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As traders digest economic data and await minutes from the Federal Reserve, stocks in the United States rose in early morning trading. Tuesday was a good day for stocks, with the S&P 500 closing up 1.4%, while the Dow and the Nasdaq Composite also advanced. Yesterday’s rise was driven in part by the continuing belief that the Federal Reserve will lower the rate at which it is raising interest rates. Following the release of the Federal Open Market Committee meeting minutes, U.S. shares were mostly able to maintain gains but started to retreat. In the minutes, talks of smaller interest rate increases will be taking place soon, as officials at the Federal Reserve noted that a recession may occur. Senior officials at the Fed said that they are unsure just how much further interest rates will go, although they still expect them to rise higher than previously forecast. By implementing slower rate hikes, the Fed will look to have more time to evaluate the economy’s slow response to the rising signs of recession.
This marks the first time Fed officials stated recession is possible in the coming year; since the economy was hit with shutdowns, the Fed has swiftly acted to raise rates in order to slow the economy in an effort to subvert inflation. With over a year of raising large rates, it now looks like the Fed is ready to somewhat scale back.
Also today, one of the latest economic reports released, durable-goods orders, showed an increase of 1% in October while jobless benefit claims rose by 17,000 to 240,000 in the most recent week–the highest level since August. S&P Global announced that the flash U.S. services purchasing managers index in November fell to 46.1 from its previous score of 47.8 and that the S&P Global flash U.S. manufacturing purchasing managers index also fell in November, this time to 47.6 from 50.7. This latest data traditionally signals a contracting economy.
We are watching the overhead resistance levels in the SPY, which are presently at $400 and then $416. The $SPY support is at $390 and then $380. We expect the market to continue the current rally for the next 4-8 weeks. The short-term market is trading in the well-defined range. We would be market neutral at this time and encourages subscribers not to chase the market to the downside or upside. Globally, both Asian and European markets closed in the green. Market commentary readers should maintain clearly defined stop levels for all positions. For reference, the SPY Seasonal Chart is shown below:
Note: The Vector column calculates the change of the Forecasted Average Price for the next trading session relative to the average of actual prices for the last trading session. The column shows the expected average price movement “Up or Down”, in percent. Trend traders should trade along the predicted direction of the Vector. The higher the value of the Vector the higher its momentum.
*Please note: At the time of publication Vlad Karpel does have a position in the featured symbol, QQQ. Our featured symbol is part of your free subscription service. It is not included in any paid Tradespoon subscription service. Vlad Karpel only trades his money in paid subscription services. If you are a paid subscriber, please review your Premium Member Picks, ActiveTrader, or MonthlyTrader recommendations. If you are interested in receiving Vlad’s picks, please click here.
West Texas Intermediate for Crude Oil delivery (CL.1) is priced at $77.32 per barrel, down 4.48%, at the time of publication.
Looking at USO, a crude oil tracker, our 10-day prediction model shows mixed signals. The fund is trading at $73.25 at the time of publication. Prediction data is uploaded after the market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.
The price for the Gold Continuous Contract (GC00) is up 0.60% at $1750.50 at the time of publication.
Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows mixed signals. The gold proxy is trading at $165.5 at the time of publication. Vector signals show +0.36% for today. Prediction data is uploaded after the market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.
The yield on the 10-year Treasury note is DOWN at 3.695% at the time of publication.
The yield on the 30-year Treasury note is DOWN at 3.729% 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 mixed signals in our 10-day prediction window. Prediction data is uploaded after the market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.
The CBOE Volatility Index (^VIX) is $24.11 at the time of publication, and our 10-day prediction window shows mixed signals. Prediction data is uploaded after the market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.
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