The S&P 500 is near an important support level.
- The S&P 500 traded near a key potential support level on 12/6/2018. If the index closes below this trend line there could be more selling in the future.
- The level we will be watching will be the 2630 level.
- RSI is still below the important 50 line.
- The S&P 500 made a high on 1/26/2018 at 1/26/2018 and RSI also made a new high of 90.50.
- When the S&P 500 made a new high on 9/21/2018 2940.91 RSI did not make a new high to confirm the new high. RSI only moved up to 68.42. So, this was a negative divergence which is a caution sign going forward.
John N. Lilly III, AAMS
Portfolio Manager, RJ
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.