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Stock Market Outlook for March 13, 2020


Is this the end of the bull-market trend for stocks?

 

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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Empire Co. Ltd. (TSE:EMP/A.TO) Seasonal Chart

Empire Co. Ltd. (TSE:EMP/A.TO) Seasonal Chart

Magna International Inc. (NYSE:MGA) Seasonal Chart

Magna International Inc. (NYSE:MGA) Seasonal Chart

Ulta Beauty, Inc. (NASD:ULTA) Seasonal Chart

Ulta Beauty, Inc. (NASD:ULTA) Seasonal Chart

Stuart Olson Inc. (TSE:SOX.TO) Seasonal Chart

Stuart Olson Inc. (TSE:SOX.TO) Seasonal Chart

Algonquin Power & Utilities Corp. (NYSE:AQN) Seasonal Chart

Algonquin Power & Utilities Corp. (NYSE:AQN) Seasonal Chart

Vanguard Intermediate-Term Corporate Bond ETF (NASD:VCIT) Seasonal Chart

Vanguard Intermediate-Term Corporate Bond ETF (NASD:VCIT) Seasonal Chart

Entergy Corp Hldg Co. (NYSE:ETR) Seasonal Chart

Entergy Corp Hldg Co. (NYSE:ETR) Seasonal Chart

Pepsico, Inc. (NASD:PEP) Seasonal Chart

Pepsico, Inc. (NASD:PEP) Seasonal Chart

PPL Corp. (NYSE:PPL) Seasonal Chart

PPL Corp. (NYSE:PPL) Seasonal Chart

American Elec Pwr Co., Inc. (NYSE:AEP) Seasonal Chart

American Elec Pwr Co., Inc. (NYSE:AEP) Seasonal Chart

Dollarama Inc. (TSE:DOL.TO) Seasonal Chart

Dollarama Inc. (TSE:DOL.TO) Seasonal Chart

Crombie Real Estate Investment Trust (TSE:CRR/UN.TO) Seasonal Chart

Crombie Real Estate Investment Trust (TSE:CRR/UN.TO) Seasonal Chart

The Stars Group Inc. (TSE:TSGI.TO) Seasonal Chart

The Stars Group Inc. (TSE:TSGI.TO) Seasonal Chart

 

 

The Markets

Equity markets continued to reflect the ongoing panic pertaining to the spread of the coronavirus.  The S&P 500 Index shed 9.51%, realizing the largest percent decline since Black Monday of 1987.  Prices ended at the lows of the day as traders didn’t even attempt to try to support prices into the close, an ominous sign of what to expect in the session to follow.  The benchmark has sliced through more levels of support, including last spring’s low at 2728 and the lows from the first half of 2018 around 2550.  The next horizontal hurdle on the downside is the December 2018 low at 2346, now just over 5% below present levels.  But the big level that was breached was the 200-week moving average, which has accurately pegged the low to each significant pullback in this economic expansion.    The level follows decade-old rising trendline support and the break of this hurdle effectively suggests the conclusion to the bull market trend that started in 2009.  But before we prepare a eulogy for the good times that once were, evidence of resistance is required to confirm the long-term change of trend.  The decline over the past few weeks has been characterized by a market that is lacking support as investors show their reluctance in sticking their neck out given the proliferation of negative news.  But a bear market trend is characterized as lower-lows and lower-highs.  The latter element has yet to be defined.  We have indicated in the past that you can only judge the weakness of the decline by the magnitude of the rebound.  Dislocations between sentiment and the fundamentals can often lead to abrupt declines similar to what we are presently witnessing.  However, should investors step back in to the market as fundamental data proves that investor sentiment was incorrect, it would be difficult to wave goodbye to the longer-term bull market trend.  The rebound from the fourth quarter decline of 2018 was a prime example of this.  In the Seasonal Advantage Portfolio that we manage in partnership with Castlemoore, we are still 40% in cash, combined with hedges that are working in our favour, and are extremely excited to put money to work for the rebound rally attempt.  That point is likely to be very soon.

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We continue to look for signs of strain in economic metrics that would be expected of an economic recession, something that investors are attempting to price in.  However, indications of strain, other than market prices, are not readily apparent.  In our report to subscribers on Wednesday, we showed how the change in oil and gas inventories showed no material impact from the virus through the first ten weeks of the year.  Similarly, jobless claims are showing no material indication that Americans are losing or unable to maintain employment.  The change in the initial claimant count ticked lower last week from the abrupt uptick reported in the week prior.  The year-to-date change is now 6.0% below the seasonal average trend.  The same below average path can be seen with continuing claims.  With an economy that has been defined by strength in the consumer, we’ll be watching various metrics closely to peg the impact of the virus on this critical segment of the economy.  Presently, given the data that is in front of us, which is, admittedly backward looking, there is a massive disconnect between where market prices are and what the fundamentals are saying.  That gap would be required to close.  That could entail prices moving back up or fundamentals filling in lower.  At this point, a bit of both would be expected, but we’ll continue to monitor revelations accordingly.  Follow along with us by signing up for our service and we’ll keep you up-to-date on how the data fills in compared to average seasonal norms.

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Sentiment on Thursday, as gauged by the put-call ratio, ended bearish at 1.45.

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Seasonal charts of companies reporting earnings today:

Jabil Inc. Seasonal Chart Buckle, Inc. (The) Seasonal Chart JinkoSolar Holding Company Limited Seasonal Chart Gogo Inc. Seasonal Chart Citi Trends, Inc. Seasonal Chart Century Casinos, Inc. Seasonal Chart Harrow Health, Inc. Seasonal Chart OFS Capital Corporation Seasonal Chart SMTC Corporation Seasonal Chart Neos Therapeutics, Inc. Seasonal Chart Renesola Ltd. Seasonal Chart PLx Pharma Inc. Seasonal Chart Harvest Capital Credit Corporation Seasonal Chart Kirkland's, Inc. Seasonal Chart Achieve Life Sciences, Inc. Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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