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Today, markets traded lower as Fed Chair Jerome Powell provided uncertainty regarding the projected length of an economic recovery and stated additional government aid could be “worth it.” Similarly-discouraging comments from Dr. Fauci on Tuesday and the latest batch of underwhelming economic reports are also pressuring markets, with all three major U.S. indices down over 1.5% for the day. Retail Sales report for April is due on Friday while today’s Producer-Price Index release showed a 1.3% drop last month. Next week, several key retail earnings will release including Walmart, Home Depot, and Lowes. It is our opinion that investors should continue considering hedging portfolios into the rallies. Based on our models, the SPY will trade between $270-$295 level in the next 2-3 weeks. Several sectors have already broken through their recent overhead resistance levels, eliminating the potential for the market to retest $260 SPY level, in our opinion. We will be a buyer into any short term corrections but will continue monitoring the VIX. The market can overshoot support and resistance levels when VIX is trading near $30 level. In the short term, we still believe the market is overbought; long-term investors can consider buying equities with dollar-cost averaging in mind. Market Commentary readers are always encouraged to maintain clearly defined stop-levels for all positions. For reference, the SPY Seasonal Chart is shown below:
Globally, European markets traded lower while Asian markets closed to mixed results. Crude oil prices also lowered while Gold and the dollar, although usually trading inversely, traded higher. Long-term U.S. Treasury notes also saw yields lower.
Key U.S. Economic Reports Out This Week:
Key Corporate Earnings Out This Week:
Using the “^GSPC” symbol to analyze the S&P 500 our 10-day prediction window shows a near-term mixed outlook. 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.
On May 6th, our ActiveTrader service produced a bullish recommendation for Equifax Inc (EFX). ActiveTrader is included in several Tradespoon membership plans and is designed for day trading, with signals meant to last for 1-2 days.
Trade Breakdown
EFX entered its forecasted Strategy B Entry 1 price range $146.62(± 1.47) in the first hour of trading that day and passed through its Target price of $148.09 in the first hour of trading the following day. The Stop Loss price was set at $145.15.
Our featured symbol for Thursday is iPath S&P VIX Short-Term (VXX). VXX is showing a steady vector 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 current-day predicted support and resistance, relative to our entire data universe.
The stock is trading at $35.9, with a vector of 7.24% at the time of publication.
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.
*Please note: At the time of publication Vlad Karpel does not have a position in the featured symbol, VXX. 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.
West Texas Intermediate for Crude Oil delivery (CL.1) is priced at $25.51 per barrel, down 1.01% from the open, at the time of publication.
Looking at USO, a crude oil tracker, our 10-day prediction model shows mixed signals. The fund is trading at $20.6 at the time of publication. 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 up 0.94% at $1,722.80 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 $161.58, at the time of publication. Vector signals show +0.33% 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.
The yield on the 10-year Treasury note is down, at 0.649% at the time of publication.
The yield on the 30-year Treasury note is down, at 1.347% 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 mixed signals in our 10-day prediction window. 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 $35.28 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.
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