U.S. stock futures are lower after a spike in bond yields has investors fearful of future inflation. The 10 year Treasury spiked up six basis points to a yield of 1.77%, the highest level in 14 months. Encouraging news on vaccine rollouts and expected infrastructure spending raised economic recovery expectations. The prospect of faster growth along with low corporate borrowing costs could continue to push markets higher with a Fed that is currently dovish.
The S&P 500 tested and failed at the 3981.04 resistance and broke but recovered the 3955.31 support level. The wide-ranging day came with below-average volume of only 2,372,314,880, and the RSI was flat, closing at 58.59. The days trading was inside Friday’s trading range, which means the index could be forming a new base. If so, a few more days of sideways trading would be constructive after such a large rally of the 3/25/2021 low of 3853.50. Potential support will remain at 3955.31, and possibly resistance will remain at 3981.04.
We are currently long-term bullish and short-term cautious.
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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