U.S. stock markets are set for a down open as weak corporate earnings and falling oil prices have investors seeking safety. Bank of American (BAC) reported Q1 profits off by 45%, Goldman Sachs (GS) Q1 profits were off by 46%, and Citibank’s (C) Q1 profits were also down by 46%. The bank’s earnings are the first look at the damage the coronavirus has done to corporate American. Also, crude oil prices fell to their lowest level in 18 years on worries the virus affects may have on oil’s demand outlook. Adding to the concerns was the March retail sales report that came in at -8.7% for the month of March.
The S&P 500 moved above resistance at 2825.60 and closed at 2846.06 on Tuesday. The RSI index also moved higher to support the move, but volume was below average. We feel the buyers may be losing short term momentum soon, and a pullback into the 2711.33-2825.60 trading range is possible today. However, we still believe the index can potentially move higher after some profit-taking and a new base building phase. Support could come in at 2711.33 if the selling accelerated later today.
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
Windsor Wealth Planners & Strategist
The Relative Strength Index (RSI), developed by J. Welles Wilder, is a momentum oscillator that measures the speed and changes of price movements.
The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S stock market. Past performance may not be indicative of future results. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investors’ results will vary. Opinions expressed are those of the author John N. Lilly III, and not necessarily those of Raymond James. “There is no guarantee that these statements, opinions or forecast provided herein will prove to be correct. “The information contained was received from sources believed to be reliable, but accuracy is not guaranteed. Investing always involves risk and you may incur a profit or loss. No investment strategy can guarantee success. The charts and/or tables presented herein are for illustrative purposes only and should not be considered as the sole basis for your investment decision. International investing involves special risks, including currency fluctuations, different financial accounting standards, and possible political and economic volatility. Investing in emerging markets can be riskier than investing in well-established foreign markets.
This is not a recommendation to purchase or sell the stocks of the companies mentioned.
Retail sales measure the total receipts at stores that sell merchandise and related services to final consumers. Sales are by retail and food services stores. Data are collected from the Monthly Retail Trade Survey conducted by the U.S. Bureau of the Census. Essentially, retail sales cover the durables and nondurables portions of consumer spending. Consumer spending typically accounts for about two-thirds of GDP and is therefore a key element in economic growth.