Sliding financial stocks and a concerning round of economic data have been dragging major U.S indexes today. A slumping pending-home sales report from the National Association of Realtors showed a slide of 1.3% from March. In addition, the latest Chicago PMI index fell to 55.8 in May from an April figure of 58.3. The April PMI was the highest in 28 months, so this is a significant indicator of economic health. Investors look to these reports as a way to compare concrete economic data against sentiments around economic growth. If data continues to disappoint, then continuing rate hikes from the Fed this year may not be feasible. Although the Fed maintains its hawkish economic outlook, we do see some uncertainty being injected.
The DJIA is currently down 0.17%, or 35.25 points, at 20,993. The Nasdaq-100 is down 0.27% at 6,187 and the S&P 500 is currently trading at 2,408 which is down 0.22% from the open.
Using the ^GSPC symbol to analyze the S&P 500, our 10-day prediction window shows overall negative directions. Today’s positive vector figure of +0.20% moves to -0.17% in the next three sessions. Today’s support and resistance is 2,410.33 (± 4.47) and 2,430.17 (± 4.51), respectively. The predicted close today is 2,415.00.
Crude oil prices are down today as investors review last week’s OPEC decision against the likelihood of ramped up U.S domestic production this summer. Ahead of the recent Vienna OPEC meeting, there was a speculative rally in which investors priced in the expectations of an extension of the global production cut deal. This quickly dissipated and the market saw corrections- mostly due to the fact that U.S shale production has remained uninhibited and contributes to the supply glut. It is the consensus amongst market participants that per-barrel crude prices must remain low in order to provide less incentive for U.S drillers. Whenever there is an OPEC-led oil rally, it is a rallying call for U.S drillers- and sometimes OPEC and non-OPEC countries- to quickly take advantage of high prices. This leads to higher inventories which saps crude prices. West Texas Intermediate for June delivery is currently priced at $48.03 per barrel, down 3.38% from the open.
Looking at USO, a crude oil tracker, our 10-day prediction model shows initial upward movement followed by negative corrections. The fund is currently trading at $9.99, which is down 2.44% from the open. Today’s prediction sees support at $10.20 (± 0.09) and resistance at $10.57 (± 0.09). The predicted close for today is $10.50. Vector figures show +1.64% for today, but turns to downward momentum in the 6th trading session in the prediction window. All vector figures are based on today’s market conditions.
The price for August gold is currently up 0.32% at $1,270.50 a troy ounce. A weakened U.S dollar and a series of disappointing economic data are the main contributors to firming prices. Weak economic data leads to speculation that Fed interest rate hikes are less likely, which makes gold- a non-yielding asset- a perceived safe-haven. Potentially lower interest rates will weaken the U.S. dollar- the currency in which the non-fiat asset is priced. When the U.S. dollar is weak, gold is more attractive to investors holding foreign currencies.
Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows strong downward movement. The gold proxy is currently trading at $120.62, up 0.40% from the open. Today’s predicted low is $119.10 (± 0.27) and the predicted high is $120.23 (± 0.27). The predicted close today is $119.87.
Treasury yields are rising today as bonds fall following recent economic data and speculation around the Fed’s interest rate hikes this year. Another major contributor is the current election cycle in the U.K., which polls show is highly contest and thus introduced uncertainty. Investors and analysts alike are anticipating the release of the Fed’s Beige Book today at 2 p.m EST. This report will contain commentary and soft data around economic conditions. The yield on the 10-year Treasury note is currently up 0.04% at 2.21%. Bond prices and yields are inversely related to one another.
Using the iShares 20+ Year Treasury Bond ETF (TLT) as a proxy for bond prices in our Stock Forecast Tool, we see positive signals followed by slight downward corrections in our 10-day prediction window. Relative to current conditions, we see vector figures moving from +0.27% today to +0.36% in four trading sessions before turning downward. The ETF is currently priced at $124.33- up 0.19% from the open. The predicted close today is $124.37 with a low and high of $123.64 (± 0.33) and $125.26 (± 0.33), respectively.
The CBOE Volatility Index (VIX) is currently up 2.70% at 10.66, but is predicted to drop steadily. The predicted close today is 10.05 with a negative vector of -3.45%. Today’s predicted lows and highs are 9.72 (± 0.30) and 10.32 (± 0.32), respectively.
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