Stock Market Outlook for April 21, 2022
As demand destruction for energy products materializes, it is time to tighten up the stops on energy stocks and/or rotate to other energy sector beneficiaries.
*** 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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Service Corp. (NYSE:SCI) Seasonal Chart
BioLife Solutions Inc. (NASD:BLFS) Seasonal Chart
Gabelli Utility Trust (NYSE:GUT) Seasonal Chart
PIMCO Municipal Income Fund (NYSE:PMF) Seasonal Chart
The Markets
Stocks closed mixed on Wednesday as a plunge in shares of Netflix once again raised concerns about the valuation of high multiple stocks. The S&P 500 Index slipped by just less than a tenth of one percent, charting a rather indecisive doji candlestick directly below its 20 and 200-day moving averages. Gap resistance between 4465 and 4480, along with the convergence of major moving averages around 4500, continue provide chart watchers something to mull over as a potential zone of resistance. Momentum indicators are swinging around to adopt a positive curl with MACD showing hints that it will chart a bullish cross above its middle line. Both RSI and MACD remain on the edge of what could be characterized as being bullish or bearish as the bulls attempt to make a stand to chart the first higher intermediate low that has been seen this year. The hurdles overheard remain the significant pivot point. A definitive break above resistance around the convergence of moving averages would set the stage for an intermediate trajectory of higher-highs and higher-lows, raising the likelihood of a move above the end of March high, while confirmation of resistance at the hurdles overhead raises the prospect of a retest of the mid-March lows. At this point in earnings season, the outcomes are, unfortunately, that binary. Seasonally, the market tends to remain supported through the end of the month, except for mid-term election years when a peak by this point in April is the norm. We are willing to trade either outcome as we seek to line the portfolio up for our next speculated shift in the market through the back half of the second quarter (May/June).
Today, in our Market Outlook to subscribers, we discuss the following:
- The seasonality of the outperformance of the Equal Weight S&P 500 Index ETF (RSP) over its capitalization weighted counterpart
- US Petroleum Inventories and Demand
- US Existing Home Sales and the above average increase of home prices
- Canada Consumer Price Index (CPI)
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Sentiment on Wednesday, as gauged by the put-call ratio, ended neutral, again, at 0.94.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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