Stock Market Outlook for February 14, 2024
So far this year, stocks have managed to mitigate the inverse relationship between the dollar and rates. Tuesday’s downfall in the equity market suggests the return of this headwind.
*** 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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EQT Corp. (NYSE:EQT) Seasonal Chart
Metro, Inc. (TSE:MRU.TO) Seasonal Chart
Dollarama Inc. (TSE:DOL.TO) Seasonal Chart
Northwest Natural Gas (NYSE:NWN) Seasonal Chart
National Beverage Corp. (NASD:FIZZ) Seasonal Chart
Limoneira Co. (NASD:LMNR) Seasonal Chart
Canadian Tire Corp, Ltd. (TSE:CTC/A.TO) Seasonal Chart
WisdomTree Europe Hedged Equity Fund (NYSE:HEDJ) Seasonal Chart
iShares Currency Hedged MSCI Eurozone ETF (AMEX:HEZU) Seasonal Chart
The Markets
Stocks fell on Tuesday following the release of a hotter than expected read of consumer inflation in the US, raising concerns pertaining the Fed’s path to cut rates later this year. The S&P 500 Index closed the day lower by 1.37%, opening a downside gap around the psychologically important 5,000 level that acted as a magnet to the recent upside drift of prices. The move instantly defines a point of resistance overhanging the market as seasonality gets set to flip negative for the back half of February. Short-term support at the rising 20-day moving average (4909) was tested at the lows of Tuesday’s session and buyers seemed willing to step in at that level. However, given the abruptness of the decline on the day and the aforementioned gap resistance overhead, our confidence that this hurdle will hold in the near term is low, particularly as the weak two week span for stocks in the back half of February has yet to begin. The first half of the year will put the bullish thesis of the market to the test given that the appreciation in equity prices, thus far, has been based on the fact that the Fed will bring down interest rates considerably from here. A stronger than expected/average payroll report combined with a stronger than expected/average inflation report does not exactly set a path towards the Fed’s desired goal. We’ll take things one step and one month at a time and, in the interim, prepare for a softer period on the calendar for stocks through the next few weeks.
Today, in our Market Outlook to subscribers, we discuss the following:
- Dollar, yields, and stocks
- The change we are making in the Super Simple Seasonal Portfolio
- US Consumer Price Index (CPI)
- Treasury Inflation Protected ETF (TIP)
- Commodities
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Sentiment on Tuesday, as gauged by the put-call ratio, ended bullish at 0.83.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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