The S&P 500 futures are up 67 points and trade 1.7% above fair value amid dip-buying activity, including in some of the beaten-down mega-caps. The tech-heavy Nasdaq 100 futures trade 1.9% above fair value.
Risk sentiment has also been supported by positive earnings results and guidance from Home Depot (HD 306.00, +10.01, +3.4%), an improved unit revenue outlook for Q2 from United Airlines (UAL 45.50, +1.96, +4.5%), and yesterday’s news of Shanghai planning to relax COVID restrictions. Hong Kong is also planning to relax restrictions.
Walmart (WMT 138.28, -9.93, -6.7%), however, has dropped 7% in pre-market action on mixed earnings results/guidance in addition to an observation of changes in consumer behavior due to inflation.
Investors will get another update on the consumer through the Retail Sales report for April (Briefing.com consensus 0.9%) at 8:30 a.m. ET. Also on the market’s radar is Fed Chair Powell’s conversation at a Wall Street Journal event at 2:00 p.m. ET.
Industrial Production (Briefing.com consensus 0.5%) and Capacity Utilization (Briefing.com consensus 78.6%) data for April will be released at 9:15 a.m. ET, followed by Business Inventories for March (Briefing.com consensus 1.9%) and the NAHB Housing Market Index for May (Briefing.com consensus 75) at 10:00 a.m. ET.
The Treasury market has softened up amid the rebound-minded bias in the futures market. The 2-yr yield is up four basis points to 2.62%, and the 10-yr yield is up four basis points to 2.92%. The U.S. Dollar Index is down 0.8% to 103.30. WTI crude futures are up 1.0% to $115.34/bbl.
(Michael Gibbs, Director of Equity Portfolio & Technical Strategy)
The S&P 500 closed lower at 4008.01 after testing resistance at 4062.51. The index failed to have a meaningful follow-through after Friday’s 90% up volume day. So, the index needs to break through the resistance with another 90% up volume day soon to continue the bullish momentum. A slew of economic data will be released today, along with continued earnings results, and we feel there could potentially be a rally today that could see more buyers come in as the day goes on.
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
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 Dow Jones Industrial Average (DJIA), commonly known as “The Dow” is an index representing 30 stock of companies maintained and reviewed by the editors of the Wall Street Journal. The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represent approximately 8% of the total market capitalization of the Russell 3000 Index.
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.