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Stock Market Outlook for April 14, 2020


Employment in Canada declined by 6.5% through the first quarter, a drawdown not matched by any time in at least the past four decades.

 

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.

ABIOMED, Inc. (NASD:ABMD) Seasonal Chart

ABIOMED, Inc. (NASD:ABMD) Seasonal Chart

Alexandria R E Eqty, Inc. (NYSE:ARE) Seasonal Chart

Alexandria R E Eqty, Inc. (NYSE:ARE) Seasonal Chart

Integer Holdings Corp. (NYSE:ITGR) Seasonal Chart

Integer Holdings Corp. (NYSE:ITGR) Seasonal Chart

Sun Communities, Inc. (NYSE:SUI) Seasonal Chart

Sun Communities, Inc. (NYSE:SUI) Seasonal Chart

Johnson Outdoors, Inc. (NASD:JOUT) Seasonal Chart

Johnson Outdoors, Inc. (NASD:JOUT) Seasonal Chart

SPDR S&P Health Care Services ETF (NYSE:XHS) Seasonal Chart

SPDR S&P Health Care Services ETF (NYSE:XHS) Seasonal Chart

Summit Industrial Income REIT  (TSE:SMU/UN.TO) Seasonal Chart

Summit Industrial Income REIT (TSE:SMU/UN.TO) Seasonal Chart

ProShares Short FTSE China 50 (NYSE:YXI) Seasonal Chart

ProShares Short FTSE China 50 (NYSE:YXI) Seasonal Chart

 

 

The Markets

Stocks continued to rally into the end of the holiday shortened week after the US Federal Reserve dumped a slew of liquidity on the market, providing the juice that traders have come to rely on to support stocks.  The S&P 500 Index gained 1.45%, led by the areas of the market that weighed on broad benchmarks the most on the way down, including financials, materials, and REITs.  The outperformers during the market decline sat out of Thursday’s gain as investors rotated away from the winners and into the former losers.  Paring of negative bets into the first quarter earnings season, which kicks off in the week ahead, is a logical explanation, something that we proposed to our subscribers just before the equity market low on March 23rd.  Earnings tend to be a distraction to the headlines of the day; whether the results are positive or negative, traders tend to neutralized their books into the event given the randomness of the reaction following the release of results.  However, once traders have digested early results, this mean reversion tendency fades and stocks are once again vulnerable to selling on news.  The rebound, which was laid out accurately for subscribers, is now getting long in the tooth and the performance of the equity market will become much more random.  We made the easy calls at the highs and then the lows, but this middle ground is where things become difficult to predict.  Subscribe now to follow along with our work.

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In a recent report we highlighted reason for concern for the trade in gold given the underperformance of the miners versus the commodity itself.  The ratio of the Gold Miners ETF (GDX) relative to the Gold Bullion ETF (GLD) had been trading lower throughout the bear market decline in stocks, suggesting that the better hedge was the commodity rather than the producers.  During periods of sustained bullish moves in both, beyond a volatility shock, the miners will outperform the commodity, expressing investor confidence in the strength.  The ratio broke above intermediate-term declining trendline resistance on Thursday as investors became enticed by the precious metal given the liquidity that is flooding into the economy.  However, we must take the move with a grain of salt as the long-term trend of the ratio is still deemed to be negative.  The ratio broke a long-term trend of higher-highs and higher-lows in March and the 200-day moving average of the ratio has started to turn lower.  The long-term trend of the ratio provided an excellent leading indicator of the move in gold over the past 18 months, bottoming in the middle of 2018 and trending higher into the recent topping pattern that broke down in the past month.  In the Seasonal Advantage Portfolio that we manage in partnership with Castlemoore, we recently took on exposure to both precious and base metal miners given the relative strength of the underlying commodity that these companies produce.  Seasonally, the tendencies for the stocks at this time of year is very specific, often reacting more to the strength in the cyclical economy rather than a spike in volatility/uncertainty.  Subscribers can refer to the seasonal chart database for the specific average influences for each stock in this industry.

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On the economic front, Statscan released employment data for the month of March.  The headline print of March’s Labour Force Survey in Canada indicates that employment declined by 1.011 million last month, which is significantly weaker than the consensus estimate that called for a loss of 300,000. The unemployment rate surged higher from 5.6% to 7.8%, also much weaker than the consensus analyst estimate that called for a rate of 6.6%. Stripping out the seasonal adjustments, employment actually declined by 1,060,500, or 5.6% in March, representing the weakest monthly change on record. The average change for the month is an increase of 0.2%. Year-to-date, the statistics are equally dismal with employment down 6.5% through the end of the first quarter, a drawdown not matched by any time in at least the past four decades of data that we have on record.  We sent out further insight to subscribers intraday.  Signup now and we’ll send you this report and others as we help to guide you through the evolution of this bear market for stocks.

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

Sentiment on Thursday, as gauged by the put-call ratio, ended close to neutral at 0.98.

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Seasonal charts of companies reporting earnings today:

Johnson & Johnson Seasonal Chart J P Morgan Chase & Co Seasonal Chart Wells Fargo & Company Seasonal Chart Fastenal Company Seasonal Chart FIRST REPUBLIC BANK Seasonal Chart J.B. Hunt Transport Services, Inc. Seasonal Chart Commerce Bancshares, Inc. Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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