Investors weigh continued drops in oil prices and maintain focus on global trade

March 20, 2017
By Vlad Karpel

Although stocks have edged higher today, falling oil prices have an adverse effect on energy sectors, while financials pulled down as well. Investors are looking at U.S Treasury Secretary Steven Mnuchin’s comments at the G20 summit as a repositioning from traditional trade policies. The Trump administration’s “America First” policy theme came through as Secretary Mnuchin was able to successfully advocate for the removal of anti-protectionism language in an important G20 policy statement.  In the broader picture, most analysts do not expect the U.S to adopt radically different protectionist trade stances. This may signal future iterative moves to make slight alterations to trade policy that are not as supportive to globalization, however.

The DJIA is currently up 0.15% at 20,945.07. The Nasdaq-100 is up 0.17% at 5,911.20 and the S&P 500 is currently trading at 2,378.22 which is down 0.05% from the open. All indexes had seen slips in earlier trading.

Using the ^GSPC symbol to analyze the S&P 500, our 10-day prediction window shows three sessions of downward movement followed by consistent positive corrections. Negative vector figures ease from -0.22% today to -0.03% in the next two trading sessions before positive upturn. Today’s support and resistance is 2,367.72 (± 2.91) and 2,379.51 (± 2.93), respectively. The predicted close today is 2,378.83.   



Crude oil prices are nearing a four-month low today as domestic U.S production activity continues unhampered.  Bullish speculation in the market has waned and investors are cutting long positions, even as OPEC attempted to stabilize prices by reporting that its member countries are in favor of extending the production cap accord. The announcement that OPEC member countries supported an extension past the original six-month point had boosted prices slightly today, but failed to sway investors in light of heavy U.S shale production and other domestic activities.  West Texas Intermediate for April delivery is currently priced at $48.35 per barrel, down 0.88% from the open.

Looking at USO, a crude oil tracker, our 10-day prediction model shows strong negative signals. Vector figures show -0.77% for today, followed by incremental downward moves past -2% in the next six trading sessions. All vector figures are based on today’s market conditions. The fund is currently trading at 10.30, which is down 0.29% from the open. Today’s prediction sees support at 10.24 (± 0.06) and resistance at 10.33 (± 0.06). The predicted close for today is 10.28.  



Gold for April delivery is up 0.21% at $1,232.90 a troy ounce, a third consecutive session of making gains. We are still seeing the effect of last week’s interest-rate announcement from the Fed, which has weakened the U.S dollar. News of the timeline to Britain’s exit from the E.U had also impacted the dollar, driving up gold as well.

Investors also have their eye on a peculiar development from the G20 summit, where Treasury Secretary Steven Mnuchin convinced officials to drop language which disavowed protectionism from a key policy statement. Signals like this have a eroding effect on confidence in currencies, which inversely boosts investment in gold.  

Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows negative corrections for gold prices. Relative to today’s conditions, the negative vector values pass -0.70% within three trading sessions before easing.  The gold proxy is currently trading at 117.50, up 0.43%. Today’s predicted low is 115.83 (± 0.28) and the predicted high is 117.21 (± 0.28). The predicted close today is 117.00 with a vector value of -0.25%.  



Yields on the 10-year Treasury note is holding steady, currently at 2.477%, down just 0.024% from the open. The 10-year Treasury yield also just surpassed the S&P dividend yield figures.

Using the iShares 20+ Year Treasury Bond ETF (TLT) as a proxy for bond prices in our Stock Forecast Tool, we see choppy signals in our 10-day prediction window. Relative to today’s conditions, we see vector figures oscillating from -0.50% today to +0.33% in four trading sessions before more negative corrections.  The ETF is currently priced at $119.00- up 0.31% from the open. The predicted close today is $117.38 with a low and high of 116.51 (± 0.29) and 118.64 (± 0.29), respectively.  



The CBOE Volatility Index (VIX) is currently down 0.27% at 11.31. Relative to today’s conditions, the 10-day prediction window shows strong signals for negative movement.. The predicted close today is 11.01 with a negative vector of -0.68%. Today’s predicted lows and highs are 10.81 (± 0.12) and 11.42 (± 0.13), respectively.

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