Can corporate earnings cement support behind the Dow’s 22,000 benchmark?

August 2, 2017

By Vlad Karpel

The Dow Jones Industrial Average has hit the 22,000 level for the first time in intraday trading, and market participants will see if the index is able to close above that level today. Today’s momentum was driven mainly by a rally in Apple Inc. (AAPL) shares after the company released a strong earnings report on Tuesday which topped expectations.

The activity in the DJIA is inversely impacting the S&P 500 and Nasdaq, which are both trading lower. Earnings data across the board has been positive overall, major upticks and a psychological milestone being hit often come with analyst concerns. Nevertheless, it looks like we’ll be enjoying strong corporate performance despite political uncertainty and a more distant timeline for an interest-rate hike.

The DJIA is currently up 0.18%, or 39.57 points, at 22,004.91. The S&P 500 is currently trading at 2,474.12- down 0.09% from the open. The Nasdaq-100 is down 0.12% at 6,355.16.

Using the ^GSPC symbol to analyze the S&P 500, our 10-day prediction window shows overall negative signals. Today’s negative vector figure of -0.17% moves to +0.30% within four trading sessions. Today’s predicted support and resistance is 2,464.54 (± 3.19) and 2,476.85 (± 3.21), respectively. The predicted close today is 2,468.89. 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.

Must-buy Stocks for Thursday

Based on our Stock Forecast Toolbox’s 10-day prediction data, we’ve found 2 great candidates of interest. They are:

Wal-Mart Stores, Inc. (WMT)

Wal-Mart seems poised to do battle with Amazon, who recently announced acquisition plans with Whole Foods. There’s been a re-organization of their food leadership team and it appears the retail giant is re-strategizing to fend off grocer-competitors like Target and a new German entrant- Lidl. WMT has also just passed their average target price of $79.94/share- but does not appear to be overbought.

Our 10-day prediction model shows incrementally building positive signals. The stock is currently trading at $81.05, up 0.69% from the open with a +0.72% vector figure for today. Tomorrow’s prediction shows an open price of $82.53, a low of $80.68 and a high of $82.53. The predicted close for tomorrow is $80.82. Vector figures show +1.58% for tomorrow. 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.

Colgate-Palmolive Company. (CL)

Although Q2 earnings reported lower-than-expected, Colgate’s gross profit margin increased by 50 basis points due to cost-savings and restructuring programs. Unilever has been internally floating the idea of acquiring the consumer-goods company, citing CL’s weakened shares compared to Unilever’s strong performance, as well as a stronger British pound (Unilever is a Dutch-British multinational company).

Our 10-day prediction model shows consistent positive signals. The stock is currently trading at $71.56, which is down 0.19% from the open- but is showing a +0.58% vector figure for today’s session. Tomorrow’s prediction shows an open price of $72.26, a low of $71.94 and a high of $72.93. The predicted close for tomorrow is $71.98. Vector figures show +0.48% for tomorrow. 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.

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Oil

The crude oil markets are reacting to a report from the Energy Information Administration which showed declines in U.S supplies being smaller than expected. The data shows a decline of 1.5 million barrels for the week of July 28, although expectations were around 3 million barrels. The situation between the U.S and the embattled president of Venezuela, Nicolas Maduro, may be providing bullish sentiments in light of the less-than-expected U.S inventory decline. Treasury Secretary Steven Mnuchin has not explicitly ruled out a tough set of sanctions which would restrict U.S exports to Venezuela, and outright ban imports coming into the U.S. The United States receives 10% of its oil imports from Venezuela and Citgo- an oil-refiner owned by Venezuela’s state-owned oil company PDVSA- relies majorly on Venezuelan crude. West Texas Intermediate for September delivery is currently priced at $49.43 per barrel, up 0.41% from the open.

Looking at USO, a crude oil tracker, our 10-day prediction model shows overall negative signals. The fund is currently trading at $10.10, which is up 0.10% from the open. Today’s prediction sees support at $9.72 (± 0.06) and resistance at $10.11 (± 0.06). The predicted close for today is $9.91. Vector figures show -1.27% for today, moving to -4.38% in three 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 December gold is currently down 0.11% at $1,278.00 a troy ounce. A strong stock market rally has made equities more attractive than the safe-haven metal, and the U.S dollar is continues to hover around recently hit 15-month lows. In the long-term, however, investors are leaning toward the odds that a Fed interest-rate hike is more distant than previously expected. Additionally, the consistent political turmoil in the White House and across Washington has hampered investor optimism in seeing tax reform and infrastructure bills in the near future.

Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows incrementally building positive signals. The gold proxy is currently trading at $120.80, up 0.12% from the open. Today’s predicted low is $120.65 (± 0.25) and the predicted high is $121.54 (± 0.25). The predicted close today is $121.26. 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

Treasury yields are holding steady as investors parse data from a recent ADP private-sector jobs report. The report showed figures which met expectations and did not disappoint, but this report tends only to offer context and is not looked toward for strong guidance. The yield on the 10-year Treasury note is currently down 0.16% at 2.25%. Bond prices and yields are typically inversely related to one another.

Using the iShares 20+ Year Treasury Bond ETF (TLT) as a proxy for bond prices in our Stock Forecast Tool, we see overall positive signals in our 10-day prediction window. Today’s vector of +0.56% oscillates throughout the forecast but remains mostly positive. The ETF is currently priced at $124.84- up 0.16% from the open. The predicted close today is $124.80 with a low and high of $123.96 (± 0.29) and $125.07 (± 0.29), 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 currently up 2.08% at 10.30, and our 10-day prediction window shows strong positive signals. The predicted close tomorrow is 10.22 with a positive vector of +1.34%. Tomorrow’s predicted lows and highs are 9.63 (± 0.19) and 10.74 (± 0.21), 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.