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The eight-session streak the Dow rode into Tuesday quickly evaporated, along with the rest of its 2018 gains, when the blue-chip suffered triple-digit losses yesterday. Other indices and commodities didn’t fare much better, all but the dollar took losses for the day. Gold and bonds might’ve been hit the worst as gold saw its worst drop since 2016 and the 10-year note once again peeked over highly-watched over 3.00% benchmark, currently trading at 3.09%. With volatile markets still upon us, I recommend selling into the rallies and monitoring the IWM, which is at its resistance level. My seasonal charts and Stock Forecast Toolbox predictions should provide good entries for investors interested in navigating this volatile market.
Today’s action sees stocks trading tentatively higher from yesterday, possibly signaling the dust has settled from those market shaking retail and manufacturing numbers. That, along with the ever-complicated geopolitical landscape that unfolds in new directions daily, investors should expect more volatility in coming days but nothing comparable to what we saw Tuesday. After dropping almost 200 points yesterday, the Dow looks to rebound today with a double-digit gain to barely keep it in the green for 2018 while Nasdaq and S&P are also trading slightly higher for the day, and are more likely to keep and build on their 2018 gains.
The major geopolitical headline of the day carries over from yesterday as the once seemingly smooth and stable path for a meeting with North Korea got shaken harder than the Dow Jones yesterday. North Korea, to many’s surprise, pulled out of their planned meeting with South Korea and threatened to completely cancel U.S. talks. South Korean and U.S. joint military drills ignited the abrupt cancellation while news of North Korea’s unwillingness to denuclearize has slowly begun to leak. Adding more fuel to the fire, the North Korean foreign ministry said it is not interested in giving up its nuclear program for economic benefits, citing U.S. involvement in Iraq and Libya and the state of those nations after U.S intervention, while doubling down on its stance that the semi-annual, planned drills were an act of provocation. Developments on this end will be closely watched leading up to June 12 meeting between the two nations.
Back in the U.S., more strong earnings are helping boost assets. Macy’s saw it stock jump 10% today after stellar earnings reported the retail chain almost doubled its net total income from the previous year. Micron Technology also saw some nice premarket gains, currently up 4% for the day. Industrial production slightly rose in April while new house construction fell by 3%, as reported yesterday. European markets look a bit shaky today as the pound doubles down in the wrong direction on yesterday’s losses while anti-establishment murmurs from Italy’s second largest populist party has global investors worried. As previously stated, the dollar continues its strong, four-week-long performance, reaching a 2018 high.
Using the ^GSPC symbol to analyze the S&P 500, our 10-day prediction window shows all positive signals. Today’s vector figure of +0.46% moves to 1.24% in one trading session before climbing further into positive territory. Today’s predicted support and resistance levels are 2,711.45 (±7.59) and 2,745.50 (± 7.68), respectively. The predicted close for tomorrow is 2,738.82. 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.
On May 15th, our ActiveTrader service produced a bullish recommendation for Transocean LTD (RIG). ActiveTrader, included in all paid Tradespoon membership plans, is designed for intraday trading.
Trade Breakdown
RIG opened near Entry 1 price range of $13.35 (± 0.11), moving through its Target Price of $13.48 in it the second hour of trading the following day, reaching $13.57. The Stop Loss was set at $13.22.
Our featured stock for Thursday is Disney (DIS). DIS is showing a confident uptrend 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. Our 10-day prediction model shows positive vector figure reaching +1.03% in two trading sessions which then incrementally builds throughout the 10-day forecast. Our benchmark for vector figures is +1.00%.
*Please note: Our featured stock 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 ActiveInvestor recommendations. If you are interested in receiving Vlad’s personal picks, please click here.
The stock is trading at $104.386 at the time of publication, up 1.43% from the open with a +0.24% vector figure.
Thursday’s prediction shows an open price of $103.20, a low of $103.12 and a high of $104.08.
The predicted close for Thursday is 103.72. Vector figure jumps to +.81% on Thursday and drives upward from there. This is a good signal for trading opportunities because we use vectors as a primary factor in determining price movements for stocks and ETF.
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 next trading session relative to the average of actual prices for 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.
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West Texas Intermediate for June delivery (CLM8) is priced at $71.01 per barrel, down .31% from the open, at the time of publication. Pressure on prices continues to grow as the supplies are down. The EIA lowered its 2018 growth forecast for demand which also did not help rising prices per barrel.
Looking at USO, a crude oil tracker, our 10-day prediction model shows all positive signals. The fund is trading at $14.395 at the time of publication, down .03% from the open. Tomorrow’s prediction sees support at $14.40 and resistance at $14.52. The predicted close for tomorrow is $14.52. Vector figures show +0.26% today, which turn 1.15% in two 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
Pressure from a strong dollar and rising yield rates tanked the commodity yesterday, bringing it to a multi-year low. Gold looks to fare a little better today but still has a lot of ground to gain to make up for yesterday’s brutal action. Investors should continue monitoring the rallying rates for direction on the commodity. The price for June gold (GCM8) is up 0.12% at $1,291.20 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 $122.52, up .03% at the time of publication. Tomorrow’s predicted low is $123.27 and the predicted high is $124.05. The predicted close for tomorrow is $123.62. Vector signals show +0.33% for today, reaching .77% in two trading session before turning negative in four 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.
After registering one of the biggest single-day climbs of 2018 on Tuesday, the 10-year note hovered around 3.08% all day, edging .01 in each direction. The selloff yesterday looks to be behind us but investors should continue monitoring global and geopolitcal news that could continue affecting bonds. The yield on the 10-year Treasury note is up 0.21% at 3.08% at the time of publication. The yield on the 30-year Treasury note is up .27% from the open at 3.21%.
Using the iShares 20+ Year Treasury Bond ETF (TLT) as a proxy for bond prices in our Stock Forecast Tool, we see all positive signals in our 10-day prediction window. Today’s vector of .26% moves to +96% in two trading sessions. The ETF is priced at $117.05 at the time of publication, down 0.17%. The predicted close tomorrow is $117.92 with a low and high of $117.49 and $118.88, respectively. 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 down 6.77% at 13.64 at the time of publication, and our 10-day prediction window shows all negative signals. The predicted close for tomorrow is 13.72 with a vector of -.56%. The predicted lows and highs for tomorrow are 13.17 and 14.96, respectively. 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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