Stock Market Outlook for February 8, 2024
Respiratory illness season hinting of an earlier than average peak, but the percentage of patients being treated at health care institutions still extraordinarily high for this time of year.
*** 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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Kellogg Co. (NYSE:K) Seasonal Chart
GSK Plc (NYSE:GSK) Seasonal Chart
Ampco Pittsburgh Corp. (NYSE:AP) Seasonal Chart
Verastem Inc. (NASD:VSTM) Seasonal Chart
Eagle Pharmaceuticals, Inc. (NASD:EGRX) Seasonal Chart
The Markets
Stocks climbed in the Wednesday session with the S&P 500 Index knocking on the door of the psychologically important 5,000 level. The large-cap benchmark added eight-tenths of one percent, continuing to feel the pull toward the important hurdle overhead as traders remain focused on growth (technology and communication services). Wednesday’s move starts to resolve the ultra short-term bull flag pattern highlighted in our last report as providing an easy runway towards and beyond the round number on the benchmark, a positive setup that aligns with the positivity for stocks that is normal through the first half of February. The benchmark continues to portray characteristics of a bullish trend with momentum indicators holding above their middle lines and major moving averages rising above one another. But while everything remains conducive to seeing the 5,000 level on the benchmark becoming fulfilled, our speculation is that this may be the “last hurrah” before digestion set in, likely coinciding with what can be the weakest two week period of the year in the back half of February. The struggle the market is having to broaden out the rally beyond just the tried and true growth segments and the overvalued/overbought state of growth raises concerns pertaining to whether the latter can continue to perform the heavy lifting while the rest of the market fails to participate. As we have highlighted in the past, the lack of breadth in the market isn’t necessarily a problem so long as the best and the biggest companies in the market continue to attract inflows, as they have, but should those buy programs be turned off and rotation remain absent, a certain degree of top-heaviness in the market leaves stocks vulnerable to a swift correction. For now, or list of segments of the market to Accumulate remains blanketed in growth segments, as has been the case for much of the past year, but we could find the leeway to become more tactical within our intermediate-term view to step back from these segments should evidence of upside exhaustion become apparent.
Today, in our Market Outlook to subscribers, we discuss the following:
- The trend of respiratory illnesses in the US
- US energy supply and demand and the seasonal trade in the energy sector
- Canadian International Trade
- Multi-decade relative lows for the TSX Composite and the struggle for the benchmark to realize the strength that is normal for this time of year
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Sentiment on Wednesday, as gauged by the put-call ratio, ended close to neutral at 0.98.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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