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After one of the worst weeks for the market in recent history, markets are rebounding with the Dow, Nasdaq, and S&P on track to close in the green today. Last week, all three major U.S. indices recorded drops of over 10% as the COVID-19 virus spread throughout Asia and Europe with a rapidly increasing death toll. While serious concerns regarding the virus remain, global markets were able to bounce back today after recording 7-straight sessions in the red. With the market starting the process of finding the bottom, aggressive traders should consider going long near $285 and short near $315. Long-term traders should consider waiting for two days, the market will make higher highs and higher lows, before considering going long and defining where the current market bottom is. For the next 2-3 weeks, we expect the markets to trade in the range of $285-$315 with global pressures continue influencing markets. The VIX has now reached $50 level, a level not seen since December 2018, indicating the worse part of the selloff is behind us. As always, Market Commentary readers should maintain clearly defined stop-levels for all positions. For reference, the SPY Seasonal Chart is shown below:
All three major U.S. indices saw gains of over 2% today after a string of severe selloffs, primarily caused by growing concerns and fears regarding the Coronavirus. With a growing death toll and spread into territories outside of China, global pandemic fears began to put immense pressure on markets. After seven straight selloffs for markets, U.S. markets were able to rebound today while global markets continued to struggle. Globally, Asian markets closed in the red once again while European markets were mixed. While the global death toll has topped 3,000, markets were able to rally as both global containment efforts continue with both the CDC and WHO addressing the issue. Still, fear over a U.S. outbreak remains as cases continue to be tested both in the North and South America.
Over the weekend, Chinese factory data returned showing significant dips since the COVID-19 outbreak. Other key economic reports to monitor this week include the U.S. Beige Book on Wednesday, Q4 Productivity and Unit Labor Costs. As earnings season winds down, several key sectors and brand names are still due to report. This week we will see data from Target, Kohl’s, Costco, and Zoom Video, with JD.com reporting before the open today and Tilray due after market close. Gold and the dollar continue trading in opposite directions, with gold up over 1%, while oil is also rebounding following heavy selling pressure last week. Tomorrow, monthly motor vehicle sales data will release while Wedesndsay will feature ADP’s February Employment report.
Using the “^GSPC” symbol to analyze the S&P 500 our 10-day prediction window shows a near-term negative outlook. Today’s vector figure of -4.27% moves to -9.29% in four 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.
On February 25th, our ActiveTrader service produced a bullish recommendation for General Motors Company (GM). ActiveTrader is included in all paid Tradespoon membership plans and is designed for day trading, with signals meant to last for 1-2 days.
Trade Breakdown
GM entered its forecasted Strategy B Entry 2 price range $33.26(± 0.22) in its first hour of trading that day and passed through its Target price of $32.76 in the following hour of trading. The Stop Loss price was set at $34.42.
Our featured symbol for Tuesday is Ipath S&P 500 VIX Short-Term Futures (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 $23.02 at the time of publication, with a -1.24% 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.
*Please note: At the time of publication Vlad Karpel does 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 $47.10 per barrel, up 5.23% 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 $9.77 at the time of publication. Vector figures show -2.07% today, which turns to -16.14% 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.
The price for the Gold Continuous Contract (GC00) is up 1.84% at $1,595.70 at the time of publication.
Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows negative signals. The gold proxy is trading at $150.18, at the time of publication. Vector signals show -1.40% 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 5.10% at 1.10% at the time of publication.
The yield on the 30-year Treasury note is down 1.32% at 1.66% 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 +0.56% moves to +1.94% 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.
The CBOE Volatility Index (^VIX) is $35.72 at the time of publication, and our 10-day prediction window shows positive 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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