Stock Market Outlook for March 30, 2022
While a number of points on the yield curve are inverting, typically you need to see broad participation in the flattening of the curve for it to be an accurate predictor of a recession in the year ahead.
*** 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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Summit Midstream Partners, LP (NYSE:SMLP) Seasonal Chart
City Office REIT, Inc. (NYSE:CIO) Seasonal Chart
Black Stone Minerals LP (NYSE:BSM) Seasonal Chart
American Express Co. (NYSE:AXP) Seasonal Chart
Vermilion Energy Inc. (NYSE:VET) Seasonal Chart
Enerplus Corp. (NYSE:ERF) Seasonal Chart
IDT Corp. (NYSE:IDT) Seasonal Chart
Overstock.com Inc. (NASD:OSTK) Seasonal Chart
Freehold Royalties Ltd. (TSE:FRU.TO) Seasonal Chart
Keyera Corp (TSE:KEY.TO) Seasonal Chart
The Markets
Stocks jumped on Tuesday as news crossed the tape that Russia would reduce military activity near the Ukrainian capital of Kyiv. The S&P 500 Index gained 1.23%, continuing to shake the negative bets in the market loose after reaching extremes just a few weeks ago. The benchmark continues to breakdown all levels of resistance that have been expected of it during this end-of-quarter mean reversion move, including horizontal resistance around the February highs at 4600. The characteristics of this market have completely reversed from the first ten weeks of the year where levels of resistance burdened the market and levels of support failed to draw in buying demand. Today, we are looking at a market where levels of resistance do not matter, however, we have yet to see some of those levels of support be re-tested to confirm that buyers are willing to step in and defend against any downside. In addition to major moving averages, another level of support has been added around 4600, which represents the upside gap that was achieved on Tuesday following the opening bell. The market still remains in this zone of significant supply, but with the shorts continuing to be squeezed and portfolio managers forced to ratchet up their equity exposure after taking it down significantly through January and February, nobody seems to want to stand in the way of this rebound trajectory. Momentum indicators remain on the rise and there was a slight expansion in the MACD histogram, something that had become a bit of a concern to the momentum of the mean-reversion trade into quarter-end. The market remains in this seasonally strong period between the middle of March and the middle of April, something that we have taken advantage of via ramped up equity exposure initially enacted on March 10 in the Super Simple Seasonal Portfolio, but we have to acknowledge that even we have underestimated the sheer power of the mean reversion play that had been anticipated. There remains a risk that some of the strength into the end of the quarter has pulled forward some of the gains that were expected of the first half of April, but we’ll have to deal with any retracement through this strong period as it is realized while attempting to maintain our bullish bias for this timeframe.
Today, in our Market Outlook to subscribers, we discuss the following:
- European ETFs retaking levels of previously broken support
- Inversion of the treasury yield curve
- Job Openings and Labor Turnover Survey (JOLTS)
- Case-Shiller Home Price Index
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Sentiment on Tuesday, as gauged by the put-call ratio, ended close to neutral at 0.94.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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