The S&P 500 futures are down 18 points and are trading 0.5% below fair value. The Nasdaq 100 futures are down 53 points and are trading 0.4% below fair value. The Dow Jones Industrial Average futures are down 117 points and are trading 0.3% below fair value.
Equity futures reversed earlier gains as Treasury yields inched higher. Price action reflects skittishness about rates going even higher from here after Minneapolis Fed President Kashkari (2023 FOMC voter) said he believes the Fed might need to raise rates above 4.75% if there’s no improvement in core inflation, according to Reuters.
The 10-yr note yield is up eight basis points to 4.08%, and the 2-yr note yield is up five basis points to 4.50%.
Better-than-expected quarterly results from Netflix, Procter & Gamble, ASML, Travelers, and United Airlines have mitigated some selling interest.
In overseas news, the Bank of England confirmed it would sell gilts in November but said it would hold off on selling longer-dated gilts this year. The UK’s September CPI jumped to 10.1% year-over-year, revisiting this year’s peak from July.
President Biden announced the release of 15 million barrels of oil from the Strategic Petroleum Reserves to be delivered in December. WTI crude oil futures moved higher this morning, up 1.2% to $83.08/bbl.
The weekly MBA Mortgage Application Index declined 4.5% as mortgage demand hit its lowest level since 1997, according to CNBC.
(Michael Gibbs, Director of Equity Portfolio & Technical Strategy)
The S&P 500 rallied and broke out past resistance at 3712.00 to close higher at 3719.98. RSI move up in support of the breakout, closing at 48.33. So far this morning, the index is set to open lower by 0.66%, with a suggested open at 3709.00. If that open holds, the index would be back in the 3712.00- 3584.45 trading range and would help to build a base in that range. We feel the index could stay within the trading range for a few more days before attempting another breakout.
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 stocks 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 on 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.
The Nasdaq 100 (^NDX) is a stock market index made up of 103 equity securities issued by 100 of the largest non-financial companies listed on the NASDAQ. It is a modified capitalization-weighted index. It is based on exchange, and it is not an index of U.S.-based companies.