U.S. stock futures were flat to start the day as worries grow about China’s ability to contain the coronavirus outbreak. Two major cities were on lockdown after the virus continues to spread. So, far fourth-quarter earnings have been mostly positive. According to Refinitiv IBES data, 67.2% of the reporting companies have topped Wall Street’s profit estimates. The high percent of better than expected earnings reports has investors in a risk-on mood for stock so far this year.
The S&P 500 traded at a new all-time high at 3337.77 on Wednesday but sold off late in the day to close at 3321.75. The index is now at the high end of the recent 3302.82-3329.88 trading range, and we feel a few more days of sideways trading would be constructive for all markets. The RSI index remained in the overbought zone at 73.07, and volume was less than average. We continue to believe the next move will potentially be a new leg higher after more consolidation of the recent uptrend.
We are currently long-term bullish and short-term bullish.
John N. Lilly III
Accredited Portfolio Management Advisor℠
Accredited Asset Management Specialist℠
Portfolio Manager, RJ
Partner, Windsor Wealth
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