U.S. and global markets are once again selling off due to fears of a prolonged trade war with China. Also, the global bond rally has sent the 10-year U.S. Treasury to 20-month lows. Fears of a recession sooner rather than later are building as investors seek the safety of bonds.
The S&P 500 closed at 2826.06 on lower than average volume and below the resistance of 2831. We did not expect much from the index due to the holiday weekend; however, it is critical that there is a close above the 2831 level this week. If not, there could possibly be more selling which could take the index down to the 2800 level. Traders will be looking for a catalyst to try and move markets higher this week.
The spread between the three-month treasury and the ten-year treasury is now negative at -0.11. The inverted yield curve is a concern for the U.S. economy. However, consumer confidence moved up to 134.1 compared to a March report of 129.2. So, the recession fears have not hit the U.S consumer.
We are currently long term bullish with short term cautious.
John N. Lilly III
Accredited Portfolio Management Advisor℠
Accredited Asset Management Specialist℠
Portfolio Manager, RJ
Dominguez & Jones Wealth Management Group
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, onions 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.