Technical Analysis
We have recently had viewers ask for examples of how we use technical analysis so today we will go over some of those examples. Often, we talk about resistance and support levels and one of the questions is asked how we arrive at those numbers. One of the main things that we look at is the moving day averages of the S&P 500. Some are the 50-day, 100-day, and 200-day moving day averages. Recently, we talked about the S&P 500 approaching the 200-day moving day average. In fact, we’ve seen the S&P 500 trade over both the 50-day and 100-day moving day averages. When this happens, it starts to build momentum in the markets that we look at. In the last couple of weeks, we saw the S&P 500 almost hit the 200-day moving day average before it receded back down. This type of market behavior gives us indications of whether we need to buy or sell certain positions. Overall, this type of analysis gives us a good indication of the momentum in the markets and where we could possibly head for the remainder of the year. It’s important to keep in mind that those days are captured on actual trading days so when you hear 200-day moving day average, that means 200 days of the week, not including weekends and holidays.
Corporate Earnings
We had a viewer ask about how corporate earnings have performed in the second quarter compared to historical earnings for previous quarters. Eight of the ten sectors exceeded earnings expectations. Was that because expectations were low, or is it because we are in a good spot? As you can see on the chart shown in this episode, the average for corporate earnings beats is 66%. Right now, it’s hovering around 76%. It kind of flattened out from the first quarter of this year but is up slightly from the fourth quarter of last year, which is a good sign. You hear a lot of talk regarding the negatives, but so far corporate earnings have hung in there quite well. From a historical standpoint, corporate earnings for the second quarter of this year, are performing better and that is great to see for the market.
Housing Market
We continue to get a lot of questions about the housing market and what impact the higher rates are having on it. Right now, we’re seeing a slowdown across housing. Total US home sales were down 12.6% for July. That is a big drop just in one month. As you can see in the chart shown in this episode, existing home sales, new home sales, and the housing index have all seen a steep drop. We’re watching housing carefully to see what impact it could have on the overall economy since we are seeing a definite slowdown in that sector. We want to pay close attention to see what impact it’s having in the markets.
Bobby Norman, CFP®, AIF®, CEPA®
Managing Director
Wealth Consultant
Email Bobby Norman here
Adam Vansant, AIF®, BFA™
Vice President
Wealth Consultant
Email Adam Vansant here
Ty Miller
Associate Vice President
Email Ty Miller here
Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
Economic forecasts set forth in this presentation may not develop as predicted.
No strategy can ensure success or protect against a loss.
Stock investing involves risk including potential loss of principal.
Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.
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