Morning Brief
Headline News:
Equity futures point to a lower opening this morning after stocks finished mostly lower yesterday in reaction to a slate of mega-cap earnings.
President Trump confirmed that he will nominate former Federal Reserve Governor Kevin Warsh as a candidate for the next Fed chair. Futures are well off their earlier lows after the announcement, and treasuries have remained steady.
Precious metals prices are facing a sharp pullback this morning after an impressive run to record highs. Gold futures are down about 4%, while silver is down about 11%.
Meanwhile, oil is modestly lower despite The New York Times reporting that President Trump is considering new military options against Iran to target nuclear and missile facilities.
In Washington, the White House & Democrats have reached a deal to fund most of the government through September 30 and the DHS through February 13. The Senate hopes to vote today after disagreements last night prevented a vote. The House is expected to vote on Monday, which means the government shutdown will occur over the weekend, according to Politico.
On the data front, the market will receive the December PPI (Briefing.com consensus: 0.2%) and Core PPI (Briefing.com consensus: 0.3%) readings today as it continues to work through a backlog of economic data.
(Michael Gibbs, Managing Director, Lead Portfolio Manager |)
Markets:
The S&P 500 traded in a wide range and closed lower at 6,969.01, but finished well off the intraday low. The index briefly moved below the 20-day moving average but is now back above that support level. Down volume accounted for only 43% of total volume, indicating the selling pressure was not intense.
The RSI has yet to turn higher during the recent rally, which could open the door to additional selling today. We expect the 20-day moving average to be tested again, and holding above that level would be bullish for next week’s trading.
We are currently Intermediate-term cautious and short-term bullish.
John N. Lilly III CPFA
Accredited Portfolio Management Advisor℠
Accredited Asset Management Specialist℠
Portfolio Manager, RJFS
Partner, DJWMG
Windsor Wealth Planners & Strategists
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 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 averages are used for short-to-medium-term timeframes, while the 150-day and 200-day moving averages are used for medium-to-long-term ones. 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 represents 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 due to the federal government’s timely principal and interest payment. 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 not an index of U.S.-based companies.
The Russell 2000 Index is a stock market index that measures the performance of the 2,000 smaller companies included in the Russell 3000 Index. It is managed by London’s FTSE Russell Group and is widely regarded as a bellwether of the U.S. economy because it focuses on smaller companies that focus on the U.S. market.