Major indexes slightly overbought, oil slips and ECB prepares for Thursday meeting

Major indexes are pulling back after recent pushes past record benchmarks. On Tuesday, the DJIA hit another record high when it closed at 19251.78. The S&P 500 closed just within a new record high at 2,212.23. Currently, The S&P 500 is up 0.17% at 2215.90. The Nasdaq-100 is holding at  5333.77 today, making slight returns after a biotech selloff .  

Most analysts consider major indexes to be overbought. Using the ^GSPC symbol to analyze the S&P 500, our prediction model complements this view and sees consistent declines. The predicted close today is 2206.55, with predicted support and resistance at 2184.41 (± 4.60) and 2212.23 (± 4.65), respectively. Downward vector movements indicate a sell-off, but figures do not breach 1%.

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Fed speakers will be holding off on making any commentary until the December 12-13 FOMC meeting which is widely anticipated to result in rate hikes.

The European Central Bank will meet on Thursday to discuss a range monetary policy decisions, including quantitative easing and an anticipated continuation of its asset buying program. Italian uncertainty will be weighing on the ECB decisions tomorrow, following a 60% to 40% vote against proposed constitutional-reforms.  The case is being made for the ECB to extend its quantitative easing measures into next year. Although markets have learned to shrug off flashpoints in the global anti establishment political wave, the possible installation of populist and euroskeptic parties foreshadow more departures from the EU and the euro.

Oil

The OPEC rally is now seeing sharp reversals, as uncertainty surrounds another pending discussion of production caps. This time, it will be the non-OPEC countries who will be meeting with the oil-exporting organization.  Crude oil is down 1.08%, currently trading at $50.38.

Looking at USO, a crude oil tracker, our 10-day prediction model shows continued declines that reverse around December 13. The fund is currently down 1.41% at 11.131. Today’s prediction sees support at 10.92 (± 0.09) and resistance at 11.29 (± 0.09). After the forecasted dip and reversal, we show predicted support and resistance at 11.95 and 12.45 by December 20.

Gold

Gold is up 9 points, or 0.77% to $1179.10 today. The reintroduction of uncertainty around crude oil, as well as the notion of markets being overbought currently, is driving a spike in the non-fiat metal. This notion of fear can be seen as investors rotate into the safe haven.

Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, we see majority positive movement staying under 1%. It is currently trading at 112.14 which is up 0.01, or 0.64%. Today’s predicted low is 111.37 (± 0.45) and the predicted high is 112.83 (± 0.46). The predicted close today is 112.36.

Volatility

The CBOE Volatility Index (VIX) is down 2.37% at 11.51 with a mixed vector outlook. Our 10-day model shows movement oscillating up and down, mostly by a magnitude of 3-4%.. The predicted close today is 12.18. Today’s predicted lows and highs are 11.66 (± 0.26) and 13.97 (± 0.31), respectively.  Predicted 10-day figures show support contained between ~10 and ~12. Predicted resistance stays between ~13 and ~15.

In other news

Western Digital Corp. (WDC) shares are currently trading at $68.61, up 7.46 from today’s open. Western Digital is an industry leader in data storage solutions- including brands like SanDisk, WD, and HGST. The jump in price is due to an updated expectations for their second fiscal quarter of 2017, which they project at $4.75 billion. In a separate announcement, Samsung and Western Digital revealed a cross-license agreement which will see Western receiving increased intellectual property revenue.

SoftBank CEO Masayoshi Son has met with president-elect Donald Trump, rekindling  the Japanese internet and telecom giant’s interest in pursuing a mega-merger with T-mobile. Softbank already owns a majority of Sprint Corp., and a previous attempt at T-mobile was blocked by antitrust regulators under the Obama administration. It is clear that Trump will likely try to see this merger through in the coming year. Son has also declared a tentative plan to invest $50 billion in the US and create 50,000 jobs. This is  part of a larger $100 billion fund planned with other partners, including a Saudi-Arabian sovereign-wealth fund.