Two major factors are compounding today’s broad market drops across all major indices: a questionable timeline for tax reform and a series of crude oil data which dropped benchmark prices. We’ve moved past earnings season at this point, so investors are much more sensitive to economic data and other political news that were previously sidelined by strong corporate performance. We can expect to see major indices becoming more acutely sensitive as they were before earnings season.
Tuesday reports from Washington indicated there may be a move by Republican senators to add a repeal of the individual insurance mandate attributed to Obamacare. This shake-up, which also further deviates from the House version of the bill, is injecting uncertainty into equities and the U.S. dollar’s strength.
A Tuesday report from Paris-based International Energy Agency has slashed global demand for crude oil in its forecasts, and went further to forecast a U.S. shale boom in the near future. Compounding this was an unexpected report from the American Petroleum Institute late Tuesday, which showed increases in U.S. inventories for both crude and gasoline.
The CBOE Volatility Index (VIX), or the ‘fear gauge’, spiked to around 14 today which is a 21% jump. The Dow Jones Industrial Average had dropped over 100 points today, with other major indices seeing downward pressure as well.
At the time of publication, the DJIA is down 0.34%, or 80.57 points, at 23,329. The S&P 500 is trading at 2,571- down 0.31% from the open. The Nasdaq-100 is down 0.27% at 6,720.
Using the ^GSPC symbol to analyze the S&P 500, our 10-day prediction window shows consistent negative signals. Today’s negative vector figure of -0.09% moves to +0.18% within three trading sessions. Today’s predicted support and resistance is 2,558.70 (± 2.80) and 2,578.87 (± 2.82), respectively. The predicted close today is 2,576.94. 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 14, our ActiveTrader service- included in all of our membership plans- generated a Bullish recommendation for the Pulte Group Inc. (PHM).
PHM opened within its Entry 1 ($31.17, ± 0.15) price range and moved to reach its Target of $31.48 within the first hour of the trading session. The Stop Loss was set at $30.86.
Our must-buy stock for Thursday is Qualcomm Inc. (QCOM). We’re seeing steady and strong positive signals 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 relative to our entire data universe. Our 10-day prediction model shows vector figures climbing above +3.00% within the next trading session. Our benchmark for vector figures is +1.00%.
The stock is trading at $65.88 at the time of publication, down 0.19% from the open with a +1.57% vector figure.
Thursday’s prediction shows an open price of $68.07, a low of $67.44 and a high of $68.68.
The predicted close for Thursday is $68.65. Vector figures show +3.15% for tomorrow, holding strong throughout the forecast. This is a good signal for trading opportunities, because the vectors are 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.
Two reports released Tuesday compounded to put pressure on crude prices as investors digest data on U.S. inventories and crude demand forecasts. The Paris-based International Energy Agency cut its crude demand forecasts, additionally warning of a impending boom in U.S. shale production. Later in Tuesday trading, the American Petroleum Institute released surprising data showing climbs in U.S. crude and gasoline inventories. West Texas Intermediate for December delivery is priced at $55.36 per barrel at the time of publication, down 0.61% from the open.
Looking at USO, a crude oil tracker, our 10-day prediction model shows overall positive signals. The fund is trading at $11.11 at the time of publication, down 0.18% from the open. Today’s prediction sees support at $11.06 (± 0.04) and resistance at $11.39 (± 0.05). The predicted close for today is $11.26. Vector figures show -0.16% today, moving to +1.20% 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.
The price for December gold is down 0.41% at $1,280.00 a troy ounce at the time of publication. Gold futures had risen the same percentage in earlier trading, moved by a decidedly risk-averse market atmosphere due to uncertainty around tax reform, drops in crude oil prices and a lowered U.S. dollar. Investors tend to rotate into perceived safe-haven assets, such as gold, when uncertainty is high in yield-bearing assets.
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 $121.31, down 0.21% at the time of publication. Today’s predicted low is $120.90 (± 0.20) and the predicted high is $122.05 (± 0.20). The predicted close today is $121.56. 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.
Like gold, U.S. government paper is another perceived safe haven which investors will turn to during market slumps. Recent inflation and retail sales data has been healthy- and there is a high chance of a Fed interest rate hike this December- but temporary market pullbacks are driving action today. The yield on the 10-year Treasury note is down 1.15% at 2.35% 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 negative signals in our 10-day prediction window. Today’s vector of -0.13% moves to -0.97% within the next three trading sessions. The ETF is priced at $125.97 at the time of publication- up 0.62% from the open. The predicted close today is $124.69 with a low and high of $124.26 (± 0.27) and $125.20 (± 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.
The CBOE Volatility Index (VIX) is up 11.22% to 12.89 at the time of publication, and our 10-day prediction window shows negative signals followed by an positive correction. The predicted close today 11.25 with a negative vector of -2.45%. This downward trend reverses and holds positive in five trading sessions. Today’s predicted lows and highs are 10.73 (± 0.20) and 12.45 (± 0.23), 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.
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