Will abated North Korea tensions sustain market gains through an FOMC meeting?

September 18, 2017

By Vlad Karpel

With a temporary cool-down in geopolitical tension and anticipation for Wednesday’s conclusion of a two-day FOMC meeting, stocks are trading higher today and continuing Friday’s gains. The S&P 500 breached the 2,500 level in Monday trading- reflecting a strong risk-on investor sentiment. The Fed’s FOMC meeting will not be providing signals for an interest rate hike, but there will be commentary around methods for dealing with a $4.5 trillion balance sheet.

The DJIA is currently up 0.33%, or 72 points, at 22,339. The S&P 500 is currently trading at 2,505- up 0.20% from the open. The Nasdaq-100 is up 0.36% at 6,472.

Using the ^GSPC symbol to analyze the S&P 500, our 10-day prediction window shows overall negative signals. Today’s positive vector figure of +0.03% reverses to slight negative signals which hold until the last three sessions of the forecast. Today’s predicted support and resistance is 2,493.29 (± 3.85) and 2,500.23 (± 3.86), respectively. The predicted close today is 2,498.84. 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.

Highlight of a Recent Winning Trade

On September 13, we closed a successful long position for Applied Materials (ABBV).

Trade Breakdown

This pick was made on August 21, and we saw a $1.82 (44.49%) gain for the stock trade, a $1.40 (28.28%) net gain for the options trade and a $0.80 (30.19%) net gain for the options spread trade.

*Stock % Gain/Loss is calculated by dividing the $ Gain/Loss by the Max Risk which is the posted Stop Loss for the trade.

Must-buy Stock for Tuesday

Anadarko Petroleum Corp. (APC) is showing signals that indicate a great investment opportunity in our Stock Forecast Toolbox’s 10-day forecast. The stock has breached its 50 day moving average with bullish momentum recently and is involved in a promising pipeline deal. Our 10-day prediction model shows positive vector signals building above +3% after an initial slight dip.

The stock is currently trading at $43.70, up 0.34% from the open with a +1.00% vector figure for today.

Tuesday’s prediction shows an open price of $43.67, a low of $42.15 and a high of $44.31.

The predicted close for Tuesday is $42.52. Vector figures show -0.86% for Tuesday, but reversed back into strong positive movement by September 22.

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 figures calculate the change of the Forecasted Average Price relative to “today’s” actual price. The figure shows expected average price movement “Up or Down”, in percent. Trend traders should trade along predicted direction of the Vector. The higher the value of the Vector the higher its momentum.

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Oil

Crude oil prices are seeing a corrective downturn after last week’s gains as market participants factored in a potential extension of the OPEC production cut deal, as well as inclusion of more producer countries. Although a general extension of the accord is expected to occur, it is still uncertain whether or not Nigeria will be successfully brought into the deal. Investors are focused on output levels from both Nigeria and Libya. West Texas Intermediate for October delivery is currently priced at $49.46 per barrel, down 0.90% from the open.

Looking at USO, a crude oil tracker, our 10-day prediction model shows consistent positive movement. The fund is currently trading at $10.19, which is down 0.10% from the open. Today’s prediction sees support at $10.06 (± 0.04) and resistance at $10.20 (± 0.04). The predicted close for today is $10.12. Vector figures show -0.41% today, moving past -2.00% for the next session and eventually reversing into positive territory by September 22. 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 December gold is currently down 1.09% at $1,312.60 a troy ounce. With the United Nations General Assembly underway in New York, North Korea has been mum on making provocative threats and statements. Although the nuclear threat from the country is real and present, Secretary of State Rex Tillerson helped dampen tensions by saying the U.S. wants to “bring North Korea to the table for constructive, productive dialogue,”. There is also anticipation of a Fed sell-off of bonds and mortgage securities in efforts to unload much of its multi-trillion dollar balance sheet.

Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows initial positive signals followed by a negative downturn. The gold proxy is currently trading at $124.14, down 1.11%. Today’s predicted low is $125.24 (± 0.31) and the predicted high is $126.54 (± 0.31). The predicted close today is $126.28. 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

Yields are rising in Monday’s trading ahead of a two-day FOMC meeting this week, in which the Fed is expected to deliver plans on unloading its massive balance sheet. Interest in risk-assets is up as geopolitical tensions are currently low and index gains are holding from last Friday. The yield on the 10-year Treasury note is currently up 1.12% at 2.23%. Bond prices tend to move inversely to yields.

Using the iShares 20+ Year Treasury Bond ETF (TLT) as a proxy for bond prices in our Stock Forecast Tool, we see overall negative signals in our 10-day prediction window. Today’s vector of +0.47% fluctuates for two more trading sessions before holding negative for the remainder of the forecast. The ETF is currently priced at $126.04- down 0.65% from the open. The predicted close today is $128.04 with a low and high of $126.70 (± 0.25) and $128.17 (± 0.26), 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 currently down 0.39% at 10.13, and our 10-day prediction window shows overall negative signals. The predicted close today is 9.88 with a negative vector of -1.89%. Today’s predicted lows and highs are 9.73 (± 0.26) and 10.00 (± 0.26), 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.