Market at a Glance

Market at a Glance - 3/31/2016

By: Christopher Mistal

March 31, 2016

Psychological: Neutral. According to the most recent Investor’s Intelligence Advisor Sentiment survey, bearish advisors have declined to 28.9%. Correction advisors stand at 27.8% and Bullish advisors are 43.3%. This blend is nether excessively bullish or bearish and leaves room for the market’s current trend (higher) to continue. CBOE Weekly Put/Call is perhaps more bullish with an elevated reading of 0.82 last week.

Fundamental: Resilient. The U.S. labor market continues to make gains even as the global macro picture is tepid. The U.S. Unemployment Rate remained at 4.9% in February as 242k new jobs were added. This is a solid showing considering the Federal Reserve Bank of Atlanta GDPNow model is forecasting Q1 GDP of just 0.6%. Firming crude oil and a softening dollar could provide modest tailwinds to corporate profits in Q2 and beyond should current trends persist.

Technical: Nearing Resistance. DJIA and S&P 500 have reclaimed their respective 50- and 200-day moving averages, but are likely to run into resistance at the highs from Q4 of last year. NASDAQ and Russell 2000 have yet to return to the green in 2016. Technology and small-caps will need to catch up then there would be a reasonably solid chance that the rally continues. Q4 closing highs for DJIA and S&P 500 were 17918.15 and 2109.79. NASDAQ and Russell 2000 breakeven in 2016 is 5007.41 and 1135.89.

Monetary: 0.25-0.50%. As broadly expected, there was no rate hike at the Fed’s latest meeting and depending on data, it could be months before the next. Expectations currently stand at two rate increases in 2016, down from four. These expectations were essentially confirmed earlier this week by Fed Chair Yellen as she promoted “greater gradualism” and the Fed’s ability to provide “considerable scope” for stimulus if needed.

Seasonal: Bullish. April is DJIA’s best performing month since 1950, third best for S&P and fourth best for NASDAQ (since 1971). However, April also marks the end of our “Best Six Months” for DJIA and the S&P 500. On April 1, we will begin looking for our seasonal MACD sell signal and corresponding early signs of seasonal weakness and will issue an Alert when it triggers.