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Stock Market Outlook for April 8, 2020


For the first time since February of 2018, job openings have come in less than the level of unemployment.

 

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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Resmed, Inc. (NYSE:RMD) Seasonal Chart

Resmed, Inc. (NYSE:RMD) Seasonal Chart

 

 

The Markets

Stocks closed flat on Tuesday as investors sold into the early strength as the market attempted to follow through with Monday’s gains.  The S&P 500 Index closed down by 0.16%, remaining above its 20-day moving average that was broken in the prior session.  Momentum indicators have moved back to neutral territory with the Relative Strength Index (RSI) hovering around 50 and MACD retracing around half of the decline from the past month and a half.  MACD remains on a buy signal that was triggered on March 26th and there are no signs, as of yet, that the momentum indicator is starting to roll over.  We breakdown the action further in our market outlook emailed to subscribers.

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Treasury bond prices are pointing to a peak.  The price of these safe havens closed firmly lower on the day and momentum indicators are rolling over.  MACD on the iShares 7-10 Year Treasury Bond ETF triggered a sell signal at a lower level than the one that proceeded it at the peak in the first half of March.  This effectively concludes the trend of higher-highs and higher-lows on the daily chart of this indicator; the same can be concluded of the Relative Strength Index (RSI).  The ratio of the treasury ETF versus the S&P 500 Index has broken below its 20-day moving average for the first time since the middle of February; stocks are now outperforming bonds, suggesting a shift in investor sentiment.  Momentum indicators on this treasury ETF had reached some of the most overbought levels in the history of the product, therefore it was inevitable that some reprieve was to be expected.  Treasury bond prices continue to show higher-highs and higher-lows on a long-term timescale, but a retest of levels of long-term support below may be a required reset.  The 200-day moving average of the Intermediate Treasury Bond ETF (IEF) hovers around $112, a logical entry point to the long-term trend.

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As for the relative trend of the treasury bond ETF on a long-term scale, while stocks have been the outperformer for the past decade, the break above the relative declining trendline suggests the conclusion to equities as being the asset class of choice.

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On the economic front, a report on Job Openings and Labor Turnover was released during Tuesday’s session.  The headline print of February’s survey indicated that openings declined by 1.9% in the month to 6.882 million. Analysts were expecting a decline of 5.3% to 6.638 million. As of the end of March, there were 7.140 million individuals that were declared unemployed, according to the Bureau of Labor Statistics, suggesting that just less than one opportunity was available for everyone seeking a job. This is the first time since February of 2018 that openings have tallied less than the level of those unemployed. Stripping out the seasonal adjustments, openings actually declined by 4.6% to 6.597 million in February, which is stronger than the 6.2% decline that is average for the month. The year-to-date increase of 10.4% is approximately inline with the seasonal norm, which sees a rise of 11.1% through the first two months of the year. The results follow last year’s weak performance in this labor market metric, which saw job openings produce the largest calendar year decline in a decade.  We sent out further insight to subscribers intraday.  Signup now to receive our research and analysis.

Job Openings: Total Nonfarm Seasonal Chart

Sentiment on Tuesday, as gauged by the put-call ratio, ended close to neutral at 0.95.

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Seasonal charts of companies reporting earnings today:

RPM International Inc. Seasonal Chart MSC Industrial Direct Company, Inc. Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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