Stock Market Outlook: Fears Subside, Stocks Surge
Tech Talk | Mar 05, 2014 06:33AM ET
- ADP Employment Report for February will be released at 8:15am. The market expects 150,000 versus 175,000 previous.
- PMI Services Index for February will be released at 8:58am.
- ISM Non-Manufacturing Index for February will be released at 10:00am. The market expects 53.5 versus 54.0 previous.
- Weekly Crude Inventories will be released at 10:30am.
- The Fed’s Beige Book will be released at 2:00pm.
- German PMI Services for February will be released at 3:55am EST. The market expects 55.4 versus 53.1 previous.
- Euro-Zone PMI Services for February will be released at 4:00am EST. The market expects 51.7 versus 51.6 previous.
- Great Britain PMI Services for February will be released at 4:30am EST. The market expects 57.9 versus 58.3 previous.
- Euro-Zone GDP for the Fourth Quarter will be released at 5:00am EST. The market expects a year-over-year increase of 0.5% versus a decline of 0.4% previous.
- Euro-Zone Retail Sales for January will be released at 5:00am EST. The market expects a year-over-year decline of 0.2% versus a decline of 1.0% previous.
- Bank of Canada Rate Announcement will be released at 10:00am. The market expects no change in rates at 1.0%.
Stocks surged on Tuesday as fears subsided pertaining to the tensions between Ukraine and Russia. Just one day following a plunge of stocks based on headlines that Russian troops had tightened their grip on the Crimea region of Ukraine, the risk trade was back on, pushing the S&P 500 Large Cap Index, the S&P 400 Mid cap Index, and the S&P 600 Small Cap Index to new all-time closing highs. Even the NYSE Composite, which had been struggling over recent months around the all-time high originally charted in 2007, broke above the apparent long-term level of resistance.
One important momentum indicator that was once negatively diverging from the equity market price action is starting to confirm the recent strength. The percent of S&P 500 stocks trading above 50-day moving averages had been declining since October of last year, diverging from the price action of the S&P 500. Tuesday’s surge in stock prices pushed the technical indicator above the declining trendline that has remained evident for around the past five months. However, a longer-term negative divergence with respect to the percent of stocks trading above 200-day moving averages remains.
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Risk sentiment of the equity market remains strong, as indicated by the outperformance of the risker small cap stocks. The Russell 2000 Small Cap Index surged 2.75% on Tuesday, outpacing the returns of all other major equity benchmarks on the session. The benchmark is now pushing up against trendline resistance that has constrained the rising trend for well over a year. The Russell 2000 Small Cap Index seasonally outperforms the S&P 500 Large Cap Index from mid-November through to the beginning of March, a trend that has played out yet again this year. Relative performance versus the large cap benchmark typically trades flat to negative, compared to the S&P 500, between now and May.
Seasonal charts of companies reporting earnings today:
Sentiment on Tuesday, as gauged by the put-call ratio, ended bullish at 0.80.
S&P 500 Index
TSE Composite
Horizons Seasonal Rotation ETF (TSX:HAC)
- Closing Market Value: $14.50 (up 1.54%)
- Closing NAV/Unit: $14.51 (up 1.44%)
Performance*
| 2014 Year-to-Date | Since Inception (Nov 19, 2009) | |
| HAC.TO | 1.47% | 45.1% |
* performance calculated on Closing NAV/Unit as provided by custodian
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