Markets trading skittish as investors digest recent earnings, look to a potential Broadcom/Qualcomm merger

November 6, 2017
By Vlad Karpel

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This week will not see a great deal of economic data, so market participants are focusing on earnings, corporate news and any clues around the Republican-led tax reform bill. After the GOP came forth last week with plans and ideas around tax reform, investors will likely see a tentative bill produced by the Senate this week. Any progress around this effort is positive, as the tax bill has been much anticipated but so far sparse on details. Two major events occurred in corporate news- the end to merger talks between Sprint (S) and T-Mobile (TMUS), and an announced Broadcom (AVGO) bid for acquiring its rival chip-maker Qualcomm (QCOM). Sprint and T-Mobile both saw share losses today as Broadcom and Qualcomm gained. North Korean geopolitical tensions are rotating back into focus with U.S. President Trump ramping up rhetoric on a trip to Japan. Trump had suggested Japan could “shoot North Korean missiles out of the sky when he completes the purchase of lots of additional military equipment from the United States.”

Keep an eye on crude oil trading this week, following news from Saudi Arabia of a crackdown on corruption which has already resulted in dozens of arrests of high-profile businessmen, government ministers and princes. This is part of a larger series of sweeping changes instigated by Saudi Crown Prince Mohammed bin Salman, who had been named Crown Prince only five months ago.

At the time of publication, the DJIA is up 0.02%, or 4.57 points, at 23,544. The S&P 500 is trading at 2,590- up 0.07% from the open. The Nasdaq-100 is up 0.30% at 6,785.

Using the ^GSPC symbol to analyze the S&P 500, our 10-day prediction window shows  slight and consistent positive signals. Today’s positive vector figure of +0.08% moves to +0.23% within three trading sessions.  Today’s predicted support and resistance is 2,576.76 (± 2.47) and 2,589.53 (± 2.48), respectively. The predicted close today is 2,576.79. 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.  

Highlight of a Recent Winning Trade

On November 3, our ActiveTrader service- included in all of our membership plans- generated a Bearish recommendation for the Barrick Gold Corp. (ABX).

Trade Breakdown

Within the first hour of trading, ABX opened at its Entry 1 ($14.14, ± 0.08) price range and moved to reach its Target of $14.00. The Stop Loss was set at $14.28.


Must-buy Stock for Tuesday

Our must-buy stock for Thursday is BP P.L.C. (BP). BP is producing an opportune bullish trend in the near-term in our Stock Forecast Toolbox’s 10-day forecast. This stock is assigned a Model Grade of A, indicating it ranks in the top 10th percentile for accuracy relative to our entire data universe. Our 10-day prediction model shows vector figures climbing above +1.10% within the next trading session. Our benchmark for vector figures is +1.00%.

The stock is trading at $41.15 at the time of publication, up 1.45% from the open with a +0.28% vector figure.

Tuesday’s prediction shows an open price of $41.26, a low of $40.58 and a high of $41.37.

The predicted close for Tuesday is $40.69. Vector figures show +1.12% for tomorrow, which continues to build up incrementally in the following 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.

Note: The Vector column calculates the change of the Forecasted Average Price for next trading session relatively to 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 predicted direction of the Vector. The higher the value of the Vector the higher its momentum.

 



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Crude oil prices are climbing today as market participants digest the recent news from Saudi Arabia involving a massive corruption crackdown. Among the most high-profile arrests was that of Prince al-Waleed bin Talal, one of the world’s richest men who’s holding company possesses a great deal of shares in Twitter (TWTR) and Citigroup (C). His arrest will have more impact in equities, but it is an example of how far-reaching this crackdown is. The subsequent instability and internal backlash expected will inject a short-term uncertainty with oil investors until more details emerge.  West Texas Intermediate for November delivery is priced at $57.11 per barrel at the time of publication, up 2.53% from the open.  

Looking at USO, a crude oil tracker, our 10-day prediction model shows consistent positive signals. The fund is trading at $11.45 at the time of publication, which is up 2.46% from the open. Today’s prediction sees support at $11.04 (± 0.06) and resistance at $11.36 (± 0.06). The predicted close for today is $11.20. Vector figures show +1.09% today, moving to +1.83% 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

The price for December gold is up 1.06% at $1,274.00 a troy ounce at the time of publication. Gold futures have been in retreat, and this temporary gain may see a negative correction as the U.S. dollar continues to strengthen, and investors look to the new GOP tax bill. The appointment of Jerome Powell as the new Fed Chairman also lends more confidence to investors as to what the timeline will look like for future rate hikes. Higher interest rates make gold comparatively less attractive as it does not bear a yield.

Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows overall negative signals. The gold proxy is trading at $121.77, up 0.95% at the time of publication. Today’s predicted low is $119.74 (± 0.26) and the predicted high is $121.15 (± 0.26). The predicted close today is $120.05. 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

Yields are turning down today as investors anticipate the incoming Senate tax bill. Some are concerned that this bill will ultimately deepen the budget deficit, which will increase the rate of new issuance next year. The Ways and Means committee in the House will likely vote on the tax bill by Thursday, so expect to see the next big move in treasuries occur later in the week. The yield on the 10-year Treasury note is down 0.66% at 2.33% at the time of publication. Bond prices tend to move inversely to yields.

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 -0.05% fluctuates for the next three trading sessions before committing to a consistent positive trend. The ETF is priced at $126.01 at the time of publication- up 0.29% from the open. The predicted close today is $125.35 with a low and high of $124.80 (± 0.27) and $125.89 (± 0.28), 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 up 2.50% to 9.46 at the time of publication, and our 10-day prediction window shows all negative signals.  The predicted close today 9.49 with a negative vector of +0.06%. Today’s predicted lows and highs are 9.21 (± 0.14) and 10.04 (± 0.16), 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.

 



Here’s where I put my money where my mouth is!

Click here for my daily recommendations & research tools!

 


 


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