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Stock Market Outlook for April 17, 2020


Initial jobless claims declined versus the increase reported in the week prior, but the most appropriate metric is now going to be continuing claims to determine the level of permanent economic destruction from this health event.

 

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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TransCanada PipeLines Ltd. (TSE:TRP.TO) Seasonal Chart

TransCanada PipeLines Ltd. (TSE:TRP.TO) Seasonal Chart

Dollar Tree, Inc. (NASD:DLTR) Seasonal Chart

Dollar Tree, Inc. (NASD:DLTR) Seasonal Chart

Equinix, Inc. (NASD:EQIX) Seasonal Chart

Equinix, Inc. (NASD:EQIX) Seasonal Chart

Franco-Nevada Corp. (TSE:FNV.TO) Seasonal Chart

Franco-Nevada Corp. (TSE:FNV.TO) Seasonal Chart

NuVasive, Inc. (NASD:NUVA) Seasonal Chart

NuVasive, Inc. (NASD:NUVA) Seasonal Chart

Northwest Natural Gas (NYSE:NWN) Seasonal Chart

Northwest Natural Gas (NYSE:NWN) Seasonal Chart

SAP SE (NYSE:SAP) Seasonal Chart

SAP SE (NYSE:SAP) Seasonal Chart

ServiceNow, Inc. (NYSE:NOW) Seasonal Chart

ServiceNow, Inc. (NYSE:NOW) Seasonal Chart

iShares S&P-TSX Capped Consumer Staples Index ETF (TSE:XST.TO) Seasonal Chart

iShares S&P-TSX Capped Consumer Staples Index ETF (TSE:XST.TO) Seasonal Chart

 

 

The Markets

Traders shook off another set of weak economic data and sent stocks higher on Thursday.  The S&P 500 Index gained just less than six-tenths of one percent in what seemed like a quiet day compared to recent volatile sessions.  The benchmark moved back towards the gap that was opened on Wednesday between 2800 and 2830.  Over the past two sessions, the large-cap benchmark has consolidated below this hurdle overhead, charting the narrowest range between open and close since early February.  Indecision is suspected as the bulls and the bears contemplate their next move.  Momentum indicators on the daily look at the benchmark continue to show signs of peaking with the MACD histogram contracting for a second day and Stochastics and RSI hinting of short-term peaks.  These indicators have rebounded from deeply oversold levels at the lows of the market in March, suggesting a significantly stretched condition, to neutral today; MACD has just moved above 0 for the first time since the highs in February.  The indicators are suggesting that the stretched condition that gave fuel to the multi-week rebound over recent weeks has been alleviated, leaving stocks to their own devices to chart their next short-term move.  Investors have some work ahead as they attempt to grind through resistance at Wednesday’s open gap between 2800 and 2830.

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The positive session for stocks on Thursday follows another dire look at the state of employment in the US with a report on jobless claims.  The headline print indicated that initial claims surged again by 5.245 million, bringing the four week tally to over 22 million.  Stripping out the seasonal adjustments, which are irrelevant in this environment, the initial claimant count increased by 4.972 million last week, which is down from the 6.211 million reported in the week prior.  The result does little to cut down on the ridiculousness of the chart of the year-to-date change of initial claims versus the seasonal norm; this year’s data has effectively been off the charts, now up by almost 1500% year-to-date.  Continuing claims, which are now going to be the most appropriate metric to follow, are up by 483% year-to-date through the start of April.  When the economy reopens, we will be looking for evidence of permanent economic destruction from this health event and continuing claims will be the first metric to have something to say on this front.  Should workers be unable to return to work, continuing claims will remain elevated, implying a contingent of the economy that is unable to spend or participate in the return to normal.

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On the economic front, a report on housing starts was released before Thursday’s opening bell.  The headline print of March’s report indicated that activity declined by 22.3% last month to a seasonally adjusted annualized rate of 1.216 million. Analysts were expecting a decline of 13.7% to a rate of 1.35 million. Stripping out the adjustments, starts actually declined by 10.1% in March, which is much weaker than the 20.7% increase that is average for this time of year. This is the first March decline in the history of this report. The year-to-date change is now down 7.6% through the first quarter, significantly weaker than the 23.7% increase that is average for the first three months of the year.  We sent out further insight to subscribers intraday.  Signup now. 

Housing Starts Seasonal Chart

Sentiment on Thursday, as gauged by the put-call ratio, ended bullish at 0.91.

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Seasonal charts of companies reporting earnings today:

Procter & Gamble Company (The) Seasonal Chart Schlumberger N.V. Seasonal Chart State Street Corporation Seasonal Chart Kansas City Southern Seasonal Chart Regions Financial Corporation Seasonal Chart Citizens Financial Group, Inc. Seasonal Chart Murphy USA Inc. Seasonal Chart IBERIABANK Corporation Seasonal Chart

 

 

S&P 500 Index

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TSE Composite

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