U.S. stock futures are sharply lower this morning as investors appear to be fearful of rising inflation. However, St. Louis Fed President James Bullard said that it was natural for the Fed to tilt a little “hawkish,” and he said he sees the first interest rate increase in 2022. He also said, “We’re expecting a good year, a good reopening. But this is a bigger year than we were expecting, more inflation than we were expecting.” The comments had the 2-year treasury yield higher and the 10-year yield lower. The rise in the 2-year reflects higher expectations of the Fed raising rates, and the lower 10-year yield reflects less optimism for future economic growth.
The S&P 500 traded down to support at 4197.59 and rallied to close higher at 4221.86. There was, finally, a substantial pick-up in volume with 2.580,717,824 shares traded. This morning, the S&P 500 futures are trading at 4180.25 as of 8:55 am. That would be an open below current support and right at the 50-day moving average at 4180.20. So, if buyers do not come in today, it is possible a new downtrend would be in place, changing the current dynamic of the index. However, we will be in a wait-and-see mode for the rest of the before we potentially move to short-term bearish.
We are currently long-term bullish and short-term bullish.
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 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.
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