Stock Market Outlook for March 24, 2022
The trend of the US Dollar Index remains in a position of a headwind against risk assets and it could be a significant factor behind whether or not stocks realize the gains that are average for the month of April.
*** 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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Principal US Small Cap Index ETF (NASD:PSC) Seasonal Chart
FS Investment Corp. (NYSE:FSK) Seasonal Chart
Amazon.com, Inc. (NASD:AMZN) Seasonal Chart
BMO Equal Weight U.S. Health Care Hedged to CAD Index ETF (TSE:ZUH.TO) Seasonal Chart
Del Taco Restaurants, Inc. (NASD:TACO) Seasonal Chart
Franklin Covey Co. (NYSE:FC) Seasonal Chart
United Dominion Realty Trust (NYSE:UDR) Seasonal Chart
The Markets
Stocks slipped on Wednesday as investors continued to monitor developments in the Ukraine-Russia war and digest the ongoing sharp appreciation in energy commodity prices. The S&P 500 Index fell by 1.23%, slipping marginally back below its 200-day moving average that was broken to the upside in the previous session. Let the evolution of the tests of major moving averages as support begin. Just like on the way down where a series of tests of major moving averages as resistance was observed, we are now poised to watch some of these moving averages tested as support. The immediate hurdle below is the 50-day moving average at 4420, followed by the 20-day moving average at 4332. The recent rebound that we have been taking advantage of as part of the end of quarter mean reversion has provided some healthy relief and it is hinting that we are emerging from a market where levels of resistance outweigh levels of support. Now that we’ve seen levels of resistance crack on the way up during the over 6% rally from the mid-March low, we will be seeking for levels of support to hold. Without support, this market has nowhere to go but lower, perhaps stating the obvious. We still feel the violation of levels of support is more of a risk in the back half of the second quarter rather than through the next few weeks, but we will keep an open mind and position accordingly. Momentum indicators on the daily chart are starting to roll over from the recent rebound, but they are rolling over above their middle lines as they attempt to relinquish characteristics of a bearish trend that has dominated since the year began.
Today, in our Market Outlook to subscribers, we discuss the following:
- Hourly look at the large-cap benchmark and the levels of importance
- US Dollar Index
- US Petroleum inventories and demand
- The price of oil and how we are benefiting in our Super Simple Seasonal Portfolio
- US New Home Sales and the stocks of the homebuilders
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Sentiment on Wednesday, as gauged by the put-call ratio, ended bullish at 0.86.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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