The S&P 500 futures were down 4.5 points as of 7:30 a.m. to start the week. Overnight the global markets continued selling off, but losses were trimmed when German business climate data came in better than expected. The inversion on Friday of the U.S. three-month and 10-year Treasury yield curve is a warning of a possible global slow down. However, the spread turned positive after the release of the German economic data.
The S&P 500 sold off down to the 20-day moving average on Friday. That will now act as potential support. The next level of potential support will now be at 2755.39 at the 200-day moving average. A third level could possibly be 2738.39. The selling came on higher than average volume, and the RSI is confirming the selling.
The spread between the U.S. three-month and 10- year Treasury yield did turn positive this morning. The important spread of 2- year Treasury and 10-year Treasury yield is still also positive at .13bps. Until the 10Y-2Y is the main spread used by the Fed, and we will not panic until that spread inverts.
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. 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.