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One day after the release of last month’s FOMC minutes pushed major U.S. indices to close near all-time highs, markets are seeing pressure from growing global Coronavirus concerns, causing shares to lower. Reported infections in South Korea, Iran, and Japan are causing added pressure to global markets as containment efforts and production slowdowns continue. Viacom CBS, Southern Company, Norwegian Cruise Company, and Domino’s Pizza reported earnings before the market open today while data from Fitbit and DropBox will release after market close. Despite the recent broad-based rally, gold and treasure and U.S. dollar remain at elevated levels. The bull market returned and started to rally a couple of weeks earlier than we expected; we recommend readers keep an eye on treasury and gold levels. In the next 4-6 weeks, we are expecting a shallow 1-2% correction and we will continue looking for buying opportunities near $330, the current SPY support level. Currently, there is more risk to the downside than to the upside and we discourage readers from chasing the market rally at this time. We encourage Market Commentary readers to maintain clearly defined stop-levels for all positions. For reference, the SPY Seasonal Chart is shown below:
All three major U.S. indices closed in the red today with Coronavirus concerns once again dictating both U.S. and global markets. Reported infections in Japan, Iran, and South Korea are triggering a wider global concern of contagion while the death toll in China has now eclipsed 2,000. With this in mind, European markets closed in the red while Asian markets saw mixed results. Minutes from last month’s FOMC meeting showed the virus was a point of concern for the twelve Fed members, along with additional ongoing global affairs, leading most to believe a rate easing policy is in store. Rather than increasing rates, Fed members discussed rate easing policies for the short-term. The next FOMC will be held March 17-18 and will feature a Summary of Economic Projections. Elsewhere, the Chinese central bank cut its benchmark lending rate.
Earnings season continues to wind down with only a handful of key reports yet to be released. Before the market opened Viacom CBS, Southern Company, Norwegian Cruise Company, and Domino’s Pizza reported earnings to mixed results; Fitbit and DropBox will release after market close. Deere will headline earnings on Friday while next week we will see HP, Home Depot, Salesforce, Square Inc, Lowes, Dell, and Best Buy reports. Next week, economic reports to monitor include January New Home Sales, Personal Income, Core Inflation, Consumer Spending, and Q4 GDP.
Using the “^GSPC” symbol to analyze the S&P 500 our 10-day prediction window shows a near-term positive outlook. Today’s vector figure of +0.06% moves to +0.71% 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 February 3rd, our ActiveTrader service produced a bullish recommendation for Pultegroup (PHM). 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
PHM entered its forecasted Strategy A Entry 1 price range $44.65(± 0.20) in its first hour of trading that day and passed through its Target price of $45.10 in the fourth hour of trading on February 5th. The Stop Loss price was set at $44.20.
Our featured symbol for Friday is Micron Technology (MU). MU is showing a positive vector in our Stock Forecast Toolbox’s 10-day forecast. This stock is assigned a Model Grade of (B) indicating it ranks in the top 25th percentile for accuracy for current-day predicted support and resistance, relative to our entire data universe.
The stock is trading at $58.39 at the time of publication, with a +0.47% 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.
*Please note: At the time of publication Vlad Karpel does have a position in the featured symbol, MU. 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.
West Texas Intermediate for Crude Oil delivery (CL.1) is priced at $53.77 per barrel, up 0.90% from the open, 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 $11.18 at the time of publication. Vector figures show +0.94% today, which turns to +3.12% 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 0.72% at $1,623.40 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 $151.79, at the time of publication. Vector signals show -1.16% 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 2.76% at 1.52% at the time of publication.
The yield on the 30-year Treasury note is down 2.27% at 1.97% 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 mostly negative signals in our 10-day prediction window. Today’s vector of -0.34% moves to -1.36% 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 $14.38 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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