Investors Take Post-rally Breath Before Earnings Kick-off

January 8, 2018
By Vlad Karpel

We’re seeing trading activity take a breath and pause today, ahead of a slew of events occurring in the near term. Earnings season is underway, and major financials are due to report this Friday. These will include JPMorgan Chase & Co. (JPM),  BlackRock Inc (BLK), and Wells Fargo & Co. (WFC). These reports will undoubtedly set the tone for invesors and analysts alike, because their data will offer broader contextual clues about the economy and general corporate performance. Recent comments from Fed officials are offering an optimistic economic outlook for 2018, which indicate there may be four, instead of three, interest rate hikes this year. November data for consumer credit is also being assessed today.

Stocks in focus

Sunday saw a pre-CES announcement from Nvidia Inc (NVDA) which indicated the chip maker is beginning a partnership with Uber Inc. This partnership will be focused on self-driving technology and Nvidia will be providing hardware to support Uber’s beleaguered autonomous driving program.  At the time of publication, NVDA shares are up 3.90%.

Following a report from GoPro Inc. (GPRO) which showed a well-below expected Q4 revenue forecast, shares took a sharp dive. GoPro, which is down 19.68% at the time of publication, also indicated it will be halting its drone business in the future.

At the time of publication, the DJIA is down 0.11%, or 27.22 points, at 25,269. The S&P 500 is trading at 2,743- down 0.01% from the open. The Nasdaq-100 is up 0.20% at 7,151.

Using the ^GSPC symbol to analyze the S&P 500, our 10-day prediction window shows  consistent negative signals. Today’s negative vector figure of -0.11% moves to -0.22% within three trading sessions.  Today’s predicted support and resistance is 2,729.80 (± 5.94) and 2,750.47 (± 5.99), respectively. The predicted close today is 2,732.94. 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 January 5, our ActiveTrader service- which is included in all Tradespoon membership plans- generated a bullish trade for Adobe Systems. (ADBE). Our ActiveTrader service is designed for intraday trading.

Trade Breakdown

In the first hour of trading, ADBE moved within the Entry 1 ($183.22, ± 1.56) price range, continuing to hit its Target Price of $185.05 in the second hour of trading. The Stop Loss was set at $181.39.

 

Buy, buy, buy: Stock Signals for Tuesday

Our featured stock for Tuesday is Texas Instruments Inc. (TXN). TXN is showing solid bullish 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 for predicted support and resistance, relative to our entire data universe. Our 10-day prediction model shows vector figures hitting +1.20% within the next two trading sessions. Our benchmark for vector figures is +1.00%.

*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 ActiveInvestor recommendations.  If you are interested in receiving Vlad’s personal picks, please click here.

The stock is trading at $109.62 at the time of publication, up 0.45% from the open with a +0.93% vector figure.

Tuesday’s prediction shows an open price of $111.02, a low of $108.56 and a high of $111.39.

The predicted close for Tuesday is $109.53. Vector figures show +1.19% for tomorrow, and rise incrementally throughout the forecast.  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.

 



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Oil

Crude oil prices are tacking on gains from last week’s rally, and investors are reacting to recent U.S. data reflecting a drop in active rig counts. U.S. crude supplies have also extended declines on a weekly basis, propping up support for prices. As expected, persisting political unrest in Iran- the third-largest OPEC producer- is factoring into market sentiments. The Trump administration had recently announced an expansion of offshore U.S. drilling areas for both oil and natural gas, but this news has not been priced into the market yet.

West Texas Intermediate for February delivery (CLG8) is priced at $61.51 per barrel at the time of publication, up 0.07% from the open.  

Looking at USO, a crude oil tracker, our 10-day prediction model shows overall positive signals. The fund is trading at $12.30 at the time of publication, down 0.08% from the open. Today’s prediction sees support at $12.16 (± 0.05) and resistance at $12.32 (± 0.05). The predicted close for today is $12.29. Vector figures show -0.09% today, reversing to +0.46% 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 down 0.29% at $1,319.20 a troy ounce at the time of publication. Although a strengthening U.S dollar is pressuring prices downward, the moves have not been too significant. Speculation still exists around the impact of the tax reform bill on the economy. Pending economic data, financial earnings and Fed commentary this week and next week will address these concerns.

Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows consistent positive signals. The gold proxy is trading at $125.13, down 0.16% at the time of publication. Today’s predicted low is $125.33 (± 0.22) and the predicted high is $126.25 (± 0.22). The predicted close today is $126.12. 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 took a dive today but are now recovering, as markets attempt to price in this week’s outlook of economic data, Fed commentary and debt issuance. Friday’s consumer price index data will be of main focus to investors, as it is also a core figure looked at by the Fed for monetary policy decisions. The yield on the 10-year Treasury note is up 0.16% 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 solid positive signals in our 10-day prediction window. Today’s vector of +0.22% jumps to +2.07% tomorrow, and fluctuates throughout the forecast in positive territory. The ETF is priced at $125.43 at the time of publication, down 0.23%. The predicted close today is $125.82 with a low and high of $125.56 (± 0.35) and $127.15 (± 0.36), 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

Bitcoin prices are pulling back following a weekend rally that saw the spot price for a single bitcoin break the $17,000 level. The spot price for a single bitcoin (BTCUSD) is down 7.79% at $14,944.32 at the time of publication. CME’s January futures contract for bitcoin (BTCF8)  is down 10.19% at $14,900 at the time of publication. Inversely, we’re seeing CBOE’s January futures contract (XBTF8) up 12.21% at the time of publication, trading at $16,770.

Ethereum, the next most-popular cryptocurrency with a current $118 billion market cap, broke a psychological level last week of $1,000. The spot price of an ether coin on the Ethereum blockchain is priced at $1,116.46 at the time of publication.  

Ripple coins are pulling back after a massive spike last week, following rumors that it would see an offering on Coinbase. Coinbase corrected the hype rally by announcing the popular exchange has no current plans for new assets. The spot price of a single Ripple coin dropped 21% on Monday to $2.56. This story is an indication of the rapid and dramatic impacts on emerging cryptocurrencies due to pure speculation.

Using Grayscale’s Bitcoin Investment Trust (GBTC) as a Bitcoin tracker in our Stock Forecast Toolbox, we see solid negative signals in our 10-day prediction window. Today’s vector of -2.81% sinks to -10.36% in the following trading day and hovers around that level for the duration of the forecast. Strong negative signals for this fund indicate near-term negative momentum. The trust is priced at $2,234.00 at the time of publication, down 4.44% or $103.88. The predicted close today is $2,234.40 with a low and high of $2,081.78 (± 129.55) and $2,438.84 (± 154.58), 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 up 3.90% from the open at 9.58 at the time of publication, and our 10-day prediction window shows consistent positive movement.  The predicted close today is 9.79 with a positive vector of +1.20%, which moves to +8.93% in three trading sessions. Today’s predicted lows and highs are 9.25 (± 0.19) and 10.47 (± 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.



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