Weekly Investment Outlook: April 3, 2017

weekly update

 

The breadth was positive at the NYSE (read improved) last week as the Advance-Decline line gained 3574 units and the number of 52-week highs out did the new lows on all the five sessions. At this point a bigger than the most recent drop of 3.29% might not be the worst thing. There is a strong support in the range of 2275-2300. This is the first time since the election that the S&P 500 has traded at the lower band of Bollinger bands for the last two weeks. The recovery from the 2015-16 earnings recession shall continue, as the companies report the first quarter earnings. The Q1-2017 EPS growth may post a near 13.5% gain. If the earnings come in better than expected, that may augur further gains for the equities.

 

1

Source: stockcharts.com

 

The inflation adjusted consumer spending fell 0.1% (2.6% y/y) – tracking at a sub-1% annual rate in the first quarter of 2017. The personal consumption expenditure price index (ex-food and energy) rose 1.8%, just below the fed inflation target of 2%. The Gross domestic product was revised higher primarily due to the higher consumer spending (revised higher) and increase in private inventory which was partly offset by the downward revisions to the non-residential fixed investments. The Institute of Supply Management (ISM) manufacturing Purchasing managers index came in at 57.2 compared to 57.7 for February 2017 and ahead of the expectations of 57.

 

2

Source: stockcharts.com

 

 

 

 

This information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of Chintan Shukla, CFA and not necessarily those of Raymond James. The S&P 500 is an unmanaged index of 500 widely held stocks. The ISM Manufacturing Index is made up of over 300 manufacturing firms and monitors their employment, inventories, orders, and deliveries. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. You cannot invest directly in any index and Past performance may not be indicative of future results. Investing involves risk and investors may incur a profit or a loss. 1: From research paper Bubbles for Fama*, Harvard University &Endogenous regime switching in speculative markets by Rajiv Sethi. Goldfarb Financial is an Independent firm. Securities offered through Raymond James Financial Services, Inc, Member FINRA/SIPC. VIX is the Chicago Board Options Exchange (CBOE) Volatility Index, which shows the market’s expectation of 30-day volatility. It is constructed using the implied volatilities of a wide range of S&P 500 index options. It is a widely used measure of market risk.