U.S. stock futures were flat to start a week, which will have several important tech company earnings announcements and the important Fed Reserve meeting on Wednesday. So far, 75% of companies reporting second-quarter earnings have beaten estimates, but the economic data has continued to point to a slowing economy.
The S&P 500 closed at a new all-time high on Friday at 3024.59 while moving out of a consolidation base. However, the volume was again lower than average, so there needs to be a follow-through day soon with higher than average volume. The RSI index continues to trend higher along with the index and is still under the overbought level. Potential support is now the old high of 3017.80.
Second-quarter GDP came out at a 2.1% annual rate, which was much lower than the 3.1% growth rate for the first quarter of 2019. The data will be an important factor when the FOMC this week and will help the case for a rate cut.
We are currently long term bullish and short bullish.
John N. Lilly III
Accredited Portfolio Management Advisor℠
Accredited Asset Management Specialist℠
Portfolio Manager, RJ
Partner, Windsor Wealth
The Relative Strength Index (RSI), developed by J. Welles Wilder, is a momentum oscillator that measures the speed and changes of price movements.
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Gross Domestic Product represents the total value of the country’s production during the period and consists of the purchases of domestically-produced goods and services by individuals, businesses, foreigners and government entities. Data are available in nominal and real (inflation-adjusted) dollars, as well as in index form. Economists and market players always monitor the real growth rates generated by the GDP quantity index or the real dollar value. The quantity index measures inflation-adjusted activity, but we are more accustomed to looking at dollar values.
Household purchases are counted in personal consumption expenditures — durable goods (such as furniture and cars), nondurable goods (such as clothing and food) and services (such as banking, education and transportation). Private housing purchases are classified as residential investment. Businesses invest in nonresidential structures, durable equipment and computer software. Inventories at all stages of production are counted as investment. Only inventory changes, not levels, are added to GDP.
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The GDP price index is a comprehensive indicator of inflation. It is typically lower than the consumer price index because investment goods (which are in the GDP price index but not the CPI) tend to have lower rates of inflation than consumer goods and services. Note that contributions of each component, as averaged over the prior year, are tracked in the table below (components do not exactly sum to total due to chain-weighted methodology). Consumption expenditures, otherwise known as consumer spending, has over history been steadily making up an increasing share of GDP