Morning Brief
Headline News:
Equity futures point to a higher opening this morning, following a losing week for equities, with the major averages posting losses of more than 1.0% across the board.
The weakness was largely tied to a steady increase in the price of oil as the war in Iran continued, while shipping through the Strait of Hormuz remained at a near standstill. Developments on the geopolitical front are providing the primary catalyst for equity futures this morning.
The Wall Street Journal reported that the Trump administration plans to announce a multi-country coalition to escort ships through the Strait of Hormuz, with the announcement expected as early as this week.
Additionally, Energy Secretary Chris Wright, in an interview, said the war with Iran will “certainly come to an end in the next few weeks,” noting that he thinks the Strait of Hormuz will be opened in the “not-too-distant future,” according to ABC News.
Oil is currently down $1.62 (-1.6%) to $97.09 per barrel after testing the $ 100-per-barrel mark overnight.
Energy and geopolitical developments continue to dominate headlines, though a few other elements are in play this week.
The Fed will issue its decision for the March FOMC meeting on Wednesday, though the market has priced in no change to the fed funds target rate for some time. However, the market will take note of any commentary and updated projections from the meeting, as the recent surge in oil prices has diminished hopes of a rate cut.
(Michael Gibbs, Managing Director, Lead Portfolio Manager |)
Markets:
The S&P 500 sold off to support at 6,631.44, where buyers stepped in to stabilize the index near 6,632.19. The index also closed outside the lower Bollinger Band, signaling a potentially oversold condition in the near term. However, both the RSI and the Advance-Decline line moved lower, confirming the underlying weakness in market breadth during the session.
So far this morning, S&P 500 futures are higher by 0.89% after the price of oil traded below $100 per barrel. A stabilization in energy prices could help ease some inflation concerns and provide short-term support for equities. If the rebound continues, the index could test potential resistance near 6,720.43 this week, where additional buying interest would be constructive for the market’s technical outlook.
However, if selling pressure resumes, the next potential support level is now seen at 6,617.32. A decisive break below that level could signal continued downside momentum in the near term.
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.
The NYSE advance/decline measure refers to the number of common stocks listed on the New York Stock Exchange (NYSE) that close at a higher price than their previous closing price (“advancing issues”) compared to the number of NYSE-listed common stocks that close at a lower price than their previous closing price (“declining issues”) during a specified trading session.
This measure is used as an indicator of market breadth and reflects the extent to which price movements are broadly distributed among NYSE-listed securities.