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Stock Market Outlook for March 6, 2020


Uptick in initial jobless claims last week may be the first evidence of the coronavirus impact on the US economy.

 

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.

DTE Energy Co. (NYSE:DTE) Seasonal Chart

DTE Energy Co. (NYSE:DTE) Seasonal Chart

Cott Corp. (TSE:BCB.TO) Seasonal Chart

Cott Corp. (TSE:BCB.TO) Seasonal Chart

Republic Services, Inc. (NYSE:RSG) Seasonal Chart

Republic Services, Inc. (NYSE:RSG) Seasonal Chart

Farmers & Merchants Bancorp, Inc. (NASD:FMAO) Seasonal Chart

Farmers & Merchants Bancorp, Inc. (NASD:FMAO) Seasonal Chart

NextEra Energy Partners, LP (NYSE:NEP) Seasonal Chart

NextEra Energy Partners, LP (NYSE:NEP) Seasonal Chart

FlexShares STOXX Global Broad Infrastructure Index Fund (AMEX:NFRA) Seasonal Chart

FlexShares STOXX Global Broad Infrastructure Index Fund (AMEX:NFRA) Seasonal Chart

Invesco High Yield Equity Dividend Achievers ETF (NASD:PEY) Seasonal Chart

Invesco High Yield Equity Dividend Achievers ETF (NASD:PEY) Seasonal Chart

Invesco S&P SmallCap Utilities ETF (NASD:PSCU) Seasonal Chart

Invesco S&P SmallCap Utilities ETF (NASD:PSCU) Seasonal Chart

Invesco S&P 500 Low Volatility ETF (NYSE:SPLV) Seasonal Chart

Invesco S&P 500 Low Volatility ETF (NYSE:SPLV) Seasonal Chart

 

Upcoming BNN Appearance:

Get your questions ready… I will be on BNN’s Market Call Tonight at 6:00pm ET on Monday, March 9th taking your calls on Technical Analysis and Seasonal Investing.  CALL TOLL-FREE 1-855-326-6266,  EMAIL marketcall@bnnbloomberg.ca,  or TWEET @MarketCall.

 

The Markets

Another wild day for stocks that saw traders, once again, take back the gain from the previous session.  The S&P 500 Index closed down by 3.39%, closing back below the 200-day moving average.  Despite the extreme gyrations in recent days, momentum indicators on the daily chart continue to show signs of rebounding from deeply oversold levels and volume is beginning to fade.  At the end of February, volume on the S&P 500 Index spiked to the highest level since 2011 amidst the the abrupt summer melt-down.  Back then, following the plunge decline in August, the benchmark chopped around in a wild manner for a couple of months before a significant low was recorded at start of October.  The same pattern is playing out now.  Investors are attempting to find a level that they are comfortable with.  We’ve often cited that traders will cling to major moving averages during times of uncertainty.  While certainly not precise, that level, for now, is looking to be the 200-day moving average around 3050.  The benchmark has predominantly held around this zone for the past week.  Given the fluidity of the situation, that could change, but this is a logical level for the market to find comfort in while it assesses the long-term impact from the coronavirus.

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As highlighted in recent reports, the hourly chart has been an effective guide.  The benchmark has been respecting the gaps on the charts fairly precisely for some time.  The recovery of stocks this week has been halted by the gap that was opened last Thursday between 3060 and 3110.  Last Friday’s gap around 2975 has been the hurdle on the downside.  These are the barriers to watch.  A break below the lower limit would likely fuel another round of selling pressures, while a break above the upper limit opens the door for the test of what looks to be significant resistance at 3215.  In yesterday’s report, we suggested that the short-term peaks from the last few sessions could represent the neckline of a head-and-shoulders bottoming pattern.  An alternate view suggests that we could be charting the flag portion of a bear-flag setup.  The initial wave down in the last week of February created the pole and the chop this week is creating the flag.  Ultimately, it all comes down to where investors find comfort and how the news flow fills out.  We called the easy moves in the middle of February with our suggestion to be cautious and the end of February with our suggestion that the risk-reward of the broad equity market was appealing.  It is the chop in between that is more difficult to call as it relies on pure speculation.

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Friday’s action is likely to see some influence from the monthly payroll report for February.  Analysts are expecting the addition of 177,000 jobs in February, down from the 225,000 increase reported in the month prior.  Before the seasonal adjustments, payrolls actually increase by 0.5%, on average, in the second month of the year, which would imply the addition of 750,000 payrolls.  This year is unique given the census hiring, therefore don’t be surprised if the result comes in well above average as workers are brought on to conduct this decennial survey.  Looking for insight from the weekly report of jobless claims, through the middle of the survey period, the trend for initial claims was below the seasonal norm, suggesting no strains in the labour market that would be expected to cause a deviation in the the seasonal fluctuation of payrolls.  However, at the end of the month, beyond the survey period and encompassing the period when public panic pertaining to the virus escalated, an uptick in the actual trend above the seasonal norm can be picked out.  This may be the first indication of the impact from this virus that may be realized in next month’s report.  Jobless claims typically provide a coincident indication of strains in the labor market and the economy, therefore we’ll be watching the results closely as the weeks progress.  We’ll have the complete breakdown of the Nonfarm Payroll report in a distribution that will be released to subscribers during Friday’s session.  Signup now to be included on our list.

Total Nonfarm Seasonal Chart

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On the economic front, a report on Factory Orders was released during Thursday’s session.  We provided the relevant details in a report on Durable Goods Orders that was sent to subscribers last Thursday.  Login now to view this report in the archive or browse through the seasonal charts of Factory Orders via the following link: https://charts.equityclock.com/u-s-factory-orders

Value of Manufacturers' New Orders for All Manufacturing Industries Seasonal Chart

Sentiment on Thursday, as gauged by the put-call ratio, ended bullish at 0.88.

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Seasonal charts of companies reporting earnings today:

YPF Sociedad Anonima Seasonal Chart Vermilion Energy Inc. Seasonal Chart Global Partners LP Seasonal Chart DXP Enterprises, Inc. Seasonal Chart Silvercrest Asset Management Group Inc. Seasonal Chart Portman Ridge Finance Corporation Seasonal Chart Bio-Path Holdings, Inc. Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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