Markets Pressured By U.S-China Uncertainty and Lower ISM Manufacturing Index

December 2, 2019
By Vlad Karpel

Major U.S. indices were weighed by underwhelming November manufacturing data as well as the latest tariff news. The unexpected dip in U.S. manufacturing data has overshadowed positive economic data from China while also tampering last week’s trade deal optimism, which pushed indices into record territory. China has levied its first counter-measure regarding the U.S. intervention in Hong Kong by closing off the Hong Kong port visited by U.S. naval ships. Uncertainty regarding “Phase One” of the U.S.-China trade deal remains as it is seeming more likely a deal will not be reached by the end of the year while contradictory messages from both sides have confused investors. China has stated the U.S. has agreed to roll back tariffs as part of the deal while President Trump has previously stated the Dec. 15th tariff hikes would go into effect if no deal is reached. SPY overhead resistance remains near $317 and we will look to buy when the SPY is closer to $303 level. With little evidence the SPY will retest its 200 days MA, we expect further volatility as well as shallow pullbacks. We encourage Market Commentary readers to maintain clearly defined stop levels for all positions. For reference, the SPY Seasonal Chart is shown below:

All three major U.S. indices closed in the red on the first trading day of December behind unexpectedly bad U.S. manufacturing data as well as uncertainty regarding U.S.-China trade deal. U.S. manufacturing data for November returned lower than expected, down to 48.1% from 48.3%. Look for November employment data on Wednesday, Trade Deficit and factory order on Thursday, and the December Consumer Sentiment Index on Friday. Cyber Monday should provide a nice boost to the economy, while additional sales and consumer activity are likely to increase through the holiday season. Amazon is trading lower today, as well as several other notable retailers. Globally, Asian markets closed higher while European markets closed in the red. The latest comment from China has been contradicting the previous sentiment which saw the “Phase One” trade deal near completion. China has since requested further rollback of tariffs while President Trump has stated December 15th tariffs will kick in unless a deal is reached. As China looks to take additional counter measures, look for U.S.-China development in the coming days to dictate markets.

Using the “^GSPC” symbol to analyze the S&P 500 our 10-day prediction window shows a near-term mixed outlook. Today’s vector figure of -0.17% moves to +1.17% in five trading sessions. Prediction data is uploaded after the market closes at 6 p.m. 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 November 11th, our MonthlyTrader service produced a bullish recommendation for Eli Lilly and Company (LLY). MonthlyTrader is included in Tools, Premium, Elite Trading Circle or available as a standalone subscription. This service provides 3 bullish and 3 bearish stock & single option signals for 2-5 day trades. 

Trade Breakdown

LLY entered its forecasted Strategy A Entry 1 price range $112.03 (± 0.70) in its first hour of trading on 11/14 and passed through its Target price of $117.63 in the first hour of trading today- 11/25/19. The Stop Loss price was set at $106.43. Every stock recommendation includes a single option strategy based on the stock price parameters. 

Tuesday Morning Featured Symbol

*Please note: At the time of publication Vlad Karpel does have a position in the featured symbol, PRU. 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 Tuesday is Prudential Financial Inc (PRU). PRU is showing a confident vector trend in our Stock Forecast Toolbox’s 10-day forecast. This stock is assigned a Model Grade of (A) indicating it ranks in the top 10th percentile for accuracy for current-day predicted support and resistance, relative to our entire data universe.  

The stock is trading at $93.47 at the time of publication, up 0.57% from the open with a +0.27% 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 the 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 $58.04 per barrel, down 0.63% from the open, at the time of publication.

Looking at USO, a crude oil tracker, our 10-day prediction model shows a near-term negative trend. The fund is trading at $12.10 at the time of publication, down 0.08% from the open. Vector figures show -0.90% today, which turns -1.29% in three 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 the Gold Continuous Contract (GC00) is down 0.45% at $1,453.70 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 $136.94, down 0.58% at the time of publication. Vector signals show +0.43% 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 1.33% at 1.77% at the time of publication. 

The yield on the 30-year Treasury note is up 0.55% at 2.19% 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 overall positive signals in our 10-day prediction window. Today’s vector of +0.40% moves to +0.53% 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 at $11.54 at the time of publication, and our 10-day prediction window shows mixed signals. 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.


CYBER MONDAY SPECIAL:

As a Lifetime Member of the Elite Trading Circle, you’ll always have instant access to just about any investing tool you’ll ever need.

And the technology will continue to be upgraded and refined to meet evolving market environments as the years go by.  

So, your lifetime Membership will never be behind the times.

I guess I need to make one qualification for this offer:

This offer is good today only!  You need to act immediately because at midnight the offer is GONE!

Just use the form below to claim this special offer!

Click Here to Sign Up


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