Morning Brief
Equity futures point to a mostly higher open this morning after yesterday’s earnings-fueled rally pushed the S&P 500 and Nasdaq Composite to fresh record highs. The market still has plenty of earnings to digest this morning, with a large tech company keeping the momentum rolling across “magnificent seven” names after turning in a solid report.
Headlines are relatively quiet elsewhere after a notably busy week that included an FOMC meeting, earnings reports from several of the market’s largest components, and a full slate of economic data.
Not much has changed on the geopolitical front, with Bloomberg reporting that President Trump is vowing to maintain the blockade against Iran. Still, oil prices are modestly lower again this morning.
On the data front, the market will receive the final S&P Global U.S. Manufacturing PMI for April at 9:45 a.m. ET, and the ISM Manufacturing Index for April (Briefing.com consensus 53.1%) at 10:00 a.m. ET.
(Michael Gibbs, Managing Director, Lead Portfolio Manager |)
Markets:
The S&P 500 closed at another new all-time high of 7,193.83, although the Advance/Decline line failed to confirm the move with a corresponding high, signaling some underlying weakness in market breadth. The RSI has now moved into overbought territory, while up volume registered a solid 76% of total volume, indicating strong participation on the upside.
Taken together, the technical backdrop is mixed heading into today’s session. Momentum remains positive, but the lack of breadth confirmation and overbought conditions suggest the rally may be becoming extended.
Near-term resistance is at the intraday all-time high of 7,219.83, while initial support is seen at 7,147.52. This morning, S&P 500 futures are higher by 0.21%, positioning the index for a potential continuation of the rally and another record close, provided buying pressure remains intact.
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.