Although investor sentiment and attention is focused on parsing tax reform debates, there were a round of major moves in equities today. We’re seeing two big merger and acquisition stories today- with Qualcomm Inc. (QCOM) rejecting a Broadcom Ltd. (AVGO) takeover bid as well as a potential Hasbro Inc. (HAS) takeover of rival toymaker, Mattel Inc. (MAT).
Qualcomm’s board unanimously rejected the bid valued at $130 billion, saying that it ‘significantly undervalues’ Qualcomm. The confidence to reject the takeover and expound on its positions in several business sectors have seen share prices tick up today. At the time of publication, Qualcomm is up 1.83% and Broadcom is up 0.02% after falling 0.7% in early trading.
There are reports of a potential takeover deal with Hasbro acquiring Mattel, which would result in the merger of the U.S.’s two largest toymakers. Mattel’s current market value is around $5 billion, about half as much as Hasbro’s $11 billion valuation. Although no details are available, the offer has investors interested to say the least.
Tax-reform is the eclipsing story of the day, with two major factors working to spark a potential pullback in short-term market momentum. Continued discrepancies between House and Senate drafts of the bill, combined with a year-long timeline until corporate reform gets enacted, may slow down immediate bullish market sentiments. Growing political strife within Britain’s ruling Conservative party has been brought into focus, as PM Theresa May’s position comes under question. Infighting would add difficulty to striking a favourable Brexit deal with the E.U., so investors are keeping a close watch here.
At the time of publication, the DJIA is up 0.01%, or 1.43 points, at 23,424. The S&P 500 is trading at 2,582- up 0.01% from the open. The Nasdaq-100 is up 0.08% at 6,756.
Using the ^GSPC symbol to analyze the S&P 500, our 10-day prediction window shows consistent positive signals. Today’s positive vector figure of +0.35% moves to +1.01% within three trading sessions. Today’s predicted support and resistance is 2,582.30 (± 2.96) and 2,598.52 (± 2.98), respectively. The predicted close today is 2,594.96. 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 10, our ActiveTrader service- included in all of our membership plans- generated a Bearish recommendation for the Verizon Communications Inc. (VZ).
VZ opened within its Entry 1 ($45.30, ± 0.22) price range and moved to reach its Target of $44.85 within the first hour of the trading session. The Stop Loss was set at $45.75.
Our must-buy stock for Tuesday is the SPDR S&P Oil & Gas Exploration & Production ETF. (XOP). This ETF is looking ripe for opportunity, showing steady positive signals in our Stock Forecast Toolbox’s 10-day forecast. This stock is assigned a Model Grade of A, indicating it ranks in the top 10th percentile for accuracy relative to our entire data universe. Our 10-day prediction model shows vector figures climbing above +1.50% within the next trading session. Our benchmark for vector figures is +1.00%.
The stock is trading at $36.10 at the time of publication, down 1.07% from the open with a +0.69% vector figure.
Tuesday’s prediction shows an open price of $37.32, a low of $36.97 and a high of $37.33.
The predicted close for Tuesday is $37.09. Vector figures show +1.83% 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.
Crude oil saw gains today following a recent OPEC monthly report which showed a 0.5% production drop from its member countries. OPEC’s 2018 oil demand forecast also rose in this report. Adding to a bullish crude sentiment is Saudi political turmoil, as well as its ongoing proxy conflict with Iran. West Texas Intermediate for November delivery is priced at $56.81 per barrel at the time of publication, up 0.11% from the open.
Looking at USO, a crude oil tracker, our 10-day prediction model shows consistent positive signals. The fund is trading at $11.42 at the time of publication, which is flat from the open. Today’s prediction sees support at $11.41 (± 0.05) and resistance at $11.62 (± 0.05). The predicted close for today is $11.45. Vector figures show +0.29% today, moving to +1.66% 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 up 0.38% at $1,278.20 a troy ounce at the time of publication. Gold futures are reflecting a risk-off investor attitude amidst volatility in equities and uncertainty around tax reform. Tax reform delays and debates can put downward pressure on treasury yields, which have a proxy effect on the U.S. dollar. Market participants seem to be digesting dips in risk assets, determining whether or not this will become an overall correction for the end of the year.
Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows overall positive signals. The gold proxy is trading at $121.49, up 0.29% at the time of publication. Today’s predicted low is $121.13 (± 0.20) and the predicted high is $122.52 (± 0.20). The predicted close today is $121.79. 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.
Yields are lowering today as bond prices rise amidst British political turmoil and domestic tax reform uncertainties. British Prime Minister Theresa May is facing growing opposition within her own part, as reports indicate there may be a vote of no confidence issued against her position. This impedes a concerted effort for Britain’s ruling party to successfully negotiate a Brexit deal with the European Union. An unfavorable deal for Britain would have a financial ripple effect in the markets, so investors are turning to perceived safe-haven assets. Similarly in the U.S., differences between the House and Senate tax reform bill, and continued debates around the policies, is driving uncertainty around the specific timeline of a tax cut bill coming to fruition. This is also driving a risk-off market sentiment. The yield on the 10-year Treasury note is up 0.04% at 2.38% at the time of publication. The 10-year yield had dropped 1.6 basis points in earlier trading. 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 positive signals in our 10-day prediction window. Today’s vector of +0.15% moves to +0.45% within the next three trading sessions. The ETF is priced at $124.56 at the time of publication- up 0.37% from the open. The predicted close today is $124.90 with a low and high of $124.10 (± 0.28) and $125.27 (± 0.29), 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 down 1.06% to 11.17 at the time of publication, and our 10-day prediction window shows initial negative signals followed by an uptrend. The predicted close today 10.82 with a negative vector of -3.41%- which reverses to hold a positive trend in three trading sessions. Today’s predicted lows and highs are 10.42 (± 0.16) and 12.15 (± 0.19), 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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