Wide Spread Weakness – Stock Market Outlook Midday Analysis for Thu Feb 17 2022

This morning worries about the Ukraine-Russia crisis continues to keep investors on edge but in general weakness is continuing to build for stocks.

Despite yesterday’s Fed minutes, analysts still believe there is a 60% chance of a half point rate increase in March and 6 more quarter rate increases in 2022 for a total of 7 rate increases. They believe the Fed has no choice but to act quickly.

Let’s look at the stats as markets head out of the lunch hour..

New York Stats:

Volume is average at 2.2 billion shares traded.

New 52 week lows are at 91 while new highs are just 18. This is 5:1 to the downside. This is very bearish.

Volume is 69% to the downside which is more bearish than yesterday as the lunch hour ends.

NASDAQ Stats

Volume is below average at just 2.1 billion shares traded. Obviously a lot of investors are taking a wait and see approach as stocks head out of the lunch hour.

New 52 week lows are 212 which is high while new highs are just 26. This is 8:1 to the downside and very bearish.

67% of all volume is lower. Obviously bearish.

Outlook:

The outlook is bearish. More sell signals will be made later today unless the index can recover which at present seems unlikely.

Both indexes look like we will see further weakness in the afternoon today.

The 6 month chart shows that the 4400 level is being retested and could break, especially if there is no resolution to the Ukraine-Russia crisis shortly.

Jan 24th low of 4222 is likely to be seen again if a war erupts. My personal outlook is a drop to 4150 if there is a war would not be unusual.

SPX 6 month chart

Financial Stocks Being Sold

One of the better sectors lately had been the financial stocks. Today they are being heavily sold. Some of this is international fund managers taking profits but as gold is rising today and concerns increase that there will be a war, investors are moving assets from banks to gold or cash.

TSX Composite Index – Canadian Stock Market Outlook

For those who follow the smaller Canadian Market, the TSX is down 66 points. The TSX is at 21,317. The 21,000 level has been a very difficult valuation to move solidly above. A drop back next week could easily occur.

Volume is above average at 196 million shares traded. Of volume 48% is to the upside with 54% to the downside

Only 27% of all stocks are rising. Even Canadian banks are falling today. There are 17 new 52 week highs and 25 new 52 week lows which shows that despite the selling, stocks are not falling deeply. This is one of the lowest midday new lows we have seen in several weeks.

Summary

The outlook is negative for the afternoon. The TSX looks set to close negative on the day.

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