Stock Market Outlook for March 23, 2023
Treasury yield spreads are showing signs of bottoming and this is not a good thing.
*** 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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Energy Select Sector SPDR Fund (NYSE:XLE) Seasonal Chart
BlackRock Enhanced Capital and Income Fund, Inc. (NYSE:CII) Seasonal Chart
Direxion Daily Healthcare Bull 3x Shares (NYSE:CURE) Seasonal Chart
Fidelity MSCI Materials Index ETF (AMEX:FMAT) Seasonal Chart
iShares Global Energy ETF (NYSE:IXC) Seasonal Chart
VanEck Vectors Morningstar Wide Moat ETF (AMEX:MOAT) Seasonal Chart
Element Solutions Inc. (NYSE:ESI) Seasonal Chart
Primo Water Corporation (NYSE:PRMW) Seasonal Chart
Devon Energy Corp. (NYSE:DVN) Seasonal Chart
Marathon Oil (NYSE:MRO) Seasonal Chart
Surge Energy Inc. (TSE:SGY.TO) Seasonal Chart
NRG Energy Inc. (NYSE:NRG) Seasonal Chart
AutoCanada Inc. (TSE:ACQ.TO) Seasonal Chart
AES Corp. (NYSE:AES) Seasonal Chart
CAE, Inc. (NYSE:CAE) Seasonal Chart
The Markets
Stocks and bond yields dropped on Wednesday as the market reacted to the latest FOMC meeting announcement. The S&P 500 Index closed down by 1.65%, showing a sharp negative reaction around now intermediate resistance at the 50-day moving average. The confluence of major moving averages, including the 20, 50, and 200-day, in the range between 3900 and 4000 remains a formidable barrier preventing the equity benchmark from achieving the strength that is typical of this period heading into the start of spring; until the hurdle is broken, it has to be expected that it will cap the near-term trajectory until the uncertainty in the market alleviates. The December low at 3764 remains a critical level to watch as a violation of this hurdle would start to imply negative intermediate implications beyond the short-term burden that has been experienced since the start of February. In a recessionary economic framework, a break below the December low and the rising 200-week moving average at 3736 would be the base case and it is certainly not the environment that we want to have a positive correlation to risk assets within investment portfolios.
Today, in our Market Outlook to subscribers, we discuss the following:
- The bounce of traditional safe-havens of treasury bonds and gold
- Interest rate sensitive segments of the market still suffering, despite the plunge in the cost of borrowing
- The shift towards the normalization of the treasury yield curve
- Weekly EIA Petroleum Status and the seasonal trade in the energy sector
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Sentiment on Wednesday, as gauged by the put-call ratio, ended bullish at 0.87.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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