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Markets are trading slightly lower today as a trio of testimonies take place in D.C. while major U.S. indices show signs of reacting to this week’s poor retail earnings. Fed Chairman Jerome Powell, U.S. Trade Ambassador Robert Lighthizer, and former Trump-lawyer Michael Cohen are simultaneously taking questions from congressional committees in three separate hearings. Elsewhere, President Trump arrived in Vietnam to begin his two-day meeting with North Korean leader Kim Jong-un. Earnings in focus today include Lowe’s, Best Buy, and Square. Our strategy through this week remains: buy the selloffs, avoid chasing. The current SPY 200-day moving average sits at $274 and if average drops below this key level, we expect a downward trend. Another major selloff, like the one we saw to end 2018, is unlikely this quarter but the SPY could still retrace to $267 level in the coming weeks. For reference, the SPY Seasonal Chart is shown below:
Fed chair Jerome Powell continued his two-day testimony today in front of the House Financial Services Committee. After yesterday’s comments of uneven economic growth turned markets lower, today’s testimony looks to not fair better although Powell has provided the more-dovish sentiment in his comments most investors sought. Powell clearly defined the goals of the Fed as “maximize employment and maintain stable prices,” while once more reinforcing the importance of an independent central bank. Major takeaways from Powell’s two-day meeting include the restated patient approach of the Fed in 2019, an evaluation of the U.S. banking system that is stronger and more resilient than the one that preceded the economic crisis 10 years ago, and the necessity and urgency of yearly debt-to-GDP ratio to be reduced. Also worth noting, Powell stated the Fed is nearing an agreement for a 2019 balance sheet plan.
Also on Capitol Hill, Trade Ambassador Robert Lighthizer spoke with the House Ways and Means committee, answering questions on China-trade negotiations. Lighthizer updated lawmakers on trade talks with China while taking in worthy concerns of committee members regarding the deal structure and enforcement. Ambassador Lighthizer agreed with committee members that China has previously failed to keep promises and a structured deal, beyond simply an increase or one-time purchase of U.S. goods, is necessary to improve trade relations and the deficit. Although the current deal is of urgent importance in order to avoid escalating tariffs and further deficit, Lightizer stressed that only one negotiation will not solve all issues and further negotiations are likely needed.
Finally, the third hearing in D.C. sees former Trump-lawyer Michael Cohen taking questions from the committee of Oversight and Reform and has already spanned a wide range of topics. Cohen answered questions regarding his time working for Trump, describing the President unfavorably and going as far as warning Republicans over their loyalty to him by drawing from his own experiences. Other remarks reaffirmed that Trump reimbursed him for hush payments and that other wrongdoings by the President were known to Cohen but could not be commented on as they are under active investigation. Currently, President Trump is in Vietnam for his second meeting with North Korean leader Kim Jong-un.
Trump is scheduled to meet with Jong-Un to discuss peace and denuclearization, as well as several economic factors that could encourage the closed-off nation to cooperate. Globally, Asian markets were split while European markets closed modestly lower. U.S. markets, aside from the three hearings taking place today, continue to be shaped by earnings as Home Depot’s struggles yesterday in the retail section cast further importance on today’s, and this week’s retail earnings. Best Buy and Lowe’s reported before market open and saw nice gains off solid earnings. Booking Holdings, HP, and Square Inc. are scheduled to report after market close.
Using the “^GSPC” symbol to analyze the S&P 500, our 10-day prediction window shows mixed signals. Today’s vector figure of -0.11% moves to +1.23% in five trading sessions. The predicted close for tomorrow is 2,782.92. Prediction data is uploaded after the market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.
On February 25th, our ActiveTrader service produced a bearish recommendation for Helmerich & Payne Inc (HP). ActiveTrader is included in all paid Tradespoon membership plans and is designed for day trading.
Trade Breakdown
HP entered its forecasted Strategy B Entry 1 price range $55.02 (± 0.38) in its first hour of trading and passed through its Target price $54.47 in the first hour of trading the following day. The Stop Loss price was set at $55.57
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Our featured stock for Thursday is Baxter Intl Inc. (BAX). BAX is showing a confident vector trend 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 for predicted support and resistance, relative to our entire data universe.
The stock is trading at $75.22 at the time of publication with a +0.21% 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 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.
West Texas Intermediate for March delivery (CLH9) is priced at $56.94 per barrel, up 2.59% from the open, at the time of publication. Looking at USO, a crude oil tracker, our 10-day prediction model shows positive signals. The fund is trading at $11.9 at the time of publication, up 2.00% from the open. Vector figures show +1.11% today, which turns +2.80% 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.
The price for April gold (GCJ9) is down 0.63% at $1,320.10 at the time of publication. Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows mostly positive signals. The gold proxy is trading at $124.59, down 1.00% at the time of publication. Vector signals show +0.03% 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.
The yield on the 10-year Treasury note is up 1.94% at 2.69% at the time of publication. The yield on the 30-year Treasury note is up 2.14% at 3.07% 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 mostly negative signals in our 10-day prediction window. Today’s vector of +0.03% moves to -0.60% 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.
The CBOE Volatility Index (^VIX) is down 0.46% at $15.1 at the time of publication, and our 10-day prediction window shows negative signals. The predicted close for tomorrow is $14.93 with a vector of -2.05%. 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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