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Stock Market Outlook for March 9, 2020


Significant indecision weekly candlestick below the 50-week moving average and previous rising range suggests that further instability is likely.

 

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.

General Dynamics Corp. (NYSE:GD) Seasonal Chart

General Dynamics Corp. (NYSE:GD) Seasonal Chart

Comstock Resources, Inc. (NYSE:CRK) Seasonal Chart

Comstock Resources, Inc. (NYSE:CRK) Seasonal Chart

Alliance Data Systems (NYSE:ADS) Seasonal Chart

Alliance Data Systems (NYSE:ADS) Seasonal Chart

Hawaiian Electric Industries Inc. (NYSE:HE) Seasonal Chart

Hawaiian Electric Industries Inc. (NYSE:HE) Seasonal Chart

Balchem Corp. (NASD:BCPC) Seasonal Chart

Balchem Corp. (NASD:BCPC) Seasonal Chart

Astrazeneca PLC (NYSE:AZN) Seasonal Chart

Astrazeneca PLC (NYSE:AZN) Seasonal Chart

iShares U.S. Preferred Stock ETF (NASD:PFF) Seasonal Chart

iShares U.S. Preferred Stock ETF (NASD:PFF) Seasonal Chart

SPDR S&P 600 Small Cap ETF (NYSE:SLY) Seasonal Chart

SPDR S&P 600 Small Cap ETF (NYSE:SLY) Seasonal Chart

ProShares Ultra Real Estate (NYSE:URE) Seasonal Chart

ProShares Ultra Real Estate (NYSE:URE) Seasonal Chart

Vornado Realty Trust (NYSE:VNO) Seasonal Chart

Vornado Realty Trust (NYSE:VNO) Seasonal Chart

Purpose Floating Rate Income ETF (TSE:FLOT.TO) Seasonal Chart

Purpose Floating Rate Income ETF (TSE:FLOT.TO) Seasonal Chart

BMO Covered Call Utilities ETF (TSE:ZWU.TO) Seasonal Chart

BMO Covered Call Utilities ETF (TSE:ZWU.TO) Seasonal Chart

iShares S&P Small-Cap 600 Growth ETF (NASD:IJT) Seasonal Chart

iShares S&P Small-Cap 600 Growth ETF (NASD:IJT) Seasonal Chart

iShares Residential Real Estate Capped ETF (NYSE:REZ) Seasonal Chart

iShares Residential Real Estate Capped ETF (NYSE:REZ) Seasonal Chart

 

Upcoming BNN Appearance:

Let’s try to bring some sense to all this madness… I will be on BNN’s Market Call Tonight at 6:00pm ET today (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 tough day for equity markets as fears relating to the coronavirus continue to grow.  The S&P 500 Index closed down by 1.70%, moving firmly below its 200-day moving average.  The benchmark managed to close higher by 0.61% for the week, having returned the bulk of the the gain from a rebound rally that was attempted mid-week.  The weekly candlestick that was derived with a long upper and lower wick is indicative of investor indecision.  The benchmark closed below its 50-week moving average for the second week in a row, the first  time it has done so since the meltdown in equity prices during the fourth quarter of 2018.  The variable level had been providing reliable support throughout the bull market trend.  While the market has certainly been unstable thus far, the risk of increased instability is implied with the benchmark now below this critical level of variable support.  We sent out a special report to subscribers early in Friday’s session that broke down the move and highlighted the appropriate action to take.  We also pointed to a particular metric to monitor in order to determine if the worst is over.  Subscribe now and we’ll send you this report.

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This continues to be a battle of stocks (risk) versus bonds (defense) as investors express their concerns pertaining to the virus.  The yield on the 10-year treasury note closed at another record low on Friday at 0.7%, maintaining a parabolic trend that has been relentless for the past month.  By definition, parabolic trends are unsustainable and the risk of a pronounced snap-back is growing.  As long as fear persists, however, the trend in yields is lower.

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Looking at the long-term trend of 30-year treasury bond prices, there still remains room to run on the upside for prices.  The bond price broke above the mid-point to its long-term rising trend during Friday’s session.  The derived trendline resistance is around 190, or 5.7% above Friday’s close.  Tests of the upper and lower ranges of the rising span have historically provided interesting signals for the equity market.  A bounce from the lower limit of the range has more often than not coincided with peaks in equity prices, while rollovers from the upper limit have frequently coincided with significant equity market lows.  The price of the 30-year bond last tested the lower limit of the span in October of 2018, prior to the fourth quarter meltdown.  Ever since, at least up until a month ago, the two (stocks and bonds) had been rising together as each market was sceptical of the other.

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The downfall in the price of oil didn’t help investor sentiment during Friday’s session.  The commodity broke through significant support at $42 to trade to the lowest level since 2016.  A head-and-shoulders topping pattern can be picked out on the chart with the neckline represented by that now violated hurdle.  Price is hovering at or below the breakeven price of producers and the strains in the energy sector have just ramped up exponentially.  The significantly depressed state of yields and the deflated price of oil could manifest itself in ways that we are not yet fully aware.  The broader equity market and economy can be intolerant to such strains and the weakness in equity prices may be just the tip of the iceberg.  We’ll have to see if these negative trends for yields and oil are sustained.

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On the economic front, the better than expected payroll report for February failed to entice investors back to risk assets.  The Bureau of Labor Statistics indicates that 273,000 payrolls were added last month, which is firmly better than the consensus analyst estimate that called for an increase of 177,000.  The unemployment rate ticked lower by a tenth of a percent to 3.5% and average hourly earnings were higher by 0.3%, inline with the consensus analyst estimate.  Stripping out the seasonal adjustments, payrolls actually increased by 880,000, or 0.6%, in February, which is stronger than the 0.5% increase that is average for this time of year.  The year-to-date change is now hovering three-tenths of one percent above the seasonal norm through the first two months of the year.  We sent out further insight to subscribers intraday.  Signup now and you can login to the report archive to download this report.

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

North of the border, Canada released an employment report of its own.  The headline print of January’s Labour Force Survey in Canada indicates that employment increased by 30,300, which is better than the consensus estimate that called for a gain of 10,000.  The unemployment rate ticked higher by one-tenth of one percent to 5.6%.  Stripping out the seasonal adjustments, employment actually increased by 78,500, or 0.4%, which is inline with the 0.4% increase that is average for this time of year.   Subscribers received further insight intraday.  Login now to download the report.

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

Sentiment on Friday, as gauged by the put-call ratio, ended bearish at 1.18.

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Seasonal charts of companies reporting earnings today:

Franco-Nevada Corporation Seasonal Chart Vail Resorts, Inc. Seasonal Chart Thor Industries, Inc. Seasonal Chart Changyou.com Limited Seasonal Chart Xenon Pharmaceuticals Inc. Seasonal Chart Sohu.com Limited Seasonal Chart Minerva Neurosciences, Inc Seasonal Chart Avid Technology, Inc. Seasonal Chart Synchronoss Technologies, Inc. Seasonal Chart Matinas Biopharma Holdings, Inc. Seasonal Chart Trecora Resources Seasonal Chart Manitex International, Inc. Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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