Financials propel markets even higher as investors turn to Davos

Major indices are showing strong gains today as financial stocks see rises in congruence with spiking bond yields. During earnings season, strong financials movement can reinforce rallies in equities as it signals optimistic outlooks for overall corporate performance. Another contributing factor is a climb in bond yields, due in part to recent comments from Treasury Secretary Steven Mnuchin at the annual World Economic Forum in Davos, Switzerland. Mnuchin had indicated the Trump administration is friendly to bilateral trade agreements, and further commented that he believes a weaker dollar is good for trade. This sentiment worked to deplete investor attraction to treasury bonds, inversely boosting bond yields. Higher yields are also complementary for the financial sectors as their income from interest is supplemented.

At the time of publication, the DJIA is up 0.20%, or 52.83 points, at 26,262.98. The S&P 500 is trading at 2,835.21- down 0.14% from the open. The Nasdaq-100 is down 0.64% at 7,411.69.  

Using the ^GSPC symbol to analyze the S&P 500, our 10-day prediction window shows  overall positive signals. Today’s negative vector figure of -0.05% moves to +0.24% within three trading sessions.  Today’s predicted support and resistance is 2,829.64 (± 4.25) and 2,858.60 (± 4.29), respectively. The predicted close today is 2,836.36. 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 January 22, our ActiveTrader service- which is included in all paid Tradespoon membership plans- generated a trade recommendation for Adobe Systems Inc.  (ADBE). Our ActiveTrader service is designed for intraday trading.

Trade Breakdown

ADBE moved through the Entry 1 ($195.73, ± 1.20) range in the first hour of trading, and to hit our Target Price of $197.69 in the last hour of the session. The Stop Loss was set at $193.77.

Buy, Buy, Buy: Stock Signals for Thursday

Our featured stock for Thursday is JP Morgan Chase & Co. (JPM). JPM is showing strong bullish signals in our Stock Forecast Toolbox’s 10-day forecast. This stock is assigned a Model Grade of (A)– indicating it ranks in the top 10th percentile for accuracy for predicted support and resistance, relative to our entire data universe. Our 10-day prediction model shows vector figures rising above +1.50% within the next three trading sessions. 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 $115.45 at the time of publication, up 1.06% from the open with a +0.42% vector figure.

Thursday’s  prediction shows an open price of $114.89, a low of $114.35 and a high of $116.03.

The predicted close for Thursday is $115.11. Vector figures rise to +1.51% in three trading sessions and build throughout the forecast.  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 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.

Crude oil is seeing continued climbs in per-barrel prices as the EIA reports further declines in U.S. inventories. This news is on the heels of renewed commitments from participants in the OPEC global production agreement to arrange for an extension past 2018.  We’re also seeing another round of indications from militant groups in the Niger Delta to continue bombings of production facilities soon, which raises concerns. It is notable that U.S. production has climbed higher in recent reports. This data, combined with an overbought crude market, may signal negative corrections in the near future.  

West Texas Intermediate for March delivery (CLH8) is priced at $65.12 per barrel at the time of publication, up 0.57% from the open.  

Looking at USO, a crude oil tracker, our 10-day prediction model shows consistent negative signals. The fund is trading at $13.00 at the time of publication, up 0.27% from the open. Today’s prediction sees support at $12.78 (± 0.04) and resistance at $12.97 (± 0.04). The predicted close for today is $12.85. Vector figures show -0.10% today, sliding to -1.13% in three 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

The price for February gold (GCG8) is up 1.12% at $1,353.10 a troy ounce at the time of publication. Recent comments from Treasury Secretary Steven Mnuchin have sunk the U.S. dollar to around three-year low levels, which inversely boosted gold. Gold is denominated in the U.S. dollar, so the precious metal becomes attractive to investors holding foreign currencies when the greenback is weak. Mnuchin indicated little concern around a weak dollar, saying that it is beneficial to global trade for the United States.

Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows mixed signals. It is important to note this forecast was created for today’s trading session with the previous trading day’s data- which does not account for Mnuchin’s comments at Davos.  The gold proxy is trading at $128.49, up 0.95% at the time of publication. Today’s predicted low is $126.18 (± 0.20) and the predicted high is $127.28 (± 0.20). The predicted close today is $127.01. 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 turning up today as foreign investors hold back from purchasing government paper due to the recent comments from Treasury Secretary Steven Mnuchin. A decidedly weak U.S. dollar reduces the appeal of treasury bonds as it is the underlying currency.  The yield on the 10-year Treasury note is up 0.93% at 2.66% 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 all positive signals in our 10-day prediction window. Again, it should be noted that this forecast does not account for today’s market activity as it was created the previous evening with January 23 market data. Today’s vector of +0.81% moves to +1.80% in three trading sessions.  The ETF is priced at $123.03 at the time of publication, down 0.55%. The predicted close today is $125.11 with a low and high of $123.71 (± 0.39) and $126.45 (± 0.40), 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.

Cryptocurrencies

Bitcoin prices seem to be seeing a $12,000 overhead resistance level as of late, although it appears to be range-bound above a $10,000 floor despite continued regulatory crackdowns abroad. South Korea has announced a requirement of a verified bank account with accredited institutions for investing more money into cryptocurrencies. This is part of a wider effort to tighten and control trade, squeezing out anonymous accounts by requiring banks and exchanges to identify their customers.   

The spot price for a single bitcoin (BTCUSD) is up 1.04% at $11,151.82 at the time of publication. CME’s January futures contract for bitcoin (BTCF8) is down 0.41% at $11,050.00 at the time of publication. CME’s rival exchange, CBOE, has moved their bitcoin futures to a February contract (XBTG8) which is up 1.32% at $11,070.00.

Ether coins on the Ethereum blockchain holds the No.2 spot in terms of market cap, currently holding above $100B. The spot price for an Ether coin is down 2.35% from 24 hours ago at $1,032.20 at the time of publication.

The spot price of a single Ripple coin, which ranks No. 3 with a market cap of over $52B, is down 2.27% from 24 hours ago at $1.35 at the time of publication.

Using Grayscale’s Bitcoin Investment Trust (GBTC) as a Bitcoin tracker in our Stock Forecast Toolbox, we see continued mixed signals in our 10-day prediction window. Today’s vector of +3.66% holds positive for the first four trading sessions before trending down. The proxy trust is priced at $1,672.00 at the time of publication, up 1.17% or $19.35. The predicted close today is $1,760.30 with a low and high of $1,652.65 (± 83.59) and $1,812.68 (± 91.68), 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 2.61% from the open at 11.29 at the time of publication, and our 10-day prediction window shows overall negative signals. The predicted close today is 10.95 with a negative vector of -1.14%.  Today’s predicted lows and highs are 10.14 (± 0.21) and 11.88 (± 0.24), 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.