Investors look to justify gains and valuations across major indexes after an unprecedented rally

After the markets absorbed and analyzed Fed commentary, indexes pulled back from their recent rally. While post-election rallies had performed better than expected, investors are now looking to economic data, profit reports and other key indicators to validate the unprecedented gains in major indexes.

The ever-elusive 20,000 level is once again unattainable for the Dow. The DJIA is currently down 0.24% from the open at 199216.72. The Nasdaq-100, propped up by major tech stocks like Apple and Facebook, is up 0.25% at 5534.72. The S&P 500 is down 4.95 points, or 0.22% at 2272.03.

Using the ^GSPC symbol to analyze the S&P 500, our prediction model shows slight oscillations, relative to today’s conditions.  The predicted close today is 2269.30, with predicted support and resistance at 2253.86 (± 3.63) and 2280.59 (± 3.68), respectively.  

Upcoming Events and Reports

We can expect “somewhat more regular increases” in interest rates, according to Boston Fed President Eric Rosengren. Changes in economic conditions have been cited for this and the comment follows indications of three hikes in 2017.

President-elect Donald Trump will be holding a press conference this Wednesday, January 11th. While no details have been released, and the event has been billed as a “general news conference”, investors will undoubtedly be looking to gleam insights from the exchange.

Oil

Oil futures have slipped amidsts renewed concerns over supply volumes, as well as increased U.S. drilling activity. There is a high level of skepticism and anxiety around cutting global production, and reasonably so. In the past, both OPEC and non-OPEC countries have cheated or obscured output figures. According to a report from ClipperData, countries like Iran and Iraq seem to be taking advantage of the per-barrel price hike to move high volumes. Baker Hughes has announced an increase of four rigs at the end of December, which bookended consistent upticks for 10 weeks.  Currently, crude futures are priced at $52.32 per-barrel, down 3.09% from today’s open.

Looking at USO, a crude oil tracker, our 10-day prediction model shows consistent but weak downward movements relative to today’s conditions. The fund is currently trading at 11.419 and today’s prediction sees support at 11.60 (± 0.09) and resistance at 11.80 (± 0.09). The predicted close for today is 11.70.  

Gold

Gold for February delivery is recovering from a recent sell-off. Pricing is attractive to investors again, and the low prices have stoked demand in emerging markets. A strong US dollar- the currency in which the non-fiat asset is priced in- is one of a few pressures on the non-fiat metal in early 2017. Other factors include rising interest rates and the political climate in general. Prices are up $9.90, or 0.84% today at $1183.30.

Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows strong consistent gains. The gold proxy is currently trading at 112.76. Today’s predicted low is 111.75 (± 0.25) and the predicted high is 113.12 (± 0.25). The predicted close today is 112.49. Positive vector figures climb toward ~6% at the end of the window, relative to current conditions.  

Treasuries

Treasury bond yields are sliding and bond prices are rising as we look toward changing fiscal policies and expected inflation growth. Using the iShares 20+ Year Treasury Bond ETF (TLT) in our Stock Forecast Tool, we see this reflected in the 10-day prediction window.

TLT, an ETF which tracks 20+ year bond returns, is currently at 121.58. The predicted close today is 121.95 with a low and high of 120.86 (± 0.30) and 122.49 (± 0.31), respectively. Positive vector movements move from ~1% toward ~5% the end of the window, relative to today’s numbers.

Volatility

The CBOE Volatility Index (VIX) is currently at 11.58, which is relatively stable compared to the past week. Our 10-day model shows a strong uptick with positive vector figures climbing above 10% relative to now. The predicted close today is 11.48. Today’s predicted lows and highs are 10.52 (± 0.25) and 12.10 (± 0.29), respectively.

Other news

The Detroit Auto Show, the premier trade show of the automotive industry, is underway and will provide a stage for global auto groups to contextualize their operations within a Trump presidency.

Mary Barra, the CEO of General Motors Co. (GM), indicated that small-car production will not be transferred to Mexico. Trump has made critical remarks recently around GM’s imports of their Chevrolet Cruze models from Mexico. Mexican-manufactured Cruze models represent under 5% of Cruze models sold domestically, according to GM. Barra is also an advisor to President-elect Trump.