The S&P futures were down 6.41 points as of 7:23 a.m. to start the day. global equity markets were mostly flat while European markets broke four days of losses on Tuesday. Traders will continue to watch the three month-ten-year yield curve and for any signs of an economic slowdown.
The S&P 500 moved off the 20-day moving average and has now stalled at the 10-day moving average. The index is now in a trading range of 2860.31-2785.02. The two-day rally did come on lower than average volume, but the RSI indicator turned back up in support of the up move. We feel that some trading inside the new range is needed before the S&P 500 can try to move to new highs.
The U.S. housing starts data came out at 1.162 M which was below the consensus number. The Consumer Confidence number was 124.51 which was below consensus and lower than the prior of 131.4. Overnight, China industrial profits shrank the most since 2011 and cause the Hang Sang to drop 0.1 percent. The spread on the three month- 10-year Treasury is now at -.05bps which is a cause for concern. We feel that the spread between the 2-year and 10-year Treasury is potential the most important to follow. The current spread is 0.17bps which is a weak spread but not a cause for worry yet.
The 3 month- 10-year yield curve spread.
The important 2-year-10-year yield curve spread.
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.
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.U.S. Government Bonds and Treasury Bills are guaranteed by the government, and if held to maturity, offer a fixed rate of return and guaranteed principal value. The 10-year Treasury note is a debt obligation issued by the United States government with a maturity of 10 years upon initial issuance. The CBOE 10-Year Treasury Note (TNX) is based on 10 times the yield-to-maturity on the most recently auctioned 10-year Treasury note.