The equity index futures market is facing renewed selling pressure, even though most companies that reported earnings since yesterday’s close beat expectations. The S&P 500 futures trade 50 points, or 1.1%, below fair value after completing a huge comeback yesterday.Dow components Johnson & Johnson (JNJ 160.00, -2.97, -1.8%), IBM (IBM 131.00, +2.18, +1.7%), American Express (AXP 160.00, +1.07, +0.7%), Verizon (VZ 53.25, +0.29, +0.6%), and 3M (MMM 176.00, +3.20, +1.9%) are among those companies with encouraging earnings results, although J&J did miss revenue estimates.Note, IBM’s software segment guidance was a bit underwhelming, which could be weighing on Microsoft (MSFT 292.08, -4.29, -1.5%) ahead of its earnings report after today’s close. Staying in the technology space, NVIDIA (NVDA 224.10, -9.62, -4.1%) is reportedly getting ready to end plans for its $40 billion acquisition of Arm Holdings due to regulatory pressure. Separately, investors’ expectations for a more hawkish Fed (to rein in inflation pressures) are playing out in the Treasury market as the FOMC prepares for its two-day policy meeting today. U.S. Treasury yields across the curve are trading higher on renewed selling interest. The 2-yr yield is up four basis points to 1.01%, and the 10-yr yield is up four basis points to 1.78%. The U.S. Dollar Index is up 0.3% to 96.23. WTI crude futures are trading little changed at $83.28/bbl. The CBOE Volatility Index is up 10.5% to 33.04 amid increased hedging interest.
(Michael Gibbs, Director of Equity Portfolio & Technical Strategy )
The S&P 500 traded as low as 4222.62 and rallied to close higher at 4410.13. The volume was massive, with 3,876,055,296 shares traded on the day. We feel the index is potentially trying to form a bottom, and traders found value at the low levels yesterday. Possible resistance could now come in at the 200-day moving average at 4430.54. Today could see more trading in a wide range, typically doing a bottoming process. We feel the possible support at 4309.87 will hold today and potentially form an important higher low.
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.
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.