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Market Updates

Morning Brief

February 6th, 2024

Square version of the Windsor Wealth Planners & Strategists logo.

Headline News:

The S&P 500 futures are down two points and are trading roughly in line with fair value, the NASDAQ 100 futures are up two points and are trading roughly in line with fair value, and the Dow Jones Industrial Average futures are down 31 points and are trading 0.1% below fair value.

The stock market is poised for a flattish, yet slightly lower, open. Another slate of earnings news since yesterday’s close has received mixed responses from investors, contributing to the muted activity in the broader market.

Stocks have been highly reactive to activity in Treasuries of late and yields are little changed this morning from yesterday’s settlement levels, which has also contributed to the flattish feeling of the broader market. The 2-yr note yield is down one basis point to 4.45%, and the 10-yr note yield is down one basis point to 4.15%.

Equities in China and Hong Kong rallied sharply overnight after a government-backed investment fund revealed it would expand its support in the market by buying stock index funds. Also, Chinese President Xi plans to discuss the stock market declines with regulators today, according to Bloomberg.

Separately, Secretary of State Antony Blinken will meet with officials in the Middle East to try to prevent an escalating conflict, according to The New York Times.

(Michael Gibbs, Managing Director, Lead Portfolio Manager)

 

Markets:

The S&P 500 sold off most of the day but rallied late to close lower at 4,942.81, and the RSI index also turned lower, closing at 66.20. The down volume reached 85% of the total, which could signal more selling this week. If so, there is potential support at 4,868.41 and possibly at the 20-day moving average at 4,843.42. Another scenario would be a multiple-day base at the current level, which could produce another new all-time higher later this month. The interest rates and the continued conversation of an economic slowdown should continue to cause some volatile trading on a day-to-day basis.

We are currently Intermediate-term bullish 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.

 

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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. 

 

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