U.S. stock futures are lower this morning as investors are, again, concerned about a possible recession. The U.S.- China trade dispute continues to cause concern across global markets, and the U.S. yield curve inverted to levels not seen since 2007. European markets were lower and Asian markets closed in the red as traders returned to potential safer assets.
The S&P 500 started the day positive only to roll over and close just above a critical trendline near 2860. Volume picked up from the previous day as sellers took control later in the day. The RSI index remained flat and has now formed a trading range that matches the S&P 500 base since early August. We feel the trading will potentially remain choppy, but we expect the support levels to hold.
We are currently long term bullish and short term cautious.
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.
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.
The yield curve shows the various yields that are currently being offered on bonds of different maturities. It enables investors at a quick glance to compare the yields offered by short-term, medium-term and long-term bonds.
Normal yield curve – you’ll generally see this type of yield curve when bond investors expect the economy to grow at a normal pace, without significant changes in the rate of inflation or major interruptions in available credit. There are times, however, when the curve’s shape deviates, signaling potential turning points in the economy.
Inverted yield curve – since lower interest rates generally mean slower economic growth, an inverted yield curve is often taken as a sign that the economy may soon stagnate. While inverted yield curves are rare, investors should never ignore them. They are very often followed by economic slowdown—or an outright recession—as well as lower interest rates along all points of the yield curve.