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Stock Market Outlook for April 1, 2020


April has historically been one of the strongest months of the year for the equity market: S&P 500 Index has averaged a gain of 1.7% in April with 75% of periods showing positive results over the past 20 years.

 

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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Meritor, Inc. (NYSE:MTOR) Seasonal Chart

Meritor, Inc. (NYSE:MTOR) Seasonal Chart

FS Bancorp, Inc. (NASD:FSBW) Seasonal Chart

FS Bancorp, Inc. (NASD:FSBW) Seasonal Chart

BMO High Yield US Corporate Bond Hedged To CAD Index ETF (TSE:ZHY.TO) Seasonal Chart

BMO High Yield US Corporate Bond Hedged To CAD Index ETF (TSE:ZHY.TO) Seasonal Chart

iShares Long-Term Corporate Bond ETF (AMEX:IGLB) Seasonal Chart

iShares Long-Term Corporate Bond ETF (AMEX:IGLB) Seasonal Chart

United States Natural Gas Fund (NYSE:UNG) Seasonal Chart

United States Natural Gas Fund (NYSE:UNG) Seasonal Chart

 

 

The Markets

Stocks ended lower to close the last session of the month and the quarter, both of which were record setting, at least compared to recent history.  The S&P 500 Index closed down by 12.51% for the month and a perfectly even 20.00% for the quarter, each the weakest since 2008.  The results are significant outliers compared to the 1.6% gain that is average for March and the 0.97% increase that is average for the first quarter.  In an abnormal world, it is unreasonable to expect the normal to play out.  For the month ahead, the large-cap index has gained 1.7% with positive results realized in 75% of Aprils over the past 20 years.  April has historically been one of the strongest months of the year as investors bid stocks higher into the start of earnings season, which begins in full force in the middle of April.  Earnings season should provide a much needed distraction, whether it be good or bad, for a market that is heavily focussed on negative headlines, which I won’t repeat for sanity sake. Looking for more insight on what to look out for in the month ahead?  Subscribe now and we’ll send you our 67-page monthly report, which covers everything that you should be aware of for the month(s) ahead.

S&P 500 Index Seasonal Chart

For the day, the S&P 500 Index lost 1.6%, continuing to show resistance at the declining 20-day moving average.  The variable hurdle should be closely watched heading into the start of the next quarter.  We provide more extensive technical analysis in our market outlook sent to subscribers.  Signup now.

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On the economic front, a report on home prices was released before Tuesday’s opening bell. The S&P Corelogic Case-Shiller Home Price Index increased by 0.3% in January, which is marginally weaker than the 0.4% increase that was expected by analysts.  Stripping out the seasonal adjustments, home prices, according to this index, actually remained unchanged in the first month of the year, which is stronger than the 0.3% decline that is average for January.  The result follows the weakest year for home price appreciation since the rebound from the Great Financial Crisis.  Home prices in 20 of the largest cities in the US gained a mere 2.8% in 2019, below the 4.0% increase that has been the average over the past 19 years. Subscribers can login and view the seasonal charts for this report via the following link: https://charts.equityclock.com/sp-corelogic-case-shiller-home-price-index-city-breakdown

S&P/Case-Shiller 20-City Composite Home Price Index Seasonal Chart

North of the border, Statscan released Gross Domestic Product (GDP) data for the month of January.  The headline print indicated that GDP increased by 0.1% for January, which is weaker than the 0.2% increase that was expected by analysts.  The year-over-year increase fell by a tenth of a percent to 1.8%.  Stripping out the seasonal adjustments, Gross Domestic Product actually declined by 3.7% to start the year, which is weaker than the 3.5% decline that is average for the month of January.  GDP had been trending below average coming into this year, dragged lower by weakness in industrial production as manufacturing activity south of the border remained strained as a result of the tariff war between the US and China.  The virus toll creates a new burden on the manufacturing economy (and the economy overall, for that matter) that was attempting to rebound amidst a calming of trade tensions between the two global economic powerhouses.  We uploaded the seasonal charts for subscribers to access at the following link: https://charts.equityclock.com/canada-monthly-gross-domestic-product-gdp-by-industry

Canada GDP - All industries Seasonal Chart

Sentiment on Tuesday, as gauged by the put-call ratio, ended bearish at 1.14.

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Seasonal charts of companies reporting earnings today:

Ascendis Pharma A/S Seasonal Chart PVH Corp. Seasonal Chart Unifirst Corporation Seasonal Chart Novagold Resources Inc. Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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