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Markets hit the 7% circuit breaker this morning shortly after the opening bell only to continue trading lower following the 15-halt. All three major U.S. indices are down over 8% today with the global impact of the Coronavirus continuing to be felt. On Friday, markets saw decent gains as the Fed announced $700 billi0on in Treasury and securities purchases only to see significant concern mount over the weekend, leading to the Fed announcing another emergency interest rate cut. With rates down to 0%, Fed Chair Powell announced there will be no FOMC meeting as previously planned. Both the ECB and the International Monterey Fund have taken action to subvert the global impact of the virus with major shutdowns and stimulus measures. At this point, we do not believe we have set the bottom and markets will have to close two days in a row with higher highs and higher lows before the bottoming process has been started. While the market is selling off, oil drilling sector XOP and gold miners are staging a quiet rally. This has been a sign of the start of the bottom forming process in the past bear markets. In the next few weeks, we expect the market to trade in the range of $230-$300 for the SPY ETF. Market Commentary readers are encouraged to maintain clearly defined stop-levels for all positions. For reference, the SPY Seasonal Chart is shown below:
Over the weekend, Feds took precautionary action against the continued economic impact of the Coronavirus by cutting rates down to 0% and canceling the upcoming FOMC meeting scheduled for this week. This follows last week’s stimuli plan to buy back Treasuries, which was met with an initial boost to markets. Although the rate cut initially eased markets, shortly after Monday’s opening bell markets hit the 7% circuit breaker causing a 15-minute trading halt. Markets then resumed to trade lower, at times near 10% losses, currently on track from 7-8% losses. G-7 leaders are reportedly discussing and monitoring the matter closely while several national and international health organizations are making efforts to ease conditions. As the rapid spread reached the U.S., major business shutdowns triggered large selloffs. Several states have already issued guidelines and shutdowns while the President issued a national state of emergency. Currently, over 160,000 cases of the virus have been reported, globally, with over 6,000 deaths. Globally, both Asian and European markets suffered major selloffs.
Using the “^GSPC” symbol to analyze the S&P 500 our 10-day prediction window shows a near-term mixed outlook. Prediction data is uploaded after the market closes at 6 p.m. CST. Today’s data is based on market signals from the previous trading session.
On February 25th, our ActiveTrader service produced a bullish recommendation for General Motors Company (GM). ActiveTrader is included in several Tradespoon membership plans and is designed for day trading, with signals meant to last for 1-2 days.
Trade Breakdown
GM entered its forecasted Strategy B Entry 2 price range $33.26(± 0.22) in its first hour of trading that day and passed through its Target price of $32.76 in the following hour of trading. The Stop Loss price was set at $34.42.
Our featured symbol for Tuesday is Gold Miners ETF (GDX). GDX is showing a steady vector in our Stock Forecast Toolbox’s 10-day forecast. This stock is assigned a Model Grade of (C) indicating it ranks in the top 50th percentile for accuracy for current-day predicted support and resistance, relative to our entire data universe.
The stock is trading at $20.83 at the time of publication, with a -8.13% vector figure.
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.
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, GDX. 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 own personal 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 personal picks, please click here.
West Texas Intermediate for Crude Oil delivery (CL.1) is priced at $28.88 per barrel, down 1.81% from the open, at the time of publication.
Looking at USO, a crude oil tracker, our 10-day prediction model shows negative signals. The fund is trading at $6.14 at the time of publication. Vector figures show -4.20% today, which turns to -18.38% in three trading sessions. 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.
Gold
The price for the Gold Continuous Contract (GC00) is down 1.77% at $489.90 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 $140.39, at the time of publication. Vector signals show -0.41% 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 down to 0.728% at the time of publication.
The yield on the 30-year Treasury note is down to 1.342% 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 negative 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.
Volatility
The CBOE Volatility Index (^VIX) is $78.16 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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