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After a volatile trading session on Monday, stocks closed mixed; all three indices had started the day in the green before falling to mixed results at the close. The Nasdaq was the lone standout, holding onto gains while the Dow and S&P were in the green. Investors continue to keep a close eye on the fallout from Silicon Valley Bank’s (SVB) recent collapse. However, reassuring regulatory actions have limited contagion and helped ease investor concerns.
One piece of good news is that all deposits of the failed lender have been guaranteed, and New York-based Signature Bank has been closed. The Federal Reserve and U.S. Treasury have also pledged to make more funds available through a new funding program to meet demands for bank withdrawals. President Biden also spoke out to reassure Americans that the banking system is secure and that SVB’s customers will be protected.
However, there is still some risk to sales and financial positions at other banks which could impact the markets. Consequently, investors are assuming that the Federal Reserve may move less aggressively in lifting interest rates, thus putting less pressure on the economy. Treasuries, considered a haven after SVB’s collapse raised concerns about other banks, continued their strong rally on Monday. As investors reconsider the outlook for monetary policy, bond prices have increased while yields have fallen sharply.
Looking ahead, the release of February’s consumer price data on Tuesday will be the next major catalyst for the markets. February retail sales and January business inventories are due on Wednesday, along with Core PPI reports. In addition, earnings reports from companies such as FedEx and Lennar Corporation, as well as liquidity issues in regional banks, could influence the market’s next move.
Reviewing the latest level, we believe the market is expected to trade sideways for the next two to eight weeks. We are currently bearish on the market and encourage subscribers to hedge their positions. The VIX is trading near the 30-level, while FDX and LEN earnings this week, as well as CPI data, could influence the market’s next move. We are watching the overhead resistance levels in the SPY, which are currently at 392 and then 402, while the support level is at 380 and then 372. Market commentary readers should maintain clearly defined stop levels for all positions. For reference, the SPY Seasonal Chart is shown below:
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, spy. 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 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 picks, please click here.
West Texas Intermediate for Crude Oil delivery (CL.1) is priced at $74.69 per barrel, down 2.60%, at the time of publication.
Looking at USO, a crude oil tracker, our 10-day prediction model shows mixed signals. The fund is trading at $65.25 at the time of publication. 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 2.77% at $1918.90 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 $177.86 at the time of publication. Vector signals show +0.08% 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 at 3.577% at the time of publication.
The yield on the 30-year Treasury note is up at 3.716% 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. 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 $26.52 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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