Possibility of Looming Trade War Cause for Concern

March 5, 2018

By Vlad Karpel

Threat of a possible global trade war has dropped U.S. stocks for their longest skid since last year. President Donald Trump’s announcement of a 25% steel tariff and a 10% aluminum tariff has investors worried over the possibility of higher interest rates and inflation, hitting the industrials sector hardest. This, in turn, caused the market to swoon this past week, stopping the recovery we saw from early February’s large sell-off. The possibility of a trade war has investors tuned into possible global retaliation to the U.S. tariffs and its implication on and from NAFTA partners. In the past, periods of protectionism, where government policies and action restrict international trade with the intent of protecting domestic business as Trump suggested, have not been great for investors. Elsewhere, two major European elections resulted in opposing financial reactions. Italy’s hung parliament generated worry while Germany, after months of uncertainty, voted to support a grand coalition government, clearing the way for Chancellor Angela Merkel to begin serving her fourth term. Back in the U.S., several Fed officials are set to speak throughout the week, including NY Fed Reserve Bank President William Dudley, Fed Reserve Vice Chairman Randal Quarles, as well as Fed Presidents from Atlanta, Dallas, and Chicago. Investors will look for their comments on Trump’s tariffs as well as other financial data set to become available this week, including the latest Beige Book, a collection of economic data across all Federal Reserve Districts set to release on Wednesday, as well as the monthly job and earnings reports.

At the time of publication, the DJIA is up 0.52%, or 127.87 points, at 24,665.93. The S&P 500 is at 2,709.91 – up 0.69% from the open. The Nasdaq-100 is up 0.51% at 6,845.55.

Using the ^GSPC symbol to analyze the S&P 500, our 10-day prediction window shows solid positive signals. Today’s vector figure of 0.34% moves to +1.46% within three trading sessions. Today’s predicted support and resistance levels are 2,682.85 (±13.56) and 2,700.92 (± 13.65), respectively. The predicted close today is 2,695.55. 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 March 2, our ActiveTrader service produced a bullish recommendation for Sky Works Solutions, Inc. (SWKS). ActiveTrader is included in all paid Tradespoon membership plans and is designed for intraday trading.

Trade Breakdown

SWKS opened below Entry 1 price range of $107.93 (± 0.87) and moved within Entry 1 Price in its first hour. In its second hour of trading, SWKS went through its Target price of $109.01, reaching a high of $109.39. The Stop Loss was set at $106.85.

Buy, Buy, Buy: Stock Signals for Tuesday

Our featured stock for Thursday is Micron Technology, Inc. (MU). MU is showing a predicted near-term 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 a positive vector figure of +2.79% for Tuesday, and rising throughout the 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 $51.92 at the time of publication, up 5.74% from the open with a +2.49% vector figure.

Tuesday’s prediction shows an open price of $48.44, a low of $47.39 and a high of $50.64.

The predicted close for Thursday is $49.42. Vector figures rise to +2.74% on Tuesday, continuing to build incrementally. 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 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.

Live Trading Room Update

See how we make money in the current market and what to expect next in our limited time Live Trading Room highlights. Our winning 5-for-5 trades this morning, March 5 ranged from 4.95% to over 64.52% ROI!

Symbol	Action	Open	Close	Entry	Exit	Stop Loss	Net Gain
ETFC	LONG	3/5/18	3/5/18	$51.02	$51.30	$50.40	45.16%
MRVL	LONG	3/5/18	3/5/18	$23.23	$23.32	$22.99	37.50%
RTN	LONG	3/5/18	3/5/18	$213.32	$213.43	$211.10	4.95%
STLD	LONG	3/5/18	3/5/18	$48.11	$48.31	$47.80	64.52%
STLD	LONG	3/5/18	3/5/18	$48.18	$48.37	$47.80	50.00%

Our Live Trading Room is open every trading day from 9:15 am Eastern Time, but these Live Trading Sessions are only available for Premium Members.

We wanted to share the recording with you so you can see the profits you might be missing- even during volatile markets.

Click Here to Watch How I Generate Profits During a Volatile Market!

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Oil

Oil prices are seeing a rise today following reports of stalled and falling Libyan production, approximately 380,000 less barrels a day. Also aiding the positive outlook, is the International Energy Agency Monday report that has the U.S forecasted to become the world’s top crude producer by 2023. Issues in Venezuela, both economic and political, have heavily affected supply. West Texas Intermediate for April delivery (CLJ8) is priced at $61.40 per barrel at the time of publication, up 2.33% from the open.

Looking at USO, a crude oil tracker, our 10-day prediction model shows positive signals. The fund is trading at $12.59 at the time of publication, up 0.22% from the open. Today’s prediction sees support at $12.17 (± 0.05) and resistance at $12.43 (± 0.06). The predicted close for today is $12.43. Vector figures show 0.70% today, which move to 1.11% in one 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 April gold (GCJ8) is down 0.20% at $1,322.90 at the time of publication. Gold continues to waver up and down throughout Monday due to the possible trade war brought on from the impending steel tariffs. The strong dollar index and uncertainty in the European Union can also be attributed to the up and down movement of gold throughout the weekend and Monday.

Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows negative signals. The gold proxy is trading at $125.18, down 0.17% at the time of publication. Today’s predicted low is $124.71 (± 0.33) and the predicted high is $126.46 (± 0.34). The predicted close today is $125.08. Vector signals show -0.02% for today, holding negative signals throughout the 10-day outlook. 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 lowered today after concerns about protectionist rhetoric from Trump and the uncertainty from the stalled Italian election, causing treasury prices to rise.The potential for a trade war has both positive and negative implications as analysts forecast both a spike in bonds bought while possible inflation pressure looms. Fed official comments this week will hopefully provide some clarity on the mater. Both short and long-dated bond yields are seeing rises today. The yield on the 10-year Treasury note is up 3.02% at 2.88% at the time of publication. The 30-year rose 2.7% , now at 3.16%.

Using the iShares 20+ Year Treasury Bond ETF (TLT) as a proxy for bond prices in our Stock Forecast Tool, we see consistent positive signals in our 10-day prediction window. Today’s vector of +0.31% moves to +1.32% in three trading sessions. The ETF is priced at $117.64 at the time of publication, down -0.60%. The predicted close today is $119.18 with a low and high of $118.35 (± 0.22) and $119.86 (± 0.22), 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 -6.58% at 18.3 at the time of publication, and our 10-day prediction window shows a negative signal for today followed by all positive signals. The predicted close is 21.40 with a vector of -0.57%. The predicted lows and highs are 19.59 (± 1.01) and 26.56 (± 1.37), 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.