Morning Brief
Headline News:
The S&P 500 futures trade 11 points, or 0.3%, above fair value while Treasury yields hold steady in front of the Consumer Price Index for March at 8:30 a.m. ET.
The Briefing.com consensus is projecting another hot inflation report with a 1.2% m/m increase in total CPI that pushes the yr/yr rate to 8.4%. That should keep expectations elevated for the Fed to issue a 50-basis-point rate hike next month, as Fed officials have been suggesting could be the case.
Earlier, the NFIB Small Business Optimism Index for March decreased to 93.2 from 95.7 in February, and later, the Treasury Budget for March will be released at 2:00 p.m. ET.
The 2-yr yield is up one basis point to 2.51%, and the 10-yr yield is unchanged at 2.78%. The U.S. Dollar Index is up for the ninth straight session, topping the 100.00 level (100.14, +0.23, +0.2%), while WTI crude futures are rebounding 4.1%, or $3.89, to $98.17/bbl.
Separately, shares of Cisco (CSCO 51.63, -1.25, -2.4%) are down 2% in pre-market action after Citigroup downgraded the Dow component to Sell from Neutral. CarMax (KMX 99.50, -3.67, -3.6%) and Albertsons (ACI 33.50, -1.28, -3.7%) are down sharply following their earnings reports.
(Michael Gibbs, Director of Equity Portfolio & Technical Strategy)
Markets:
The S&P 500 moved below the 50-day moving average at 4426.68 and closed lower at 4412.53. RSI also moved lower in support of the selling and closed below the 50 level at 45.41. However, volume came in at only 2,402,956,800, which shows the selling was not intense. So far this morning, the index is set to open at 4437.75, which would be snap back above the 50-day moving average. A close above that level would be encouraging. Potential resistance could then come in at 4450.05, and possible support is now at 4362.84.
We are currently Intermediate-term bearish and short-term bearish.
John N. Lilly III CPFA
Accredited Portfolio Management Advisor℠
Accredited Asset Management Specialist℠
Portfolio Manager, RJFS
Partner, DJWMG
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.
The percentage of stocks trading above a specific moving average is a breadth indicator that measures internal strength or weakness in the underlying index. The 50-day moving average is used for short-to-medium-term timeframes, while the 150-day and 200-day moving averages are used for medium-to-long-term timeframes. Signals can be derived from overbought/oversold levels, crosses above/below 50% and bullish/bearish divergences.
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.