Stocks prices began to drop in the afternoon, after starting the day off strong, as investors seemed torn about whether or not the Federal Reserve would take action on inflation in the upcoming FOMC meetings. All three major U.S. indices closed in the red on Monday, which comes after an impressive week of gains last week. In last week’s key economic report the Consumer Price Index displayed a 7.7% inflation rate in the span of one year – lower than what has been occurring recently. Core inflation fell to 6.3% while month-to-month headline and core inflations were .4% and .3%, respectively. These pushed indices to impressive gains following last week’s midterm elections, which were also supportive for markets.
As the current earning season wraps up, we still have a few key names set to report. On Tuesday, look out for Home Depot and Walmart to report their latest earnings; the rest of the week is set to feature Cisco Systems, Target, Alibaba, Applied Materials, and Lowe’s. Additionally, several economic reports are set to release and further illuminate current economic conditions: retail sales, import price index, industrial production, housing starts, and building permits.
Finally, after spiking last week, the $VIX has cooled off and is trading near the $25 level. The $WMT, $TGT, and $CSCO earnings this week – as well as PPI data – can influence the next move in the market. We are watching the overhead resistance levels in the SPY, which are presently at $400 and then $416. The $SPY support is at $390 and then $380. We expect the market to continue the current rally for the next 4-8 weeks. The short-term market is overbought and can pull back. We would be market neutral at this time and encourage subscribers not to chase the market to the downside or upside. Globally, Asian markets closed to mixed results while European markets finished in the green. Market commentary readers should maintain clearly defined stop levels for all positions. For reference, the SPY Seasonal Chart is shown below:
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, SPY. 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 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 picks, please click here.
West Texas Intermediate for Crude Oil delivery (CL.1) is priced at $85.21 per barrel, down 4.22%, at the time of publication.
Looking at USO, a crude oil tracker, our 10-day prediction model shows mixed signals. The fund is trading at $76.82 at the time of publication. 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 0.31% at $1774.80 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 $156.47 at the time of publication. Vector signals show +0.26% 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 up at 3.858% at the time of publication.
The yield on the 30-year Treasury note is up at 4.042% 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. 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 $24.35 at the time of publication, and our 10-day prediction window shows mixed 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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