Seasonal:
Bullish. In March the market tends to perform better in the first half than the second half. In pre-election years March has historically performed better than average with DJIA and NASDAQ ranking climbing to fourth best (S&P 500 is unchanged). Russell 2000 March performance improves to third best.
Psychological:
Skeptical. According to Investor’s Intelligence Advisors Sentiment survey bulls are at 52.4%. Correction advisors are at 27.2% and Bearish advisors are 20.4%. Typically at these levels, we would interpret sentiment to be somewhat excessively bullish however, given the markets nine-week winning streak it is surprising there are not even more bulls. This suggests that there may still be a healthy amount of doubt (and capital on the sidelines) that could fuel the market even higher.
Fundamental:
Mostly firm. U.S. growth is still expected to slow due to the fading effects of tax cuts, but it is not forecast to fall off a cliff. Corporate earnings may also slow as year-over-year comparisons are tougher. However, employment is still firm with 304,000 net new jobs added in January while inflation is remaining largely in check. Housing and autos are still challenged due to higher interest rates than in the recent past. Recent stabilization in rates could provide some aid to confidence and the overall economy.
Technical:
Recovering. DJIA, S&P 500, NASDAQ and Russell 2000 continued to climb throughout February. DJIA, S&P 500 and NASDAQ have all reclaimed their respective 200-day moving averages; Russell 2000 is currently struggling with this key level. Respective 50-day moving averages have turned up. Further gains are needed to drive the 50-day moving average back above the 200-day moving average. NYSE and S&P 500 cumulative daily advance/decline lines have bullishly climbed back above previous highs.
Monetary:
2.25-2.50%. Even though we have heard from some Fed officials since their last meeting in January, they all appear to be sticking to a more dovish tone regarding future potential rate increases. The next Fed meeting on March 19-20, will provide additional clarity. Until then, the new status quo will likely not change.
MAR
2019