U.S. Looks to Leave World Trade Organization

Last week, we saw indices lower as trade war fears and tariff back and forths finally hold down assets without an immediate rally. Although Friday provided a small boost for U.S. assets, all three indices finished lower for the week and today have not gotten off to a better start with both all three major U.S. indices and all three index futures modestly down. The market, in my opinion, continues to be overbought and investors should buy into the dips and sell into the rallies. As long as the market stays below 50-day moving averages, the path of least resistance is down.

The biggest development in the constant tariff-off the U.S. has been engaged throughout the second quarter, and now into the third quarter, of the year is the new tension with the European Union. Trump tweeted this Sunday that he believes the EU is “as bad as China,” and he intends to implement 20% tariffs on automakers. The EU immediately responded with a proposed $300 billion in fresh tariffs against U.S. goods if the auto tariffs go through. This, on top of the fresh Canadian tariffs that went into effect against the U.S. as a response to Trump’s aluminum and steel tariffs, has certainly dented U.S. assets at the start of the third quarter of 2018. With news, but no official action, of Trump’s intent to withdraw the U.S. from the World Trade Organization which would allow Trump to wield tariffs without being governed by international rules, or congressional supervision. Bowing out of WTO rules will certainly have its global effect on markets; currently, both European and Asian markets are down.  

Since the recent escalation over the weekend, Trump has been strongly warned and pleaded to by automakers worldwide. GM argued that isolating European automakers will, in turn, hurt U.S. companies and in turn create a “smaller GM” while Toyota echoed those notions and expanded on the negative impact on all manufacturers. Nissan and Hyundai have taken the biggest dips in the auto field, while the general sentiment throughout as automakers are down as everyone from Ford to Toyota is trading lower today.

A few May-June economic reports are scheduled to be released today, including manufacturing and construction spending, both of which are projected to meet or exceed expectations.

Using the ^GSPC symbol to analyze the S&P 500, our 10-day prediction window shows all negative signals. Today’s vector figure of -0.05% moves to -1.36% in five trading sessions. Today’s predicted support and resistance levels are 2,692.74 (±5.02) and 2,709.74 (± 5.05), respectively. The predicted close for tomorrow is 2,691.05. 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.  

Volatility Performance 

Even with recent EU and Chinese tariff escalation, Tradespoon technology has been able to provide 85% accuracy in our post-selloff trade performance! Similar selloffs in early February resulted in 16 out 21 winning trades in our Live Trading Room in the two weeks that followed, while the late-March selloff resulted in a whopping 14 out 15 winning trades in the week that followed!

Trade Breakdown

On June 13th, in the midst of June’s big selloff, we recommended and bought DVN (Option) at $0.72 and sold the following day at $1.14, that’s a 140% net gain in one day!

Highlight of a Recent Winning Trade

On June 29th, our ActiveTrader service produced a bullish recommendation for Church & Dwight Company Inc. (CHD). ActiveTrader, included in all paid Tradespoon membership plans, is designed for intraday trading.

Trade Breakdown

CHD opened near Entry 1 price range of $53.17 (± 0.25) and moved through its Target Price of $53.70 in its second hour of trading. The Stop Loss was set at $52.64.

Tuesday Morning Featured Stock

Our featured stock for Thursday is Dr Pepper Snapple Group (DPS). DPS is showing a confident uptrend in our Stock Forecast Toolbox’s 10-day forecast. This stock is assigned a Model Grade of (B) indicating it ranks in the top 25th percentile for accuracy for predicted support and resistance, relative to our entire data universe.  Our 10-day prediction model shows positive vector figure reaching +0.51% tomorrow. Our benchmark for vector figures is +1.00%.

*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 $121.91 at the time of publication, down 0.05% from the open with a +0.64% vector figure.

Tuesday’s prediction shows an open price of $120.89, a low of $120.70 and a high of $122.71. 

The predicted close for Tuesday is $122.50. Vector figures stay positive tomorrow. This is a good signal for trading opportunities because we use vectors as 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 relative to the 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 the predicted direction of the Vector. The higher the value of the Vector the higher its momentum.

Oil

West Texas Intermediate for August delivery (CLQ8) is priced at $73.78per barrel, down 0.50% from the open, at the time of publication. Oil prices have been running high all of last week, and although they have relatively pulled back, the commodity is still floating in record-high ranges. Trump’s recent proclamation of increased production from Saudi Arabia created a small pull-back in the commodity.

Looking at USO, a crude oil tracker, our 10-day prediction model shows all positive signals. The fund is trading at $15.02 at the time of publication, down 0.27% from the open. Tomorrow’s prediction sees support at $15.39 and resistance at $15.59. The predicted close for tomorrow is $15.48. Vector figures show 1.38% today, which turns 5.10% in two 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

After hitting a year-low last week, gold futures continue to trade lower amid trade fears and no overwhelmingly positive economic data. The dollar continues to, correctly, move inversely to the safe-haven commodity, unlike early last week where both gold and the dollar lowered. The price for August gold (GCQ8) is down 0.5% at $1,248.20 at the time of publication.

Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows all negative signals. The gold proxy is trading at $117.51, down 0.96% at the time of publication. Tomorrow’s predicted low is $117.66 and the predicted high is $118.05. The predicted close for tomorrow is $117.68. Vector signals show -0.32% for today, reaching -1.02% in two 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.  

Treasuries

With trade escalation already strongly affecting yields to end last week, the fresh batch of economic data looks to out-influence the constant threat of a trade war that has loomed around U.S. markets. This has caused yields to advance higher while investors await further global developments. The yield on the 10-year Treasury note is up 0.32% at 2.85% at the time of publication. The yield on the 30-year Treasury note is up 0.54% at 2.99% 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 all positive signals in our 10-day prediction window. Today’s vector of 0.07% moves to 1.01% in three trading sessions. The ETF is priced at $121.43 at the time of publication, down 0.24%. The predicted close tomorrow is $122.28 with a low and high of $122.49 and $123.11, 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.

Volatility

The CBOE Volatility Index (^VIX) is up 7.02% at 17.22 at the time of publication, and our 10-day prediction window shows mostly all positive signals. The predicted close for tomorrow is 17.67 with a vector of 0.31%. The predicted lows and highs for tomorrow are 16.95 and 17.70, 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.