Trump’s press conference eclipsed by fresh allegations of Russian connections as investors look for more signals

January 11, 2017
By Vlad Karpel

Major indexes have been little moved by allegations from a previously classified  briefing- presented to President Obama, President-elect Donald Trump, and other top legislative figures- that the President-elect has been compromised by the Russian intelligence apparatus. The synopsis alleges that Russia has compromising information about Trump which it intends to hold for blackmailing purposes. The document also goes on to claim that Trump had been cultivated as an asset for 5 years.

Although the claims could potentially rock the administration and its cabinet picks, it is still too early to tell what the fallout will be. The claims are still being investigated and verified, but we have yet to see any clear repercussions. The Dow is characteristically hovering just under 20,000, currently up 0.45% from the open at 19,944.83. The Nasdaq-100 is up 0.11% at 5557.10. The S&P 500 is down 3.43 points, or 0.15% at 2272.03.

Using the ^GSPC symbol to analyze the S&P 500, our prediction model shows slight oscillations, relative to today’s conditions.  The predicted close today is 2269.30, with predicted support and resistance at 2253.86 (± 3.63) and 2280.59 (± 3.68), respectively.  

 

Upcoming Events and Reports

Donald Trump’s schedule press conference will undoubtedly be framed within these timely leaks. He is expected to give more context and detail around fiscal policy and, in a recent turn of events, will need to dispel the allegations recently levied against him. The outcome of this press conference may have deep implications for investor decision-making, and we may soon stop seeing the President-elect referred to as ‘Teflon Don’.

Oil

Oil prices have jumped back from a recent selloff, as the temporarily lower prices proved attractive to investors. Skepticism still remains around the commitments to production cuts. Some OPEC countries have been aggressively selling to take advantage of higher crude prices, and U.S domestic operations have increased. It appears that there is a last-ditch effort to capture profits and hike volume before these accords take full effect. Currently, crude futures are priced at $52.18 per-barrel, up 2.68% from today’s open.

Looking at USO, a crude oil tracker, our 10-day prediction model shows overall positive movement with slight corrections, relative to today’s conditions. The fund is currently trading at 11.36 and today’s prediction sees support at 11.07 (± 0.08) and resistance at 11.47 (± 0.08). The predicted close for today is 11.45.  

 

Gold

Gold has been selling off again in light of a stronger dollar. Recent gains in the non-fiat metal combined with gains in the US dollar has made an attractive case for selling to overseas buyers. The selling activity has driven prices down $5.90, or 0.50% today to $1179.60 a troy ounce.

Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows strong consistent gains. The gold proxy is currently trading at 112.38. Today’s predicted low is 113.15 (± 0.24) and the predicted high is 114.06 (± 0.25). The predicted close today is 113.61. Positive vector figures point to ~5% at the end of the window, relative to current conditions.  

 

Treasuries

It is becoming clearer that interest in government bonds is here to stay. Rising bond prices may bode well for large investment-grade companies. The incoming presidential administration is expected to lower taxes and regulations, prompting a jump in corporate profits. The corporate-debt prices may be lowered in this scenario, which would call for even more borrowing at a lower rate. Using the iShares 20+ Year Treasury Bond ETF (TLT) in our Stock Forecast Tool, we see this reflected in the 10-day prediction window.

TLT, an ETF which tracks 20+ year bond returns, is currently at 121.56. The predicted close today is 122.45 with a low and high of 121.75 (± 0.30) and 122.62 (± 0.31), respectively. Positive vector movements move from ~1% toward ~4% the end of the window, relative to today’s numbers.

 

Volatility

The CBOE Volatility Index (VIX) is currently at 11.89, and we can expect some oscillations within the coming weeks as Trump deals with his political snares. Our 10-day model shows overall positive movement that his highly volatile. The predicted close today is 11.88. Today’s predicted lows and highs are 11.10 (± 0.28) and 12.75 (± 0.32), respectively.

Other news

Ford Motor Co. will be paying a special dividend of 5 cents per share, on top of its normal 15 cent per share payment this quarter. Ford has indicated a lower pre-tax profit this year compared to the last, which is related to their investments in developing technology. The auto giant indicated profitability will improve in 2018.

Merck & Co. saw its shares gain last night after announcing the FDA is granting a priority review of a lung cancer treatment. Keytruda is intended to be a first-line treatment in conjunction with chemotherapy.  


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