Wall Street is set for a higher open as second-quarter earnings continue to come in better than expected, and economic growth stocks were also back in favor. Johnson & Johnson (JNJ), Coca-Cola (KO), and Harley Davidson (HD) were both higher after good reports. Also, Chevron (CV), Exxon (XOM), and Halliburton (HAL) were higher, possibly pointing to an increase in the economic recovery trade. So far, the earnings reports have justified the high stock valuations at which the markets are currently trading this year.
The S&P 500 had a major reversal on Tuesday that took the index higher by 1.52%. The rally came on significant volume with 2,460,174,080 shares traded, and up volume accounted for 89.8% of the trading. The RSI index moved back above the middle line closing at 53.56, and the Advance/Decline line also turned higher. Potential resistance could now come in at yesterday’s high of 4336.84, and we now know where the sellers will possibly come into the market. If the index can follow through today will heavy volume it the recent sell-off could potentially be over.
We are currently long-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.
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.
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