The futures market remains under pressure after Netflix (NFLX 408.00, -100.25, -19.7%) forecasted slower subscriber growth for the first quarter, keeping a lid on other growth stocks despite a decline in interest rates. The S&P 500 futures trade 14 points, or 0.3%, below fair value, while the Nasdaq 100 futures trade 0.8% below fair value.
The 20% decline in NFLX is also factoring in a miss on Q4 global paid net additions and downside Q1 revenue guidance. The Netflix story dovetails with the Peloton (PTON 25.65, +1.43, +5.9%) story yesterday insofar that investors have grown wary about what could still happen to growth stocks that don’t live up to expectations, even though they’ve already been hit hard.
(Michael Gibbs, Director of Equity Portfolio & Technical Strategy)
The S&P 500 closed lower at 4482.73 after moving through three support levels. The index moved past the December low set on 12/3/2021 of 4495.12 and has pulled back over 7% from the high on 1/4/2022 at 4818.62. RSI is close to moving into the oversold level, and the market internals are now in oversold territory. We feel the index will now potentially test the 200-day moving average at 4427.63 before any substantial buying emerges.
We are currently Intermediate-term bullish and short-term bearish.
John N. Lilly III CPFA
Accredited Portfolio Management Advisor℠
Accredited Asset Management Specialist℠
Portfolio Manager, RJFS
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 advance/decline line (A/D) is a technical indicator that plots the difference between the number of advancing and declining stocks on a daily basis. The indicator is cumulative, with a positive number being added to the prior number, or if the number is negative it is subtracted from the prior number.
The A/D line is used to show market sentiment, as it tells traders whether there are more stocks rising or falling. It is used to confirm price trends in major indexes, and can also warn of reversals when divergence occurs.
Net New 52-Week Highs is a simple breadth indicator found by subtracting new lows from new highs. “New lows” is the number of stocks recording new 52-week lows. “New highs” is the number of stocks making new 52-week highs. This indicator provides an immediate score for internal strength or weakness in the market. There are more new highs when the indicator is positive, which favors the bulls. There are more new lows when the indicator is negative, which favors the bears. Chartists can analyze daily fluctuations or apply a moving average to create an oscillator that meanders above and below the zero line. Net New Highs can also be used like the AD Line by creating a High-Low Line based on cumulative Net New Highs.
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 buy or sell any company’s stock mentioned above.
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