Stocks are under pressure and investors keep an eye on oil and European politics

February 8, 2017
By Vlad Karpel

Main indexes are trading lower as uncertainty grows around the dynamic between increased U.S crude production and the OPEC deal for global production caps. Although stocks are trading lower today, West Texas Intermediate for March delivery has made positive corrections despite the news. A board split at the International Monetary Fund (IMF) has raised concerns over a potential pull-out of the Greek bailout plan. The success of far-right French candidate Marine Le Pen is also raising caution for investors who are wary of a proposed referendum on France’s EU membership.   

The Dow is down 0.23% at 20,038.76 currently, mostly due to declines in financial stocks. Treasury yields have slipped, which often impacts the performance of bank stocks. On Tuesday, the Nasdaq-100 reached an all-time high and ended at 5,674. Apple Inc. (AAPL), a component of the tech-heavy index, was a leading advancer.    The index is currently up 0.04% at 5671.54.  The S&P 500 is trading flat today, with losses from financial components being offset by rises in real estate and utilities. Currently, the index is at 2290.95 up just 0.02% from the open.

Using the ^GSPC symbol to analyze the S&P 500, our 10-day prediction window shows miniscule sheds followed by positive corrections relative to today’s conditions.  The predicted close today is 2298.02, with predicted support and resistance at 2287.24 (± 3.20) and 2304.60 (± 3.22), respectively.  


Upcoming Events and Reports

The Energy Information Administration will be releasing their weekly supply data report today. The data will help give more context to the crude oil market, which has dropped in light of recently announced increases in U.S crude production.



March West Texas Intermediate Crude dropped more than 1% early Wednesday after data released from the American Petroleum Institute showed a weekly increase of 14.2 million barrels in U.S crude supplies. The consistent increases in U.S production is causing uncertainty over the impact of the OPEC global production caps. However, we are seeing a corrective spike in per-barrel prices today despite these conditions. These positive corrections may be a response to earlier sheds. Currently, prices are up 0.40% from the open at $52.33 per-barrel.

Looking at USO, a crude oil tracker, our 10-day prediction model shows a consistent positive outlook. The fund is currently trading at 11.215, up 0.22% from its open. Today’s prediction sees support at 11.19 (± 0.04) and resistance at 11.38 (± 0.04). The predicted close for today is 11.35. Positive vector figures peak at 1.75% in the next two days and decline to under 1%, relative to today’s conditions.  



Gold futures are up today as stocks have been under pressure, playing tug-of-war between bearish and bullish sentiments. The perceived safe-haven metal becomes attractive to investors in these conditions. Prices are currently up 0.66% at $1244.20 a troy ounce.

Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows sustained positive movement relative to today’s conditions. Positive vector figures climb from under 1% to above 4% within the next 10 days.  The gold proxy is currently trading at 118.26, up 0.68%. Today’s predicted low is 117.46 (± 0.25) and the predicted high is 118.45 (± 0.26). The predicted close today is 118.26.  



Yields remain lower and bond prices are up, mostly attributed to global and domestic political situations. There’s been a board split at the International Monetary Fund, and there are questions arising over Greek bailout plans. The recent rise in right-wing populism in Europe is often packaged with anti-EU sentiments, as reflected in France’s elections currently. European political turmoil often has an effect on U.S assets because of European investment in those markets.

In the U.S., we saw Philadelphia Fed President Patrick Harkey indicate that an interest-rate hike would still be ‘on the table’ at the Fed’s meeting in March. President Trump has announced the replacement of the Affordable Care Act, colloquially referred to as Obamacare, may not come until 2018. The sentiment which drove the post-election rallies is now being called into question as many analysts are uncertain about a time table for the rest of Trump’s proposed projects- including infrastructure projects and slashing taxes.

Using the iShares 20+ Year Treasury Bond ETF (TLT) in our Stock Forecast Tool, we see slight but sustained positive movement. Relative to today’s conditions, we see vector figures incrementally building from under 0.50% to above 1% within the next 10 days. The ETF is currently priced at $121.76, which is up 0.96% from the open. The predicted close today is 120.58 with a low and high of 119.66 (± 0.23) and 121.18 (± 0.23), respectively.  



The CBOE Volatility Index (VIX) is currently up just 0.35% at 11.33 from the open today.  The 10-day prediction window shows erratic but upward movement. Positive vector values peak above 8.5% in the middle of the window before declining again. The predicted close today is 11.02. Today’s predicted lows and highs are 10.90 (± 0.21) and 12.40 (± 0.24), respectively.


Other news

Allergan PLC (AGN), the maker of Botox, saw its shares rise 1.4% in premarket trading after it reported sales and profit figures which beat expectations.

Time Warner Inc. (TWX) has released adjusted per-share earnings of $1.25 for its fourth-quarter report. Time Warner is still awaiting regulatory decisions on a proposed $85.4 billion acquisition of AT&T Inc.

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