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For the second straight day, markets are trading higher behind strong earnings ahead of the latest FOMC decision. With markets initially trading lower to start the week due to the viral outbreak in China, notable earnings and economic reports, as well as additional preventative measures from China, have helped all three major U.S. indices rebound. Yesterday, Apple released Q4 earnings which helped shares rise impressively while today after the market close earnings from Facebook, Microsoft, and Tesla will be released. The second day of the first FOMC meeting of 2020 concluded today with Powell meeting with the press following the decision to keep rates unchanged. Tomorrow Q4 GDP data will release along with Amazon, Visa, Verizon and more. SPY support level is at $320 currently, same as the 50-days M.A. on SPY, and we remain bullish during this earnings season. The market should remain range-bound for the next 2-4 weeks between $320 and $333. Additional pullbacks are expected and we look to buy near $320. We expect a 2-5% correction in the marker next 4-6 weeks as the market is losing momentum, especially in the technology sector. Market Commentary readers are encouraged to maintain clearly defined stop-levels for all positions. For reference, the SPY Seasonal Chart is shown below:
All three major U.S. indices traded higher today both before and after the FOMC decision was announced as strong earnings and cooling fears over the China coronavirus prevail. Fed Chair Powell met with the press following the FOMC announcement which kept rates as is and increased the special rate paid to banks for excess reserves. The general consensus that the U.S. economy was moderately growing among the twelve federal districts remained. With a unanimous vote to keep rates unchanged, after three adjustments in 2019, the Fed reiterated its decision behind a strong labor market and inflation level remaining below the 2% target. With the first FOMC of 2020 behind us, the market focus returns to the busy earnings season.
Yesterday, impressive Apple data boosted shares of the company over 2%, which also traded higher today. One of the best quarters in iPhone sales supported the strong report as well as the debut of its Apple TV+ streaming service. Also reporting after the market close, Starbucks saw shares go up behind one of its strongest quarters. Today, pre-opening bell releases included MasterCard, AT&T, and McDonald’s, all of which saw shares rise behind better-than-expected results. Boeing also released earnings before the market opened which saw revenue decline while shares slightly rose. Next up, key earnings data from Microsoft, Facebook, and Tesla will release after market close today while tomorrow lookout for Amazon and Visa. Also releasing tomorrow are Coca-Cola, Verizon, and Shell earnings along with the latest GDP data.
Using the “^GSPC” symbol to analyze the S&P 500 our 10-day prediction window shows a near-term negative outlook. Today’s vector figure of -0.16% moves to -1.86% in four trading sessions. 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 January 10th, our ActiveTrader service produced a bullish recommendation for Apple Inc. (AAPL). ActiveTrader is included in all paid Tradespoon membership plans and is designed for day trading, with signals meant to last for 1-2 days.
Trade Breakdown
AAPL entered its forecasted Strategy B Entry 1 price range $309.63(± 1.05) in its third hour of trading that day and passed through its Target price of $312.73 in the second hour of trading the following trading. The Stop Loss price was set at $306.53.
*Please note: At the time of publication Vlad Karpel does have a position in the featured symbol, KSU. 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.
Our featured symbol for Thursday is Kansas City Southern (KSU). KSU is showing a positive vector 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 current-day predicted support and resistance, relative to our entire data universe.
The stock is trading at $167.52 at the time of publication, with a 0.43% 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.
West Texas Intermediate for Crude Oil delivery (CL.1) is priced at $52.77 per barrel, down 2.64% 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 $11.08 at the time of publication. Vector figures show -0.97% today, which turns to -0.88% 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.
The price for the Gold Continuous Contract (GC00) is up 0.66% at $1,582.20 at the time of publication.
Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows negative signals. The gold proxy is trading at $148.63, at the time of publication. Vector signals show 0.00% 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 2.21% at 1.52% at the time of publication.
The yield on the 30-year Treasury note is down 1.91% at 2.18% 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. Today’s vector of +0.29% moves to +0.22% in three 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.
The CBOE Volatility Index (^VIX) is $16.85 at the time of publication, and our 10-day prediction window shows negative 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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