Market Rises Following Powell’s Comments, FOMC Minutes Also Indicate Near-Term Rate Cut

July 10, 2019
By Vlad Karpel

Markets are on the move up today following dovish comments by Fed Chairman Jerome Powell to Congress as part of a two-day testimony. Delivering the semiannual Monetary Policy Report Powell, this will be Powell’s first appearance since last month’s FOMC, which held rates at 2.25% to 2.50%, for which speculation has grown, indicating rate cut could soon be due. Last month, an impressive jobs report along with a muted inflation reading fueled rate cut speculation, look for Powell’s comments today to provide an indication of the Fed’s direction. Similarly, look for last month’s FOMC minutes to be released today as a guide for current market conditions and outlook. Following yesterday’s impressive PepsiCo earnings, which helped shares of the beverage and snack company rise almost 2%, look for Bed Bath and Beyond corporate earnings today and Delta Airlines report tomorrow. SPY maintains an all-time high level and we encourage Market Commentary readers to consider buying near $290 level and avoid chasing near $298. Powell’s testimony could affect markets this week but we do not see market momentum pushing SPY above $300, potentially overshooting to $305. For reference, the SPY Seasonal Chart is shown below:

All three major U.S. indices are on track to close in the green today following comments from Fed Chair Powell which seem to indicate an interest rate cut in 2019. Powell’s comments regarding the job market and consumer spending noted a positive state of the current U.S. economy. “Economic growth to remain solid, labor markets to stay strong,” while also noting inflation should remain near the Committee’s two percent objective. The magnitude of the cut is still uncertain but most analysts have begun factoring in at least one for this year. Fed minutes from last month’s FOMC also indicated that the Fed is aware of the current positive growth in the U.S. economy, to which several policymakers discussed a near-term rate cut that “could help cushion the effects of possible future adverse shocks to the economy.” Inflation worries also surfaced in the meeting with the current gauge reading of 1.5% this year, noticeably below the 2% desired level. Still, some Fed members were more cautious regarding an interest rate cut and would need to see further evidence for the cut. Eight of the seventeen officials mentioned in the minutes that they expected at least one cut in 2019. Globally, Asian markets were split while European markets traded modestly lower. Recent data from the U.K. showed a modest rebound in May following a sluggish April while Chinese policymakers look for economic stimulus as a response to falling commodity prices and flat domestic demand. 

Bed Bath & Beyond is scheduled to release its second-quarter corporate earnings after market close today while Delta Airlines is releasing there’s tomorrow. Other economic reports worth monitoring this week include weekly jobless claims, consumer price index, core CPI, and Federal Budget from June tomorrow, as well as Producer price index on Friday. 

T-Mobile saw its shares impressively rise today, over 4%, behind the news it will replace Red Hat Inc. in the S&P following IBM’s acquisition of Red Hat. Tesla also produced nice gains today following reports that the company is increasing production in its California factory this month. Levi Strauss released earnings yesterday after market close which missed expectations and saw steep declines of its shares, nearly 11% down today. Look for an uptick in earnings releases next week with several major banks due to report. 

Using the “^GSPC” symbol to analyze the S&P 500, our 10-day prediction window shows mixed signals. Today’s vector figure of +0.11% moves to -0.21% in four trading sessions. Prediction data is uploaded after the market close at 6 pm, CST. Today’s data is based on market signals from the previous trading session.  


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Highlight of a Recent Winning Trade

On June 28th, our ActiveTrader service produced a bullish recommendation for CenturyLink Inc (CTL). ActiveTrader is included in all paid Tradespoon membership plans and is designed for day trading.

Trade Breakdown

CTL entered its forecasted Strategy B Entry 1 price range $11.64 (± 0.09) in its first hour of trading and passed through its Target price $11.76 in the fifth hour of trading that day. The Stop Loss price was set at $11.52.


Thursday Morning Featured Symbol

*Please note: At the time of publication we do own the featured symbol, PSX. 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 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 symbol for Thursday is Phillips 66 (PSX). PSX 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 $98.1 at the time of publication, with a +0.36% vector figure.

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 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 Crude Oil delivery (CL.1) is priced at $60.27 per barrel, up 4.22% from the open, at the time of publication.

Looking at USO, a crude oil tracker, our 10-day prediction model shows negative signals. The fund is trading at $12.51 at the time of publication, up 4.00% from the open. Vector figures show -0.31% today, which turns -3.25% in five 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 the Gold Continuous Contract (GC00) is up 1.35% at $1,419.40 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 $133.71, up 1.00% at the time of publication. Vector signals show +0.61% for today. 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

The yield on the 10-year Treasury note is down 0.30% at 2.06% at the time of publication. The yield on the 30-year Treasury note is up 1.23% at 2.57% 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 negative signals in our 10-day prediction window. Today’s vector of -0.03% moves to -0.26% 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. 

Volatility

The CBOE Volatility Index (^VIX) is down 6.60% at $13.16 at the time of publication, and our 10-day prediction window shows positive signals. The predicted close for tomorrow is $14.78 with a vector of +1.98%. 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.


Elite Trading Service

“I cannot guarantee your acceptance” 

Are you aware that you are one of a very select few (for real) to whom I recently extended a limited-time invitation to “test-drive” a game-changing very personal new Elite Trading service from Tradespoon?

If you are quick enough, you can join me live, in my trading room (real-time) and duplicate my trades seconds after I make them.

  • This breakthrough service is limited to only 50 traders.

  • Acceptance is on a first come first served basis and when the 50 Elite seats are taken, that’s it.

  • There is no risk for your trial

“Join me as I continue to show a 75% win-rate!” Vlad Karpel, CEO

Offer Expires At Midnight Tonight!

We make money in every market.  Don’t miss our next big trade!  

Click on the link below and hope that one of those 50 Elite seats is still available. If they’re gone, I’m sorry.  There’s nothing I can do.

Click here to learn more and check on availability


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