U.S. stock futures were flat to start the day after two straight days of heavy selling. Q1 earnings have been robust, with 90% of S&P 500 companies reporting better than expected earnings. However, it appears the good earnings were already priced into equity prices, and markets appear to be in a sell the news mode. Also, the rising COVID-19 cases abroad could lead to renewed travel restrictions that could slow down the economic recovery.
The S&P 500 moved below one support level at 4151.69, traded down to the next support zone at 4120.87, and rallied off that level to close at 4134.94. RSI continued to move lower, closing at 63.91, but there could possibly be more selling to come after moving out of the overbought zone. The next level of potential support could come in at 4095.51, and we feel that level will be tested soon. So far, the selling appears to be typical profit-taking after a recent massive rally of the March lows.
We are currently long-term bullish and short-term cautious.
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 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.
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