Stock Market Outlook for March 25, 2020
New home sales in the US continue to trend above average, but they are shifting towards purchases of homes not started as buyers seek to secure a record low mortgage rate, yet delay the moving date.
*** 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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Service Corp. (NYSE:SCI) Seasonal Chart
ANI Pharmaceuticals, Inc. (NASD:ANIP) Seasonal Chart
Frontline Ltd. (NYSE:FRO) Seasonal Chart
The Markets
Stocks surged on Tuesday as investors awaited a coronavirus stimulus deal in the US. The S&P 500 Index closed higher by 9.38%; the Dow Jones Industrial Average added 11.37%, realizing the best one-day return since 1933. Both benchmarks are hovering around the highs from the past week, closing above short-term declining trendline resistance that we had been closely monitoring for a number of sessions. Following a number of weeks that have been characterized by gaps lower on the charts of major equity benchmarks in the US, Tuesday’s gap higher creates a level of support beneath for traders to shoot off of. We provide a full breakdown of the technicals and the path forward for the market in our market outlook emailed directly to subscribers. Don’t miss out on this timely insight, subscribe now.
On the economic front, a report on new home sales in the US was released during Tuesday’s session. The headline print indicated that sales of new homes declined 4.4% in February to a seasonally adjusted annualized rate of 765,000. Analysts were expecting a 7.1% decline to a rate of 743,000. Stripping out the seasonal adjustments, sales of new homes actually increased by 11.5% in February, which is weaker than the 13.7% increase that is average for this time of year. The year-to-date trend continues to hover above the seasonal norm, now by 19.1%, still one of the better performances from the past two decades. Homes sold under construction and those that are completed are realizing a toll, showing February gains that are well below average. But while consumers avoid these currently existing structures, they are turning to homes that haven’t been started, which are often sold based on plans. It is apparent that consumers are seeking to lock in record low mortgage rates but put off their moving date to the future, something that would be expected in times like this. Subscribers can login to view the seasonal charts for this report in the database at https://charts.equityclock.com/u-s-new-home-sales.
Sentiment on Tuesday, as gauged by the put-call ratio, ended bullish at 0.88. This is the first bullish reading since the start of March.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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