Markets Lower on U.S.-China Tension, Core Inflation Rises 1.7% Last Month

October 31, 2019
By Vlad Karpel

Following the third straight interest rate cut by the FOMC, markets are trading lower today with the Dow, S&P, and Nasdaq on track to close in the red. Pressuring markets is the latest hiccup in U.S.-China negotiations as additional delays are likely to occur following the latest comments from Chinese officials, as well as weaker than expected PMI data released today. This week, we have already seen several big-name corporate earnings released including Facebook, Apple, and Alphabet Inc.; still due are third-quarter reports from Exxon and Chevron tomorrow. The latest economic reports, Consumer Spending and Personal Income, returned positively while October labor-data, including hourly earnings, unemployment rate, and payroll, is set to release tomorrow. Next week, look out for Qualcomm, Disney, Uber, and Sysco Q3 reports. The market broke through 52 weeks high and we will continue following the semiconductor sector as we approach a strong seasonal trend, looking to buy when SPY is near $294-$296 level. Further volatility expected and we recommend readers maintain clearly defined stop levels for all positions. Overhead resistance is near $302-$305 level and there is little evidence the market will retest its 200 days MA. For reference, the SPY Seasonal Chart is shown below:

Markets are trading lower today following added tension and uncertainty regarding U.S.-China negotiations. The latest comments from the Chinese government seemed to have cast doubt and soured optimism going into the next round of negotiations, which has yet to be announced. As both sides continue to attempt to schedule a meeting, comments from either side will dictate sentiment without any formal deal in place. The latest came from President Trump after Chinese officials questioned the likelihood of a long-term deal, with the President tweeting “China and the USA are working on selecting a new site for signing of Phase One of Trade Agreement, about 60% of total deal, after APEC in Chile was canceled due to unrelated circumstances. The new location will be announced soon.” In other global trading news, the latest Brexit extension has eased fears of any major European disruption, causing European markets to rise this week, but have reversed course today closing in the red. Overseas, Asian markets closed to mixed results with continued U.S.-China uncertainty. 

Apart from U.S.-China, earnings continue to dictate markets this week with several key reports having already released. Apple released earnings yesterday which beat expectations and saw shares rise today off solid holiday forecast. Facebook data was also strong as the company saw shares rise, currently up 2%. Kraft reported strong third-quarter data before the market open today which saw share up an impressive 12% today. Tomorrow, we will see Chevron and Exxon data along with October labor data while next week the earnings and economic report load does not lighten up. Marriott and Sysco are due to release on Monday, Qualcomm and Square Inc. on Wednesday. September Spending data, released earlier today, showed an increase of 0.2% while rose 0.3%. Core inflation, however, was up 1.7% from last month. Next week, Q3 productivity and unit labor cost will release along with the September trade deficit, consumer credit, and factory orders. 

Using the “^GSPC” symbol to analyze the S&P 500 our 10-day prediction window shows mostly positive signals. Today’s vector figure of +0.04% moves to +1.16% in five 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.  


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Highlight of a Recent Winning Trade

On October 10th, our ActiveTrader service produced a bullish recommendation for Wal-Mart Stores (WMT). ActiveTrader is included in all paid Tradespoon membership plans and is designed for day trading.

Trade Breakdown

WMT entered its forecasted Strategy B Entry 1 price range $118.93 (± 0.36) in its first hour of trading and passed through its Target price of $120.12 in the second hour of trading the following trading day. The Stop Loss price was set at $117.74.


Friday Morning Featured Symbol

*Please note: At the time of publication we do not own the featured symbol, WFC. 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 Friday is Wells Fargo & Company (WFC). WFC 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 $51.32 at the time of publication, down 1.36% from the open with a +0.46% 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 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 $54.07 per barrel, down 1.82% from the open, at the time of publication.

Looking at USO, a crude oil tracker, our 10-day prediction model shows positive signals. The fund is trading at $11.32 at the time of publication, down 1.31% from the open. Vector figures show +0.87% today, which turns +3.02% in five 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 up 1.19% at $1,274.40 at the time of publication.

Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows mostly positive signals. The gold proxy is trading at $142.43, up 1.00% at the time of publication. Vector signals show +0.01% 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 down 4.73% at 1.69% at the time of publication. The yield on the 30-year Treasury note is down 3.33% at 2.18% 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 +0.51% moves to +1.21% 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 12.33% at $13.85 at the time of publication, and our 10-day prediction window shows negative signals. The predicted close for tomorrow is $13.85 with a vector of -0.78%. 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.


Sign up now for Lifetime Access and pay less than the cost of just 1 year and lock-in …
PERMANENT UNLIMITED ACCESS!

  • Subscribe now for less than the cost of one year at the regular rate!

  • With 36 month trailing gains of 1,342%, and an 75% win-rate, a lifetime Membership could easily turn $100,000 into $1,442,193

  • Tradespoon Premium is the only trading service you’ll ever need.

CLICK HERE TO SIGN UP


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