Markets Lower Behind Global Trade Uncertainty and Tariff Escalation

May 13, 2019
By Vlad Karpel

Markets are down behind the re-escalation of China-U.S. tariffs, which began on Friday when the U.S. raised tariffs on Chinese goods from 10% to 25% causing China to respond with their own retaliatory tariffs. Both sides have since stated their intent to continue expanding tariffs which could further volatility and complicate trade talks. Corporate earnings season continues with several big names scheduled to report this week including Walmart, Alibaba, Cisco, Macy’s, and Tilray. Look for monthly retail data to release on Wednesday, housing data on Thursday. The market tested it’s 50-day moving average today and SPY broke support at $286. It is too early to think we are in a bear market and we remain bullish in our market outlook. We do not see SPY breaking support at $280 or worst case $277, which is 200-day moving average. However, if further tariffs are imposed the market can break 200-day moving average on SPY. For reference, the SPY Seasonal Chart is shown below:

All three major U.S. indices are trading sharply lower as global trade uncertainty fuels volatility and selloffs. Both the U.S. and China have since indicated they are willing to engage in further tariffs, a complete turnaround from the previous week’s “productive” trade talks, as noted by both trade delegations. Two rounds of negotiations ended on Friday with no deal which initiated the tariff increases and the next talks could come as late as June. President Trump and President Xi are due to attend June’s G20 summit but whether any progress on trade will occur before then or during the international conference is unknown. Globally, both Asian and European markets closed in the red.

As corporate earnings season winds down several key reports are still due. Foremost is Walmart’s Thursday report which is currently forecasted at $1.02 earnings per share, down from last year $1.14 but still fairly neutral in the current market conditions. Also worth following with Walmart’s latest report are plans to rival Amazon Prime’s shipping rate, which some analysts project could cost America’s largest retailer north of $200 million. Two major video game publishers are due to report earnings after the close today, Take-Two and Tencent, and are both currently trading lower. Tomorrow, look for HDFC Bank, Allegiant Technologies, Aurora Cannabis, and Tilray reports while Wednesday will feature Alibaba, Cisco Systems, and Kraft-Heinz. As previously noted, retail data will release on Wednesday and could provide some positive guidance amidst the current negative market conditions. Similarly, housing and employment data by week’s end could also provide support.

Using the “^GSPC” symbol to analyze the S&P 500, our 10-day prediction window shows negative signals. Today’s vector figure of -0.04% moves to -2.97% in five trading sessions. Prediction data is uploaded after the market close at 6pm, CST. Today’s data is based on market signals from the previous trading session.  


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Tuesday Morning Featured Symbol

*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 symbol for Tuesday is iPath S&P 500 VIX (VXX). VXX is showing a confident vector trend in our Stock Forecast Toolbox’s 10-day forecast.

The ETF is trading at $31.8 at the time of publication, up 13.00% from the open with a +0.62% 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.


Highlight of a Recent Winning Trade

On April 25th, our ActiveTrader service produced a bullish recommendation for Constellation Brands Inc (STZ). ActiveTrader is included in all paid Tradespoon membership plans and is designed for day trading.

Trade Breakdown

STZ entered its forecasted Strategy B Entry 1 price range $210.14 (± 1.90) in its first hour of trading and passed through its Target price $212.24 in the first hour of trading that day. The Stop Loss price was set at $208.04.


Oil

West Texas Intermediate for June delivery (CLM9) is priced at $60.96 per barrel, down 1.14% 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 $12.7 at the time of publication, down 1.00% from the open. Vector figures show -0.89% today, which turns -2.00% 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 June gold (GCM9) is up 1.06% at $1,300.90 at the time of publication.

Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows positive signals. The gold proxy is trading at $122.63, up 1.00% at the time of publication. Vector signals show +0.14% 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 2.48% at 2.41% at the time of publication. The yield on the 30-year Treasury note is down 0.96% at 2.84% 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 positive signals in our 10-day prediction window. Today’s vector of +0.19% moves to +0.62% 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 up 24.63% at $19.99 at the time of publication, and our 10-day prediction window shows positive signals. 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.


NEW:  “Vlad’s Portfolio”

My NEW membership will allow you to follow EVERYTHING that I’m trading so you can simply duplicate my success!

You will have immediate access to my Premium Portfolio, RoboInvestor Portfolio, and my bread and butter, Live Trading Room (both morning and afternoon sessions)!

In addition, you will have real-time access to my Trade Log where you will see in real-time each and every trade that I place!

I want to make this a complete no brainer.

I’m only releasing this membership to 50 people so please act fast.  This offer is only available until Midnight or until the 50 spots are filled, whichever comes first!  You don’t want to miss out! Just click the link below…

Click Here to Sign Up


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