Second Day of Powell Testimony Continues to Support Rate Cut, Oil Spikes Off Middle East Incident 

July 11, 2019
By Vlad Karpel

Building off yesterday’s gains, major U.S. indices are on track to reach new records following Fed Chairman Jerome Powell’s second day of testimony in D.C., today appearing in front of the Senate Banking Committee. Yesterday, the Nasdaq was able to reach record territory by gaining over 60 points while today the S&P and Dow are looking at making sizable gains to similarly reach record highs. The case for an interest rate cut continues to build off the latest FOMC minutes which showed several policymakers already considering a rate cut along with Powell’s dovish testimony, indicating to investors at least one rate cut could still occur in 2019. Elsewhere, oil prices have spiked to a multi-week high following another Iranian altercation in the Middle East, this time involving a British tanker which was almost intercepted by an Iranian blockade in the Persian Gulf. Next week look for major banks, such as Citigroup, Chase, and Wells Fargo, to report second-quarter corporate earnings. With the SPY maintaining an all-time high level, we encourage readers to consider buying near $290 level and avoid chasing near $298. Powell’s second day of testimony could further affect markets this week but we do not see market momentum pushing SPY above $300, potentially overshooting to $305. For reference, the SPY Seasonal Chart is shown below:

All three major U.S. indices are on track to close in the green for the second straight day off promising indication in both Powell’s D.C. testimony and last month’s FOMC minutes, which were released yesterday, that the Fed is seriously considering an interest rate cut for 2019. Strong employment data and a low inflation level have also helped. Further data released today also supported the notion with core CPI for the month of May rose slightly by 0.1%, while year-over-year inflation fell to 1.6% from 1.8%. Unemployment fell last week to 209,000 while next week we will see retail data, import prices, and industrial production for the month of June. Key economic report Beige Book is also due next week.

Earnings data this week has remained light, with Delta Airlines reporting before market open today. Revenue for the airline rose impressively, helping shares of Delta rise by 1.7% today. Bed Bath & Beyond reported after market close yesterday to underwhelming results which have led to over 7% losses today. Next week look for Citigroup, JPMorgan Chase, Goldman Sachs, Charles Schwab, Bank of America, Netflix, and plenty more. Globally, Asian markets closed in the green today while European markets unanimously lowered. 

Oil futures and prices continue to rise this week. In the Middle East, another incident with Iran regarding oil took place when an Iranian blockade attempted to intercept a British tanker. The attempt was unsuccessful but heightened worry regarding oil relations and safe trade in the area. Over in the Gulf of Mexico, major oil producers have begun evacuating workers in preparation for the second storm of the 2019 Atlantic hurricane season. American Energy Information Administration reported yesterday U.S stockpiles of crude oil fell to their lowest level in over three months. These three factors look to continue affecting oil prices as we head into the weekend and should be monitored as July progresses. 

Using the “^GSPC” symbol to analyze the S&P 500, our 10-day prediction window shows mixed signals. Today’s vector figure of +0.234% moves to -0.46% in five trading sessions. Prediction data is uploaded after the market close at 6 pm, CST. Today’s data is based on market signals from the previous trading session.  


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Highlight of a Recent Winning Trade

On June 28th, our ActiveTrader service produced a bullish recommendation for CenturyLink Inc (CTL). ActiveTrader is included in all paid Tradespoon membership plans and is designed for day trading.

Trade Breakdown

CTL entered its forecasted Strategy B Entry 1 price range $11.64 (± 0.09) in its first hour of trading and passed through its Target price $11.76 in the fifth hour of trading that day. The Stop Loss price was set at $11.52.


Friday Morning Featured Symbol

*Please note: At the time of publication we do not own the featured symbol, T. 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.

Our featured symbol for Friday is AT&T Inc. (T). T 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 predicted support and resistance, relative to our entire data universe.  

The stock is trading at $33.52 at the time of publication, with a +0.08% 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 the 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

West Texas Intermediate for Crude Oil delivery (CL.1) is priced at $60.38 per barrel, down 0.08% 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 $12.54 at the time of publication. Vector figures show -0.20% today, which turns -2.94% in five 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 the Gold Continuous Contract (GC00) is down 0.47% at $1,405.70 at the time of publication.

Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows mixed signals. The gold proxy is trading at $132.76, down 1.00% at the time of publication. Vector signals show +0.36% for today. 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

The yield on the 10-year Treasury note is up 3.29% at 2.13% at the time of publication. The yield on the 30-year Treasury note is up 2.78% at 2.66% 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 negative signals in our 10-day prediction window. Today’s vector of -0.06% moves to -0.29% 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 1.23% at $12.87 at the time of publication, and our 10-day prediction window shows positive signals. The predicted close for tomorrow is $14.39 with a vector of +4.31%. 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.


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We make money in every market. 

Don’t miss our next big trade!  

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