Will U.S. indices be able to push through earnings and extend the bullish streak?

October 23, 2017
By Vlad Karpel

Major U.S. indices saw record closes on Friday, and had attempted to push further in early Monday trading as investors parsed another round of corporate earnings reports and global financial news. While better-than-expected earnings results have drove rallies in equities in recent weeks, market participants are currently weighing in the timeline and feasibility of passing tax reform items. The prospects of Republican-led tax cuts have provided the momentum to drive post-election markets higher, but details are sparse at a time when a concrete agenda is needed.

Japanese Prime Minister Shinzo Abe has won a parliamentary snap-election, which ensures that the government’s monetary policy will continue. This works to both weaken the Japanese yen and spur Japanese stock rallies. The Nikkei 225 index is up 1.11% to 21,696.65 at the time of publication.  For this week, keep an eye on earnings reports and watch for any clues around both Fed monetary policy and tax reform details from the White House.

At the time of publication, the DJIA is up 0.07%, or 16.65 points, at 23,343. The S&P 500 is trading at 2,574- down 0.04% from the open. The Nasdaq-100 is down 0.11% at 6,622.

Using the ^GSPC symbol to analyze the S&P 500, our 10-day prediction window shows  an uptrend with strong signals. Today’s positive vector figure of +0.52% moves to +1.60% within three trading sessions.  Today’s predicted support and resistance is 2,575.21 (± 2.03) and 2,599.32 (± 2.05), respectively. The predicted close today is 2,589.89. 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.  

Highlight of a Recent Winning Trade

On October 18, our Premium Member Picks service- which is exclusive to our Premium membership plan- closed a successful long position for Facebook Inc. (FB).

Trade Breakdown

The position was opened on September 18, and we saw a Net Stock Gain of $14.39 (126.23%), a Net Options Gain of $2.65 (23.98%) and a Net Options Spread Gain of $0.70 (22.58%).  The Max Loss for the Stock Trade was $11.40, the Max Loss for the Option Trade was $11.05, and the Max Loss for the Option Spread Trade was $3.90.

Must-buy Stock for Tuesday

Our must-buy stock for Tuesday is HP Inc. (HPQ). This stock shows consistent, incremental gains in our Stock Forecast Toolbox’s 10-day forecast. Our 10-day prediction model shows vector figures climbing above +2.36% within the next three trading sessions. Our benchmark for vector figures is +1.00%.

The stock is trading at $22.28 at the time of publication, up 1.16% from the open with a +0.73% vector figure.

Tuesday’s prediction shows an open price of $22.40, a low of $22.26 and a high of $22.60.

The predicted close for Tuesday is $22.43. Vector figures show +1.80% for tomorrow, which continue to rise for the remainder of the forecast.  

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 relatively to 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 predicted direction of the Vector. The higher the value of the Vector the higher its momentum.



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Oil

Crude prices are being pulled around by three major factors currently. Disruptions to Iraqi output levels due to the ongoing conflict between the Iraqi military and Kurdish separatists, a positive OPEC outlook for the global production cut accord, and a drawdown in U.S. domestic drilling operations. In the short-term, it appears that southern Iraqi output is scaling up to counteract the aforementioned supply disruptions. Weekend OPEC commentary has inferred that the production cut agreement will likely be extended at its next meeting in November. Baker Hughes- one of the largest U.S. drilling operators- claimed a third straight weekly decline in active rig numbers. West Texas Intermediate for November delivery is priced at $51.81 per barrel at the time of publication, up 0.17% from the open.  

Looking at USO, a crude oil tracker, our 10-day prediction model shows rising positive signals for the duration of the forecast. The fund is trading at $10.42 at the time of publication, which is down 0.10% from the open. Today’s prediction sees support at $10.32 (± 0.04) and resistance at $10.49 (± 0.04). The predicted close for today is $10.40. Vector figures show +0.47% today, moving to +1.00% in three trading sessions and builds from there. 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 up 0.02% at $1,281.00 a troy ounce at the time of publication. The yellow metal dropped 0.04% today and saw its worst weekly performance since September 22 when it closed at $1,280.50 on Friday. Earnings reports beating forecasts, a general bullish market sentiment and a strengthened U.S. dollar are all contributing factors. Going forward, gold futures should be swayed primarily by Fed interest rate news and the rising expectations of a December hike.

Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows consistent negative signals. The gold proxy is trading at $121.69, down 0.02% at the time of publication. Today’s predicted low is $121.27 (± 0.33) and the predicted high is $121.88 (± 0.33). The predicted close today is $121.50. 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 no economic news or Fed commentary today, market participants are focusing on two global events impacting Treasury yields. Japanese Prime Minister Shinzo Abe’s election win is having a ripple effect as investors assume the Bank of Japan will continue its monetary policies. This puts downward pressure on yields around the world due to Japan’s easy policies. The ongoing Catalan secessionist movement in Spain is reaching a point in which the government may invoke a constitutional article to forcefully take control of the Catalan regional government.  This would undoubtedly spur intense violence and cause major economic disruptions which can branch out across the eurozone. The yield on the 10-year Treasury note is down 0.30% at 2.38% at the time of publication. 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 consistent positive signals in our 10-day prediction window. Today’s vector of +0.38% moves to +1.01% within three trading sessions. The ETF is priced at $124.20 at the time of publication- up 0.18% from the open. The predicted close today is $124.67 with a low and high of $123.98 (± 0.23) and $125.18 (± 0.23), 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 2.21% to 10.19 at the time of publication, and our 10-day prediction window shows mixed signals.  The predicted close today is 9.89 with a negative vector of -0.90%. Today’s predicted lows and highs are 9.83 (± 0.18) and 10.38 (± 0.19), 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.

 



Here’s where I put my money where my mouth is!

Click here for my daily recommendations & research tools!

 



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