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Markets were holding on to modest gains this afternoon after two straight sessions of lowering caused by continued and growing Coronavirus fears. As the virus spreads into Europe and additional parts of Asia, global pandemic concerns continue to mount as containment and vaccine efforts are yet to make progress. With a growing death toll, COVID-19 cases have now spread to Iran, Italy, Japan, South Korea, and continues to grow in China while nearby nations continue to take preventative measures. Although U.S. markets were on track to record slight gains, both the S&P and Dow slipped into the red before the close. Today, Lowe’s and Papa Johns reported corporate earnings before the market open while Booking Holdings and Square Inc are set to report after market close. Other major news to monitor includes the current Disney CEO Bob Iger stepping down and the latest economic reports. We expect the markets to trade in the range of $310-$330 for the next 2-3 weeks as global pressures continue influencing markets. The top is currently set at $340 and we encourage readers to consider going long near $310, short near $330. VIX has now reached $30 level, a level not seen since December 2018, indicating the worse part of the selloff is behind us. In the next 4-6 weeks, we are expecting a shallow 1-2% corrections and, as always, Market Commentary readers should maintain clearly defined stop-levels for all positions. For reference, the SPY Seasonal Chart is shown below:
Yesterday, all three major U.S. indices saw a 2% drop as global pandemic fears pressured both global and U.S. markets. Today, U.S. markets saw slight rebounds with mixed results as the S&P and Dow lowered over 0.3% while the Nasdaq has been trading slight losses for slight gains. With COVID-19 cases outside of China continuing to grow, global pandemic concerns become more realistic. Infections in Iran, Italy, and South Korea continue to grow as nearby nations begin heightening preventative measures. The CDC is yet to declare it an official pandemic but has issued a warning of widespread disruption if the disease reaches the States. South America might have discovered its first case of the virus in Brazil, which is currently being investigated.
Corporate earnings have significantly slowed down, with Home Depot reporting yesterday and Lowe’s and Papa Johns reporting before the market open today. Salesforce earnings data underwhelmed which is currently causing shares to lower over 1%. After the market close today, Booking Holdings, Marriott International, and Sqaure Inc will report. Tomorrow’s earnings include Anheuser -Busch, Baxter, Baidu, Dell, and Best Buy. Markets did see an early morning boost from January New Home Sales, which was up almost 8%. Additional economic reports to monitor through the end of the week include Q4 GDP, January Core Inflation, as well as January Consumer Spending and Durable Goods Orders.
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 -0.85% moves to -2.24% 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 3rd, our ActiveTrader service produced a bullish recommendation for Pultegroup (PHM). 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
PHM entered its forecasted Strategy A Entry 1 price range $44.65(± 0.20) in its first hour of trading that day and passed through its Target price of $45.10 in the fourth hour of trading on February 5th. The Stop Loss price was set at $44.20.
Our featured symbol for Thursday is Ipath S&P 500 VIX Short-Term Futures (VXX). VXX is showing a positive vector in our Stock Forecast Toolbox’s 10-day forecast. This stock is assigned a Model Grade of (C) indicating it ranks in the top 50th percentile for accuracy for current-day predicted support and resistance, relative to our entire data universe.
The stock is trading at $19.29 at the time of publication, with a +3.67% 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 $48.97 per barrel, down 2.22% 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 $10.13 at the time of publication. Vector figures show +0.81% today, which turns to +4.21% 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 down 0.23% at $1,645.70 at the time of publication.
Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows positive signals. The gold proxy is trading at $154.78, at the time of publication. Vector signals show +0.02% 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 1.54% at 1.33% at the time of publication.
The yield on the 30-year Treasury note is down 0.5% at 1.82% 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 mixed signals in our 10-day prediction window. Today’s vector of +0.26% moves to +0.44% 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 $27.7 at the time of publication, and our 10-day prediction window shows negative 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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