Stock Market Outlook for April 21, 2023
The weak Philly Fed Index keeps us with the belief that the manufacturing economy has already entered into recession.
*** 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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Cavco Industries, Inc. (NASD:CVCO) Seasonal Chart
BRP Inc. (TSE:DOO.TO) Seasonal Chart
PayPal Holdings, Inc. (NASD:PYPL) Seasonal Chart
Bridgford Foods Corp. (NASD:BRID) Seasonal Chart
BlackRock Muni Income Fund (NYSE:BLE) Seasonal Chart
Clarus Corp. (NASD:CLAR) Seasonal Chart
The Markets
Stocks slipped on Thursday following the release of a concerning print of manufacturer sentiment out of Philadelphia and ongoing reaction to earnings. The S&P 500 Index closed down by six-tenths of one percent, remaining within the band of resistance between 4100 and 4200 that has capped stocks since the spring of last year. Momentum continues to fade with the MACD indicator increasingly converging on its signal line in what could amount to a sell signal in the days ahead. Traditionally, a sell signal with respect to MACD within the window of the average peak of the best six months of the year for stocks that concludes at the start of May has provided a valuable signal to exit stocks, allowing the market to digest the strength that has been achieved over the past six months and wait for a better setup to re-invigorate risk within portfolios sometime during the volatility of the summer months (note: this does not mean “Sell in May and go away”). Booking profits in risk assets upon the confirmation of sell signals in the spring and buying back upon the peak of volatility during the summer, whether that point is revealed before, during, or after the third quarter, has historically proven to be an effective strategy to producing quality risk-adjusted returns. Time will tell if this proves to be the case this year, but given the degradation that has been observed in macro fundamental data, we are inclined to believe that we will see a better entry point to be aggressive in risk later this summer. The large-cap benchmark still needs to violate the December low at 3764 to confirm a declining intermediate path, one that will likely lead to the ultimate low of this cycle in the months/quarters ahead.
Today, in our Market Outlook to subscribers, we discuss the following:
- Hourly look at the large-cap benchmark and the bearish setup from which the market is breaking down from
- Philadelphia Fed Manufacturing Index
- Weekly Jobless Claims and the health of the labor market
- US Existing Home Sales
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Sentiment on Thursday, as gauged by the put-call ratio, ended neutral at 1.00.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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