Markets Shake Off Global Headwinds in New Year

January 2, 2019
By Vlad Karpel

All three major U.S. indices saw early dips at the open today, with the Dow dropping more than 350 points and then began rebounding late morning and early afternoon. Top of mind for investors today is a December manufacturing reading from China, showing a continued drop to the lowest point since February 2016. Fears of a slowing global economy were not abated by these numbers, and capital flows were diverted from assets perceived as risky to start the new year on a cautious note. German manufacturing data also showed a slowdown to a 33-month low, compounding concerns in the U.S. of a contracting global ecnomny making inroads here. Markets were able to shake off Asian equitiy weaknesses, however, and are returning from the skid . On the political front, the partial government shutdown continues, but President Trump has invited lawmakers to a meeting today to attempt to resolve the spat over his border wall. During a shutdown, a handfull of economics reports will be delayed as well. The row over tariffs and trade between China and the U.S. has also not reached a resolution as of yet, so invetsor uncertainty remains until new information is gathered from ongoing negotiations. After a record setting rally last week, the markets have set new lows at $230-233 for the SPY. The current range continues to trade between $233 and $253, with key support at $240 in the short term. SPY Seasonal Chart is shown below for reference:

 Meetings between Washington and Beijing delegations should occur during the G20 summit, and the products of those meeting should be broadcasted to the market at large in order to ease worries. In Asian markets, the Hang Seng Index (HIS) closed down 2.77% and the Shanghai Composit (SHCOMP) slid 1.2%.

 Tesla is in focus today, following its reported Q4 deliveries coming in below expectations, as well as an announcement of a price slash on its Model S, Model X and Model 3 vehicles. Although deliveries increased 8% from Q3 to 90,700, the consensus expectation was at 92,000. Tesla’s stock price had dropped 7.8% in Wednesday trading.

Using the “^GSPC” symbol to analyze the S&P 500, our 10-day prediction window shows all negative signals. Today’s vector figure of -0.28% moves to -0.90% in five trading sessions. The predicted close for tomorrow is 2,494.33. 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.   


New Year’s Special – Extended!

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Highlight of a Recent Winning Trade

On December 24th, our ActiveInvestor service produced a bullish recommendation for Boeing Co. (BA). ActiveInvestor is included in Tradespoon’s Tools and Premium membership plans and is designed for swing trading.

Trade Breakdown

BA passed through its forecasted Entry 1 price ranges (301.37, ± 3.01) or (304.55 ± 3.05) depending on the chosen Strategy within two trading days. BA hit its Target prices (316.44 or 319.78 depending on chosen Strategy)on 12/28, and continues to fluctuate in the Target price ranges. The Stop Loss prices were set at $286.30 or $289.82, depending on the chosen Strategy.


Thursday Morning Featured Stock

Our featured stock for Thursday is PayPal Holdings Inc. (PYPL).PYPL 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 near-term predicted support and resistance, relative to our entire data universe. 

*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 $85.74 at the time of publication, up 1.96% from the open with a +0.09% 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 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

Crude prices shook off the slide in equities in early Wednesday trading, where investors temporarily showed concerns about oil demand in the face of a potential global economic contraction. Capital flows are now entering at key support levels and investors seem to be looking toward promised output cuts by major OPEC producers, namely Saudi Arabia and a non-member cooperating player in Russia.

West Texas Intermediate for February delivery (CLG9) is priced at $47.28 per barrel, shooting up 4.18% 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 $9.99 at the time of publication, up 3.42% from the open. Vector figures show -0.45% today, which turns -1.00% in three 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

A risk-off investment attitude fueled gold prices up toward recent highs today, edging near a psychological $1,300.00 resistance level in the face of underwhelming economic data abroad. Although equities have since shed off Wednesday’s drops, the yellow metal is seeing a boost from lingering safe-haven trading. 

The price for February gold (GCG9) is down 0.41% at $1,286.70 at the time of publication after seeing an $8 gain earlier Wednesday. 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 $121.31, up 0.05% at the time of publication. Vector signals show +0.01% for today which move to 0.39% in three 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. 

 

 

Treasuries

Treasury bond prices rose through the early Wednesday risk-averse trading activity, pressuring yields lower as the markets now contemplate the tone for 2019. The yield on the 10-year Treasury note is down 0.63% at 2.67% at the time of publication. The yield on the 30-year Treasury note is down 0.73% at 2.99% 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 overall positive signals in our 10-day prediction window. Today’s vector of +0.61% moves to +0.81% 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 down 4.33% at $24.32 at the time of publication, and our 10-day prediction window shows positive signals. The predicted low and highs for tomorrow are $26.07 and $30.45, respectively. Today’s vector of +1.64% moves to +7.02% tomorrow. 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. 


New Year’s Special – Extended!

While our web designer is still on vacation, we had to postpone raising our prices until he gets back to update the website.  This is your last chance to get Unlimited LIFETIME ACCESS to our Premium Membership for less than the price for 1-year of service! 

Click Here to Sign Up


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