The Market Has Broken Out of $254 Resistance Level

January 9, 2019
By Vlad Karpel

All three major U.S. indices are on the move up today and are looking to record their fourth straight day of gains. The market has broken out of $254 resistance level which is now support for the SPY. With earnings season approaching, the market is expected to break out of the oversold conditions it faced in December. The next level of resistance, which also coincides with the 50-day moving average on SPY, is at $260-264 as long as the market trades above the $253-$254 level. However, if the market trades below 50-days moving average, expect volatility to come back and a market correction to occur. This could stem from any negative news regarding the China-U.S. negotiations, earnings, or the upcoming FOMC meeting. Our overall opinion is that the market is oversold and will potentially retrace back to $280 level in Q1 of 2018.  However, we doubt this will be a “V” shape recovery and volatility will come back in Q1. For reference, the SPY Seasonal Chart is shown below:

Major market-news to monitor today includes the conclusion of China-U.S. trade talks in Beijing, the ongoing U.S. government shutdown, and the release of last month’s FOMC meeting minutes. After three days in Beijing Chinese and U.S. delegations are leaving without a deal but optimism is high a something could still be brokered. The meeting was initially set for two days but extended for a third to continue negotiations, showing both sides are actively working at a resolution and are willing to work with each other. No future meetings have been set but the progress and good faith displayed by both sides this early on in the 90-day truce has helped diffuse global concern and uncertainty. Globally both Asian and European markets rallied today.

Domestically, the U.S. government shutdown continues with both Congress and the President weighing in this week. Congress has gone back and forth drafting and revising several funding and budget plans while just last night President Trump made a televised appearance proposing a new $5.7 billion steel wall. This exceeds the previous request for $5 billion for border security. Those in Congress opposed to the funding increase have continued to negotiate in the $1-2 billion range. Both sides will proceed with negotiations in the days to come but as it currently stands, with little progress on either end, the current government shutdown looks to soon become the longest in history.

Several Fed President speeches have already taken place this week while more are scheduled for the rest. Powell is scheduled to speak tomorrow while minutes from the December FOMC are scheduled for release today. Look for more on this in the days to come as information gets parsed out from the updated fed policy and subsequent minutes, in which Powell took a more dovish tone than previous meetings this year.


Using the “^GSPC” symbol to analyze the S&P 500, our 10-day prediction window shows mixed signals. Today’s vector figure of +0.31% moves to -0.58% in five trading sessions. The predicted close for tomorrow is 2,564.91. 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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Highlight of a Recent Winning Trade

On January 2nd, our ActiveTrader service produced a bearish recommendation for CMS Energy Corp. (CMS). ActiveTrader is included in all paid Tradespoon membership plans and is designed for day trading.

Trade Breakdown

CMS opened in its forecasted Strategy B Entry 1 price range (49.65, ± 0.26) and passed through its Target price (49.15)within the first hour of trading on 01/02/18. The Stop Loss price was set at $50.15.


Thursday Morning Featured Stock

Our featured stock for Thursday is Pulte Group Inc. (PHM). PHM 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.  

*Please note: Our featured stock 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 ActiveInvestor recommendations. If you are interested in receiving Vlad’s personal picks, please click here.

The stock is trading at $29.16 at the time of publication, up 2.88% from the open with a +0.70% 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.


Oil

West Texas Intermediate for February delivery (CLG9) is priced at $52.41 per barrel, up 5.24% 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 $11.07 at the time of publication, up 5.43% from the open. Vector figures show +1.09% today, which turns +6.76% 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 February gold (GCG9) is up 0.64% at $1,294.10 at the time of publication. Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows positive signals. The gold proxy is trading at $122.19, up 0.54% at the time of publication. Vector signals show +0.13% 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 down 0.16% at 2.73% at the time of publication. The yield on the 30-year Treasury note is up 0.33% at 3.02% 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 -0.44% moves to -1.14% 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 4.74% at $19.5 at the time of publication, and our 10-day prediction window shows negative signals. The predicted close for tomorrow is $21.98 with a vector of +3.89%. 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.


Special Offer:

LIFETIME ACCESS to our Stock Forecast Toolbox Membership for less than the regular price we normally charge for only 6 months of service!

I want to make this offer a complete no-brainer! Would you rather sign up for just one year of service or get Lifetime Access for an even lower price?

In addition, you will get Lifetime Access to our ActiveTrader service which includes daily high-probability stock & option trade ideas with exact entry/exit points for both bullish and bearish traders!

Click Here to Sign Up

 


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