Over the next month, the Volatility Index (VIX) has averaged a sharp rise amidst one of the weakest two-week spans for stocks during the year.
*** 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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Super Simple Seasonal Portfolio
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The Markets
Stocks rebounded slightly from Tuesday’s selloff, attempting to close some of the downside gaps that had been opened in the prior session. The S&P 500 Index closed with a gain of nearly one percent, intersecting with recently minted resistance around 5000. Short-term support is being maintained at the rising 20-day moving average (4920). A negative divergence with respect to MACD suggests waning upside momentum, particularly now that a bearish cross of the momentum indicator with its signal line has been confirmed at level below the prior peak set at the end of last year. The last divergence of this nature was recorded at the end of July, just prior to the significant correction in stocks that spanned the remainder of the third quarter. But while this raises near-term concern as we head into what is normally a weak period seasonally through the back half of February, intermediate-term technicals are all maintaining characteristics of a bullish trend, keeping us limited on how we can shuffle risk exposure in portfolios according to our seasonal investment strategy. The best course of action is to lower portfolio sensitivity to the broader market while remaining on the lookout for signals that could warrant a more negative stance over a prolonged timeframe. The next uptick in equity prices coinciding with the tail-end to the best six months of the year for stocks that started at the end of October runs through March and April and, despite near-term caution, we do not have any reason at present to suspect that this cap to the broader seasonal trend will fail.
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Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
