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Stock Market Outlook for April 13, 2016


Nasdaq 100 Index entering a seasonally strong period that stretches into the middle of July.



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**NEW** As part of the ongoing process to offer new and up-to-date information regarding seasonal and technical investing, we are adding a section to the daily reports that details the stocks that are entering their period of seasonal strength, based on average historical start dates.   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:

  • No stocks identified for today.


The Markets

Stocks jumped on Tuesday as a report that Russia and Saudi Arabia had agreed to an oil output freeze ahead of a meeting of key producers this weekend sent oil and energy stocks higher.  The S&P 500 Energy Sector Index jumped 2.84%, moving above its 200-day moving average for the first time since September of 2014.  Momentum indicators for the energy benchmark are curling higher following a brief consolidation over the past few weeks.  The price of oil is confirming the same, moving solidly above its 200-day moving average for the first time since July of 2014 and breaking above resistance presented by the March high at $42.49.  The confirmation of a higher-low on the chart of the energy commodity should help to alleviate speculation of pending decline, allowing investors to focus on beaten down stocks that still present value.  Seasonally, the energy sector remains in a period of strength into the month of May, rising alongside oil prices as supply and demand fundamentals converge ahead of the start of the summer driving season.

The TSX Composite saw a similar breakout above its long-term moving average, seemingly concluding a brief period of consolidation.  While performance relative to the US market has been struggling over the past couple of months, the Canadian benchmark has maintained trendline support since bottoming in January, just as commodity prices were stabilizing.  Momentum indicators are curling higher, once again, keeping the bullish intermediate-term bias alive.  Seasonally, while not typically an outperformer versus the US market between the start of March and the end of April, seasonal tendencies for the benchmark remain positive through to the start of June.

^GSPTSE Relative to the S&P 500

While investors dabble with the maturing seasonal trend in the energy sector, it may be prudent to look for opportunities amongst Nasdaq listed equities.  The technology heavy Nasdaq 100 Index enters a period of seasonal strength in mid-April, moving higher into the middle of July.  The strength is reflected in both the average absolute and relative performance as prices of the benchmark constituents push higher into a period dominated by developer conferences.  Looking at the technicals, the relative trend may be emerging earlier than average this year.  The Nasdaq 100 has been outperforming the S&P 500 large-cap index since mid-March as price consolidates above its 200-day moving average.  Significant resistance is directly overhead between 4500 and 4600, representing the open gap charted with the plunge that started the year.  This range has clearly proven to be significant having jumped higher and lower around this level a few times since last summer.  Reaction to overhead resistance will be critical to the success or failure of the seasonal trade ahead.


^NDX Relative to the S&P 500

Sentiment on Tuesday, as gauged by the put-call ratio, ended bullish at 0.93.


Seasonal charts of companies reporting earnings today:


S&P 500 Index


TSE Composite