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Stocks Enter Period of Seasonal Strength This Week

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Posted by Jon Vialoux - Equity Clock

on Thursday, 12 April 2018 06:35

Timing is everything, and seasonality is a great tool to use to help get your timing right. A strong seasonal period began with Stocks in General on April 11th, and is currently powering the Energy Sector higher. This report covers the Markets, individual stocks and Energy. - R. Zurrer for Money Talks

SPGI

 

Seasonal Chart Analysis

Analysis of the S&P Global Inc. (NYSE:SPGI) seasonal charts above shows that a Buy Date of October 5 and a Sell Date of December 29 has resulted in a geometric average return of 2.39% above the benchmark rate of the S&P 500 Total Return Index over the past 20 years. This seasonal timeframe has shown positive results compared to the benchmark in 17 of those periods. This is a very good rate of success, but the return underperforms the relative buy-and-hold performance of the stock over the past 20 years by an average of 3.5% per year.

The seasonal timeframe is Inline with the period of seasonal strength for the Financial sector, which runs from November 22 to April 13. The seasonal chart for the broad sector is available via the following link: Financial Sector Seasonal Chart.

The Markets

Stocks jumped on Tuesday as investors reacted to a speech from Chinese President Xi Jinping, who discussed plans to to open up the country’s economy.  The S&P 500 Index surged by 1.67%, testing, once again, the declining 20-day moving average.  The benchmark has been gyrating between resistance at this short-term moving average and support at the 200-day moving average for the past three weeks, charting large intraday swings as investors attempt to find a level of comfort amongst equity prices.  The more formidable level of resistance to watch is the gap around 2700, which is now intersecting with the declining 50-day moving average.  Significant negative reaction to this hurdle would increase the likelihood of a break of horizontal support below around 2575.  A bullish MACD crossover was triggered during Tuesday’s session, presenting some hope that the next move on the benchmark is higher, barring some catalyst that destabilizes markets, yet again.

image

Topping the leaderboard on Tuesday was the energy sector as commodity prices moved higher following the Chinese President’s remarks.  The S&P 500 Energy Sector index broke out from its intermediate consolidation range, as well as advanced beyond significant moving averages in the process.  The energy benchmark has significantly outperformed the market for the past three weeks, benefitting from the strength in the price of oil, which remains around multi-year highs.  Strong demand for product commodities and a return to normal levels for stockpiles of the raw input have been a significant influence.  Seasonally, the price of oil and the stocks of the companies that produce it tend to gain through the start of May.  We’ll obtain further insight as to the state of the oil market when the EIA releases their official tally on Wednesday.

image

Energy Sector Seasonal Chart

ENERGY Relative to the S&P 500 


ENERGY Relative to the S&P 500

ENERGY Monthly Averages

 

....if you want more analysis on the economic front continue reading HERE


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