U.S. stock futures are lower on fears of rising Treasury yields leading to increased inflation and fears of high equity valuations. The Yield on the 10-year Treasury note has passed the 1.30% level considered by many to be a key level for the Federal Reserve. However, Chairman Powell is expected to reiterate a commitment to an easy monetary policy in his semi-annual testimony before Congress later this week. Also, fears of a slow vaccine rollout continue to be a significant concern for investors.
The S&P 500 tested resistance at 3931.50 only to close lower at 3906.71 on Friday. The index is now back in the middle of the current trading range and is still forming a base. Volume was much higher, with 2,301,386,496 shares traded. The 3931.50 level has now been tested five times, and the sellers could be drying up soon at that level. If so, we continue to believe a potential new uptrend will begin. The pick-up in volume could also be a sign that the sellers could be done, but we will have to wait and see if the index can breakout with an above-average volume day.
We are currently long-term bullish and short-term bullish.
John N. Lilly III CPFA
Accredited Portfolio Management Advisor℠
Accredited Asset Management Specialist℠
Portfolio Manager, RJ
Windsor Wealth Planners & Strategist
Futures trading is speculative, leveraged, and involves substantial risks. Investing always involves risk, including the loss of principal, and futures trading could present additional risk based on underlying commodities investments.
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.
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US government bonds and treasury bills are guaranteed by the US government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. US government bonds are issued and guaranteed as to the timely payment of principal and interest by the federal government. Bond prices and yields are subject to change based upon market conditions and availability. If bonds are sold prior to maturity, you may receive more or less than your initial investment. Holding bonds to term allows redemption at par value. There is an inverse relationship between interest rate movements and bond prices. Generally, when interest rates rise, bond prices fall and when interest rates fall, bond prices generally rise.
Bond prices and yields are subject to change based on market conditions and availability. If bonds are sold prior to maturity, you may receive more or less than your initial investment. Holding bonds to term allows redemption at par value. There is an inverse relationship between interest rate movements and bond prices. Generally, when interest rates rise, bond prices fall and when interest rates fall, bond prices generally rise.U.S. Government Bonds and Treasury Bills are guaranteed by the government, and if held to maturity, offer a fixed rate of return and guaranteed principal value. The 10-year Treasury note is a debt obligation issued by the United States government with a maturity of 10 years upon initial issuance. The CBOE 10-Year Treasury Note (TNX) is based on 10 times the yield-to-maturity on the most recently auctioned 10-year Treasury note.