U.S. stock futures are higher despite the announcement of President Biden’s proposed capital gain increase sent that markets lower on Thursday. The plan would almost double the tax on the wealthiest taxpayers and included the most extensive levies on investment gains. Meanwhile, later today, economic reports on manufacturing and services PM and New Home Sales will be released. Investors will continue to watch these reports along with more Q1 earnings reports.
The S&P 500 traded in a wide range on Thursday and tested for, a second time, support at 4120.87 and held. The index had earlier moved past resistance at 4151.69 only to close lower at 4134.98. There was a pick-up in volume with 2,382,575,616 shares traded, and RSI continued to move lower, closing at 60.76. The selling was in reaction to a potential increase in the capital gains tax for higher-income taxpayers. So, the trading today could indicate if the sellers are truly back in charge. We still feel a test of potential support at 4095.51 will happen soon.
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.
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