Government Shutdown, Brexit, and Chinese Trade Deadlines Approach

Today, markets are mixed with the Dow trading slightly lower while the Nasdaq and S&P are on track to record modest gains. All eyes are on the potential of another government shutdown this Friday when the current stopgap funding bill, which ended the longest government shutdown in U.S. history last month, is set to run out Friday. Talks between Democrats and Republicans broke down Sunday and investors are expecting another short term funding bill or government shutdown, but not a long-term deal, to occur by week’s end. Major earnings to monitor this week include Cisco, Coca Cola, Duke Energy and more. Globally, Brexit uncertainty and the resumed Chinese trade talks are once more in the spotlight with important deadlines for both fast-approaching. Although the market continues to recoup from December lows, we believe the market could still return to $260-264 level for SPY support. Still, we do not expect the market to retest these lows until the summer of 2019. Based off most technical indicators the market remains overbought and we advocate our members to avoid chasing the rallies and buy the selloffs. For reference, the SPY Seasonal Chart is shown below:

With the current funding bill set to run out Friday, lawmakers in D.C. are looking at potential steps forward after talks between Democrats and Republicans broke down yesterday. Both sides hoped to come into Monday with some agreement in place for a bill but, on top of the general difference in the amount of funding for border security, ICE has now become a more prominent issue. Democrats are looking to cap the number of ICE arrests by limiting beds in ICE detention centers to 16,500. This would, Democrats hope, enforce and concentrate arrests of illegal immigrants on those conducting criminal activity or with a criminal background. Republicans are looking to make an exception on the 16,500-bed cap specifically for criminals. At its current state, it appears as though neither side is willing to budge. The previous government shutdown lasted 35-days and cost nearly 11 billing dollars, according to the Congressional Budget Office. With tax season coming up, potential IRS issues could surface. Administrative officials are prepping for another shutdown while lawmakers throughout D.C. are drafting a short-term funding bill to keep the government open. Trump plans to send additional troops to the border, now totaling almost 6,000 U.S. troops at the southern border, as well as visiting El Paso today for a planned speech.

Globally, Brexit tension continues to extend outside of the U.K. as currency and trade concerns mount. Less than seven weeks remain for the U.K. to exit the European Union and so far no deal is in place. One of the main financial implications causing unrest as Brexit is worked out is the lowering value of the pound, which could stall global trade and commerce. Elsewhere, trade talks between the U.S. and China resumed in Beijing today. Treasury Secretary Mnuchin will meet with Chinese Vice Premier Lie He in hopes of progressing and improving trade rhetoric between the two sides ahead of the March 1st deadline to resume and increase tariffs. It is now unlikely that President Trump and Chinese President Xi will meet before this deadline, something Trump stated previously, though both sides seem open delay tariffs past March 1st if progress on the talks is forthcoming.

Other vital news to note include new tax data, NAFTA-replacement USMCA troubles, and more earnings. As we approach tax season, last year’s numbers are coming in and are showing continued impact of the Trump Tax cuts. While returns last year were plush, the average tax refund is down 8% from last years and the individuals receiving refund lowered by 25% this year. The U.S.-Mexico-Canada Agreement, set to replace NAFTA, is facing an uphill battle in Congress and will likely be put aside until other congressional issues are addressed. Both Democrats and Republicans are contesting the deal in its current state. Earnings from Activision Blizzard, Cisco Systems, Coca-Cola, and more are expected later this week while Loews and Resturant Brands have already reported before market open today. Restaurant Brands beat expectations, helping shares modestly rise, while Lowes Corp. came in below expectations sending shares 6% lower.

Using the “^GSPC” symbol to analyze the S&P 500, our 10-day prediction window shows mostly positive signals. Today’s vector figure of +0.15% moves to +1.55% in five trading sessions. The predicted close for tomorrow is 2,704.21. 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.  

Volatility Performance

See Live Trading Room action from Tuesday 2/5/19 below, how we trade this volatile market, and what you can expect in our next Live Trading Room. During yesterday’s session, we recorded 6 of 8 winning trades, ranging from 0% to 325% ROI!

Symbol Net Gain%

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We wanted to share the recording with you so you can see the profits you might be missing- even during volatile markets.

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Highlight of a Recent Winning Trade

On February 1st, our ActiveTrader service produced a bullish recommendation for NetApp, Inc. (NTAP). ActiveTrader is included in all paid Tradespoon membership plans and is designed for day trading.

Trade Breakdown

NTAP opened in its forecasted Strategy B Entry 1 price range $63.77 (± 0.43) and passed through its Target price $64.41 in the first hour of trading, reaching a high of $67.06. The Stop Loss price was set at $63.13.

Tuesday Morning Featured Stock

*Please note: Our featured 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 MonthlyTrader recommendations. If you are interested in receiving Vlad’s personal picks, please click here.

Our featured stock for Tuesday is Microchip Technology (MCHP). MCHP is showing a confident vector trend 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 for predicted support and resistance, relative to our entire data universe.  

The stock is trading at $88.935 at the time of publication, up 1.74% from the open with a +1.87% vector figure.

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.

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 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.

Oil

West Texas Intermediate for March delivery (CLH9) is priced at $52.46 per barrel, down 0.49% from the open, at the time of publication. Looking at USO, a crude oil tracker, our 10-day prediction model shows positive signals. The fund is trading at $11.02 at the time of publication, down 0.50% from the open. Vector figures show +0.84% today, which turns +0.93% in five trading sessions.  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.

Gold

The price for April gold (GCJ9) is down 0.53% at $1,311.50 at the time of publication. Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows mostly negative signals. The gold proxy is trading at $115.54, up 2.36% at the time of publication. Vector signals show +0.02% 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.  

Treasuries

The yield on the 10-year Treasury note is up 1.19% at 2.66% at the time of publication. The yield on the 30-year Treasury note is up 0.77% at 3.00% 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 mostly positive signals in our 10-day prediction window. Today’s vector of -0.06% moves to +0.60% in three sessions. 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.

Volatility

The CBOE Volatility Index (^VIX) is up 3.56% at $16.28 at the time of publication, and our 10-day prediction window shows negative signals. The predicted close for tomorrow is $16.16 with a vector of -0.94%. 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.

You Don’t Want to Miss This!

Today only, we are doing something we have RARELY do!

We are offering LIFETIME ACCESS to our Stock Forecast Toolbox Membership for less than the regular price we normally charge for only 1 year of service!

I want to make this offer a complete no-brainer! Would you rather sign up for just one year of service or get Lifetime Access for an even lower price?

Click Here to For More Information