Busy Week Abroad as Geopolitical Issues Converge

Indices continue on the march higher as investors put trade war concerns in the rearview with earnings season winding down. The Dow is aiming for its 8th straight advance, a first since last year and an impressive feat nonetheless, while the S&P and Nasdaq look to be adding to their gains from last week. President Trump tweeted on Sunday that he plans to help keep struggling Chinese telecom giant ZTE in business after they were hit hard with trade sanctions last month, which bodes well for the upcoming meeting with President Xi this week and could support what seemed to be a deteriorating trade relationship between the two. The tech giant halted all major business operations last week, however, Trump’s intention to provide a lifeline for the Chinese company has eased investors worry over the further sanctions and global implications. Investors should stay tuned for more news from the Chinese trade talks taking place this week.

Globally, Asian markets traded slightly higher while European markets were a bit down. Investors are still watching for the full effect of the Iran deal pull out while keeping tabs on the escalating tensions in the area, such as Israel, where a U.S. embassy opened in Jerusalem today. Chinese-U.S. trade relations will still take center stage as their direct implication on the financial landscape can be felt immediately and must be accounted for. For example, ZTE took a whopping 15% hit for the day, still recoiling from the sanctions announced almost a month ago. As it stands, the market looks to be overbought. Investors should look to sell into the rallies while monitoring the $275 top benchmark for SPY.

While no major reports are set to release today, the rest of the week should provide plenty for investors to mull over. On Tuesday, Retail Sales report will be released for April while we will also get a Home Builders Index for the month of May. The rest of the week will feature a few speeches from Fed officials along with an Industrial Production and Leading Indicators report for April.

Using the ^GSPC symbol to analyze the S&P 500, our 10-day prediction window shows all positive signals. Today’s vector figure of +0.52% moves to 2.24% in two trading sessions before climbing higher into positive territory. Today’s predicted support and resistance levels are 2,727.72 (±7.46) and 2,752.12 (± 7.53), respectively. The predicted close for tomorrow is 2,769.66. 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 May 11th, our ActiveTrader service produced a bullish recommendation for Exxon Mobil Corporation (XOM). ActiveTrader, included in all paid Tradespoon membership plans, is designed for intraday trading.

Trade Breakdown

XOM opened near Entry 1 price range of $80.62 (± 0.29), moving through its Target Price of $81.43 in its the second hour of trading, reaching $81.69. The Stop Loss was set at $79.81.

Tuesday Morning- Buy, Buy, Buy

Our featured stock for Tuesday is Discover  (DFS). DFS 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 +2.00% in one trading session which then incrementally build throughout the 10-day forecast. 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 $75.59 at the time of publication, up .29% from the open with a +0.92% vector figure.

Tuesday’s prediction shows an open price of $76.82, a low of $76.18 and a high of $77.22.

The predicted close for Tuesday is $76.95. Vector figures jump to +2.08% on Tuesday and drive upward from there. 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 June delivery (CLM8) is priced at $70.95 per barrel, up .54% from the open, at the time of publication. Concerns over Iran sanction hang around the commodity but that is not enough to cease last week’s gains. OPEC reports had production up by 12,000 barrels a day in April. U.S. Energy Information Administration will issue a monthly report later today covering U.S. shale oil production.

Looking at USO, a crude oil tracker, our 10-day prediction model shows all positive signals. The fund is trading at $14.339 at the time of publication, up .63% from the open. Tomorrow’s prediction sees support at $14.50 and resistance at $14.67. The predicted close for tomorrow is $14.53. Vector figures show +0.30% today, which turns to +2.37% 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 a few tough weeks Gold finally end the week higher bug just marginally, at 0.5%. The slide came in light of geopolitical tensions and a strong dollar, which don’t always bode well for gold, however, the dollar has recently begun slipping, going posting consecutive losses, which could support the commodity. The price for June gold (GCM8) is down 0.05% at $1,319.40 at the time of publication.

Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows mostly all positive signals. The gold proxy is trading at $124.855, down .12% at the time of publication. Tomorrow’s predicted low is $125.20 and the predicted high is $126.05. The predicted close for tomorrow is $125.53. Vector signals show -0.01% for today, reaching 1.08% in four 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

Analysts are expecting another rate hike by the FOMC in next month’s meeting, which coupled with easing tensions with China, as yields are on the march higher today. April inflation data released last week revealed softer consumer inflation than expected with an overall increase in consumer prices.  The yield on the 10-year Treasury note is up 0.71% at 2.99% at the time of publication. The yield on the 30-year Treasury note is up .45% from the open at 3.116%.

Using the iShares 20+ Year Treasury Bond ETF (TLT) as a proxy for bond prices in our Stock Forecast Tool, we see all mixed signals in our 10-day prediction window. Today’s vector of +.05% moves to +.27% in two trading sessions. The ETF is priced at $118.94 at the time of publication, down 0.24%. The predicted close tomorrow is $119.60 with a low and high of $118.85 and $119.87, 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 3.72% at 13.12 at the time of publication, and our 10-day prediction window shows all negative signals. The predicted close for tomorrow is 12.24 with a vector of -5.87%. The predicted lows and highs for tomorrow are 11.91 and 12.39, 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.