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On Monday, all three major US stock indices closed lower as investors analyzed the banking industry in anticipation of this week’s Federal Open Market Committee (FOMC) meeting. JP Morgan Chase’s announcement that it would be acquiring all the deposits of First Republic Bank resulted in a slump in stocks. The Federal Reserve’s rate-setting committee will meet on May 2-3, with analysts expecting a 25 basis point interest rate hike. The possibility of the Fed moving to a range of 5% and 5.25% is high, with investors eagerly anticipating the Fed’s decision.
Investors were left reeling from the news of the seizure of First Republic Bank by JP Morgan Chase, leading to significant scrutiny of the banking industry. However, there is a possibility that the crisis is largely contained. While the market remains concerned about the impact of the Fed’s interest rate hikes on other banks, JP Morgan’s shares rose by 2% while First Republic Bank’s stock was halted.
On a positive note, the ISM manufacturing survey showed improvement in U.S. manufacturing activity, with a reading of 47.1 in April, higher than the consensus of 46.7 and up from March’s 46.3. Although any reading below 50 points to dwindling manufacturing activity, the uptick from the previous month’s low suggests a slower contraction.
Investors are also keeping a close eye on several big companies releasing their earnings reports this week, including Pfizer and Advanced Micro Devices on Tuesday, and tech giant Apple on Thursday after the market closes. With these earnings reports, as well as the Fed’s decision, influencing the market’s next move, investors are waiting with bated breath. Additionally, the earnings reports of $AAPL, $UBER, and $MGM will be closely watched this week.
With the $VIX trading near the $16 level., we are watching the overhead resistance levels in the SPY, which are presently at $418 and then $430. The $SPY support is at $410 and then $406. We expect the market to trade sideways for the next 2-8 weeks. We would be MARKET BEARISH at this time and encourage subscribers to hedge their positions. Both European and Asian markets unanimously closed in the green on Monday. Market commentary readers should maintain clearly defined stop levels for all positions. For reference, the SPY Seasonal Chart is shown below:
Note: The Vector column calculates the change of the Forecasted Average Price for the next trading session relative to the average of actual prices for the last trading session. The column shows the 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.
*Please note: At the time of publication Vlad Karpel does have a position in the featured symbol, lly. Our featured symbol is part of your free subscription service. It is not included in any paid Tradespoon subscription service. Vlad Karpel only trades his money in paid subscription services. If you are a paid subscriber, please review your Premium Member Picks, ActiveTrader, or MonthlyTrader recommendations. If you are interested in receiving Vlad’s picks, please click here.
West Texas Intermediate for Crude Oil delivery (CL.1) is priced at $75.74 per barrel, down 1.35%, at the time of publication.
Looking at USO, a crude oil tracker, our 10-day prediction model shows mixed signals. The fund is trading at $67.5 at the time of publication. Prediction data is uploaded after the market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.
The price for the Gold Continuous Contract (GC00) is down 0.43% at $1990.40 at the time of publication.
Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows mixed signals. The gold proxy is trading at $184.8 at the time of publication. Vector signals show -0.43% for today. Prediction data is uploaded after the market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.
The yield on the 10-year Treasury note is up at 3.575% at the time of publication.
The yield on the 30-year Treasury note is up at 3.813% 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 mixed signals in our 10-day prediction window. Prediction data is uploaded after the market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.
The CBOE Volatility Index (^VIX) is $16.08 at the time of publication, and our 10-day prediction window shows mixed signals. Prediction data is uploaded after the market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.
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