Stock Market Outlook for February 24, 2022
Major benchmarks are breaking levels of significant support, risking an expansion of the downfall of the equity market to areas beyond the technology sector.
*** 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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Crew Energy Inc. (TSE:CR.TO) Seasonal Chart
Wabtec (NYSE:WAB) Seasonal Chart
B&G Foods Inc. (NYSE:BGS) Seasonal Chart
Diana Shipping Inc. (NYSE:DSX) Seasonal Chart
McCoy Bros., Inc. (TSE:MCB.TO) Seasonal Chart
The Markets
The bleed in equity prices continued on Wednesday as investors express their ongoing concern over the situation in the Ukraine. The S&P 500 Index slipped by 1.84%, breaking below horizontal support at 4280. The hurdle presents the neckline to a head-and-shoulders topping pattern that has the entire market on edge given the implications that it suggests. We calculate the pattern to suggest a downside target of 3780, but we have seen others presenting a range of results between 3600 and 4100. All we are concerned about, however, is that this is still a market that is showing stronger reactions to resistance than to levels of support, which is certainly not an environment to buy and hold stocks. Price is showing an intermediate trend of lower-lows and lower-highs, resisting around its declining 50-day moving average. A trading environment continues to be implied and we are remaining prepared to execute our next trade by ramping up equity exposure again as soon as we receive evidence that investors are comfortable again with accumulating risk. We are not there yet. Momentum indicators on the chart of the large-cap benchmark continue to show characteristics of a bearish trend, hovering predominantly below their middle lines. Given that economic indicators are not showing signs that we are on the precipice of a recession, there will be opportunities to emerge from this pullback/correction and we will remain on our toes as we seek to redeploy our cash hoard for one of the strongest periods of the year for the equity market in March and April.
Today, in our Market Outlook to subscribers, we discuss the following:
- The risk of the expansion of selling pressures beyond growth/technology sectors
- Watching the credit market now that yield spreads have moved above their prevailing range
- US Home Prices and signs that some cities are showing a stalling of the rising trend
- Consumer and Business Loan activity
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Sentiment on Wednesday, as gauged by the put-call ratio, ended slightly bullish at 0.95, despite the pronounced market decline.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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