Tax-cuts top of mind as markets see holiday jitters

U.S. equity markets are in a holding pattern today as investors monitor the tax-reform bill’s motions and paces. The bill has been passed by the House and Senate, but there appear to be a slew of minor bugs that require revisions. When this happens, the House is required to vote again on the bill. The markets will continue to operate in response to economic data and fundamental levels, but a main concern for participants going into January will focus on tax-reform impacts. Companies will be categorized into winners and losers due to the tax cuts and tertiary provisions within the bill in the start of 2018.

The recent rallies spurred by the Trump bump the tax-reform hype may have a dampening effect on the annual ‘Santa rally’. Going into the holidays this weekend, we may see a less pronounced boost as valuations may be already priced in.

On the economic front- November’s existing-home sales figures rose above expectations as reported by the National Association of Realtors. Sales saw a 5.81 million climb for their seasonally adjusted annual rate.

At the time of publication, the DJIA is up 0.07%, or 18.03 points, at 24,773. The S&P 500 is trading at 2,682- down 0.02% from the open. The Nasdaq-100 is down 0.13% at 6,955.

Using the ^GSPC symbol to analyze the S&P 500, our 10-day prediction window shows  overall negative vector signals. Today’s negative vector figure of +0.33% moves to +0.67% within three trading sessions.  Today’s predicted support and resistance is 2,673.99 (± 5.33) and 2,682.70 (± 5.34), respectively. The predicted close today is 2,675.41. Prediction data is uploaded after market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.  

Highlight of a Recent Winning Trade

On December 18, our Live Trading Room saw a successful intraday trade for Skechers USA Inc. (SKX). Live access to our trading rooms is included in our Premium Membership plan, and recordings of these sessions are available to all members.

Trade Breakdown

The position was entered at $37.98 and the exit price was $38.25. The Stop Loss was set at $37.58. With a Net Gain of $0.27 and a Risk of $0.40, our Net Gain percentage was 67.50% for this trade.

*Trade % Gain/Loss is calculated by dividing the $ Gain/Loss by the Max Risk which is the posted Stop Loss for the trade.

Must-buy Stock for Thursday

Our must-buy stock for Thursday is ON Semiconductor Corp. (ON). ON is showing strong positive vector signals in our Stock Forecast Toolbox’s 10-day forecast. This stock is assigned a Model Grade of B, indicating it ranks in the top 25th percentile for accuracy relative to our entire data universe. Our 10-day prediction model shows vector figures passing +3.00% within the next trading session. Our benchmark for vector figures is +1.00%.

*Please note: Our must-buy stock is part of your free subscription service. It is not included in any paid Tradespoon subscription service. Vlad Karpel only trades his own personal money in paid subscription services.  If you are a paid subscriber, please review your Premium Member Picks, ActiveTrader or ActiveInvestor recommendations.  If you are interested in receiving Vlad’s personal picks, please click here.

The stock is trading at $21.14 at the time of publication, up 1.66% from the open with a +1.23% vector figure.

Thursday’s  prediction shows an open price of $21.31, a low of $21.24 and a high of $21.72.

The predicted close for Thursday is $21.70. Vector figures show +3.27% for tomorrow and build incrementally from there.  This is a good signal for trading opportunities, because the vectors are a primary factor in determining price movements for stocks and ETF.

Prediction data is uploaded after market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.

Note: The Vector column calculates the change of the Forecasted Average Price for next trading session relatively to average of actual prices for last trading session. The column shows expected average price movement “Up or Down”, in percent. Trend traders should trade along predicted direction of the Vector. The higher the value of the Vector the higher its momentum.

Crude prices are fluctuating today, following an Energy Information Administration report showing a drop in crude supplies which beat expectations. At the same time, we’re seeing a rise in gasoline supplies which also surpassed forecasts. Going into the holidays, forecasted gasoline demand is strong enough to offset gas inventories gains. Market participants are also focusing on simmering tensions between Iran and Saudi Arabia, primarily concerned with their ongoing proxy war in Yemen.

West Texas Intermediate for February delivery (CLG8) is priced at $57.87 per barrel at the time of publication, up 0.57% from the open.  

Looking at USO, a crude oil tracker, our 10-day prediction model shows consistent negative signals. The fund is trading at $11.57 at the time of publication, up 0.54% from the open. Today’s prediction sees support at $11.42 (± 0.05) and resistance at $11.51 (± 0.05). The predicted close for today is $11.48. Vector figures show -0.08% today, moving to -0.42% in three trading sessions. Prediction data is uploaded after market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.   

Gold

The price for February gold (GCG8) is up 0.36% at $1,268.60 a troy ounce at the time of publication. The passing of the GOP tax-reform bill is producing mixed feelings amongst speculators. On the upside for the non-fiat metal- some see potential for increased inflation, and consider President Trump’s 2018 political frontier to be  turbulent. Domestically, the Russia investigation is not abating and there will likely be further charges and indictments. Internationally, the current state of the U.K.’s Brexit deal is uncertain. If negotiations between the U.K. and the E.U. hit snags or break down, this would have a rippling effect felt here and abroad. The International Monetary Fund announced today a downgrade in its U.K. growth forecast due in part to this situation.  

The opposing perspectives for gold’s 2018 future cite a risk-on sentiment due to lower corporate tax rates and a continuation of a bull market. The signing of the tax-bill by Trump would also relieve degrees of anxiety and uncertainty as this item was arguably the most important in the White House’s agenda.

Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window is producing rising positive signals. The gold proxy is trading at $120.32, up 0.42% at the time of publication. Today’s predicted low is $119.82 (± 0.24) and the predicted high is $120.37 (± 0.25). The predicted close today is $120.20. Prediction data is uploaded after market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.   

Treasuries

Yields are up today, as expected, following the passing of the Republican-led tax-reform bill. The deficit-widening plan is expected to spark a 2018 rise in debt issuance from the Treasury Department, as well as a drop in bond buying by the Fed. This will be a drag on debt prices. The yield on the 10-year Treasury note is up 0.19% at 2.48% at the time of publication.

Using the iShares 20+ Year Treasury Bond ETF (TLT) as a proxy for bond prices in our Stock Forecast Tool, we see all positive signals in our 10-day prediction window. Today’s vector of +0.34% moves to +0.97% within three trading sessions. The ETF is priced at $124.57 at the time of publication, down 0.76%. The predicted close today is $126.39 with a low and high of $125.53 (± 0.25) and $127.57 (± 0.26), respectively.  Prediction data is uploaded after market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.

Cryptocurrencies

The leading cryptocurrency trading platform, Coinbase, released an announcement Tuesday night stating they will allow their users to trade a rival currency- bitcoin cash.  Sends and receives were made immediately available, and the price of bitcoin (BTCUSD) saw immediate jitters. Prices fell from above $18,000 to below $16,000 within hours, but is now seeing a recovery. The price of bitcoin is $16,826.89 at the time of publication, down 1.06%. CME Group’s January bitcoin futures contract (BTCF8) is down 5.44%, or $990.00, at $17,000.

Using Grayscale’s Bitcoin Investment Trust (GBTC) as a bitcoin tracker in our Stock Forecast Toolbox, strong positive signals in our 10-day prediction window is showing a near-term uptrend. Today’s vector of +3.53% moves to +19.38% in the next trading sessions The trust is priced at $2,670.01 at the time of publication, down 11.62% or $350.98. The aforementioned overnight news has produced unpredicted changes in this trust’s price movements relative to our current predictions. The predicted close today is $3,268.56 with a low and high of $3,020.99 (± 306.28) and $3,544.71 (± 359.38), respectively.  Prediction data is uploaded after market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.

Volatility

The CBOE Volatility Index (VIX) is down 3.99% from the open at 9.63 at the time of publication, and our 10-day prediction window shows all positive signals. The predicted close today is 9.83 with a positive vector of +2.32%, which moves to +10.42% in three trading sessions. Today’s predicted lows and highs are 9.09 (± 0.20) and 10.32 (± 0.23), respectively. Prediction data is uploaded after market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.