Markets Muted Ahead of EU Central Bank Decision, FOMC Next Week

September 9, 2019
By Vlad Karpel

Major U.S. indices are extending last week’s rally with gains in early morning trading today and were on track to close in the green behind renewed global trade optimism. In the coming weeks, several central bank monetary policy meeting will take place and likely affect markets, including the European Central Bank meeting in Frankfurt this week and the U.S. FOMC next week. With the market breaking out of August range of $280-$295, the SPY is currently trading between $294-$302 and we do not see the potential for the market to overshoot all-time high level at $302. Still, the question remains as to whether this is a true break out initiating a bull market or a fault breakout. We remain in our belief that market is range-bound and not a true breakout until we see other asset classes, such as XLU, TLT, EEM, and DXY for example, breakout out of their existing trends. We encourage Market Commentary readers to maintain clearly defined stop levels for all positions as further volatility is expected. We will look to buy when SPY is near $282 and sell near $300. For reference, the SPY Seasonal Chart is shown below:

Since this morning’s rally, stocks have reversed course with the S&P and Nasdaq erasing gains while the Dow is still on track to close with modest gains. Markets were up behind renewed global trade optimism with developments in both U.S-China and China-Hong Kong tensions. Talks between the U.S. and China are scheduled for early October while China has moved forward with stimulus plans following the revolts in Hong Kong. The latest data from China shows a decrease in exports in the month of August while several key U.S. economic reports are due this week. Look out for producer price index and wholesale inventories to release on Wednesday; core CPI, Federal budget, and consumer price index on Thursday. Also key this week will be the European Central Bank policy meeting in which many expect an interest rate cut similar to the one we saw from the U.S. Federal Reserve’s last meeting. Next week, Fed members will meet for the FOMC for a two-day meeting. 

Using the “^GSPC” symbol to analyze the S&P 500 our 10-day prediction window shows mixed signals. Today’s vector figure of -0.07% moves to +2.48% 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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Highlight of a Recent Winning Trade

On September 6th, our ActiveTrader service produced a bullish recommendation for TJX Companies (TJX). ActiveTrader is included in all paid Tradespoon membership plans and is designed for day trading.

Trade Breakdown

TJX entered its forecasted Strategy B Entry 1 price range $55.77 (± 0.38) in its first hour of trading and passed through its Target price $56.33 in the first hour of trading that day. The Stop Loss price was set at $55.21


Tuesday Morning Featured Symbol

*Please note: At the time of publication we do not own the featured symbol, HD. 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 Home Depot (HD). HD 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 $231.69 at the time of publication, up 0.24% from the open with a +0.76% 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 $58.05 per barrel, up 2.71% 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 $12.07 at the time of publication, up 2.55% from the open. Vector figures show -0.56% today, which turns -0.35% 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 down 0.47% at $1,508.50 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 mixed signals. The gold proxy is trading at $141.47, down 0.32% at the time of publication. Vector signals show -0.19% 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 up 4.65% at 1.63% at the time of publication. The yield on the 30-year Treasury note is up 4.17% at 2.11% 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 -0.28% moves to -1.53% 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 3.67% at $15.55 at the time of publication, and our 10-day prediction window shows mixed signals. The predicted close for tomorrow is $15.83 with a vector of +1.73%. 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.


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