA Health Sciences, Inc. Seasonal Chart Syneos Health, Inc. Seasonal Chart HollyFrontier Corporation Seasonal Chart Pilgrim's Pride Corporation Seasonal Chart CubeSmart Seasonal Chart Cabot Oil & Gas Corporation Seasonal Chart Hudson Pacific Properties, Inc. Seasonal Chart First Solar, Inc. Seasonal Chart Gildan Activewear, Inc. Seasonal Chart Boyd Gaming Corporation Seasonal Chart Six Flags Entertainment Corporation New Seasonal Chart

 

 

S&P 500 Index

image

image

 

 

TSE Composite

image

image

 

Sponsored By...
Seasonal Advantage Portfolio by CastleMoore

Comments are closed.