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U.S. Stocks continue to slip behind mixed Q2 corporate earnings, with all three major U.S. indices on track to close in the red. Netflix earnings did not impress investors with even lower than expected subscription data which caused shares of the streaming giant to lower by 10%. IBM, however, saw shares rise following Q2 earnings report which beat estimates, although seeing a decline in revenue. Microsoft is scheduled to report after the market closes today while Morgan Stanley, United Health, and Phillip Morris released before the market opened. Global-trade uncertainty remains as both the U.S. and China have threatened further tariffs against the U.S., while some positive news has surfaced following comments by Treasury Secretary Mnuchin, stating talks have not stalled. With the SPY trading at an all-time high level, we encourage Market Commentary readers to avoid chasing near $300 and look towards buying near $290 level. Second-quarter corporate earnings remain the biggest factor in the markets this week. Still, we do not see market momentum pushing SPY above much higher than $300, potentially overshooting to $305. For reference, the SPY Seasonal Chart is shown below:
On track for a third straight in the red, major U.S. indices retreating from the record-high levels reached last week. Uncertainty regarding trade deal progress and mixed earnings results have slowed growth while the recent Beige Book release reaffirmed the Fed interest rate cut notion. Look for July’s consumer sentiment report, releasing tomorrow, while next week we will see Q2 GDP report as well as more big-name earnings. Tomorrow’s earnings load includes American Express, Synchrony Financial, Blackrock, and HDFC Bank, while next week look out for Visa, Coca-Cola, Facebook, Boeing, Amazon, Alphabet Inc, Intel, Comcast, Twitter, and Mcdonald’s reports.
Today, we saw Morgan Stanley reporting an increase in revenue and sales which helped shares rise modestly, as well as a positive report from Honeywell which saw shares rise nearly 2% following profit data that beat expectations. IBM, reported yesterday after market close, continues to rise off impressive cloud business growth while revenue declined again. Yesterday’s biggest report, Netflix, underwhelmed investors with a far slower subscription rate then what was expected, though company leaders are not attributing the slow-down to an increase in competition. Disney, Apple, and Comcast have all announced similar video-streaming platforms to release in the coming year. Still, Netflix is projecting an increase in membership of nearly 7 million in the third quarter of 2019.
For the time being, earnings will hold the market’s attention until this month’s FOMC, taking place July 30-31, unless we get further global trade news. Currently, talks appear to have stalled though Treasury Secretary Mnuchin has indicated otherwise. President Trump once more spoke out against China’s lack of action following several U.S. motions to ease tensions and organize a deal. With speculation rising that interest rate cut will be featured in the upcoming FOMC, besides earnings and global trade, look for this to be the next major market catalyst. Globally, Asian and European markets closed unanimously lower.
Using the “^GSPC” symbol to analyze the S&P 500, our 10-day prediction window shows mixed signals. Today’s vector figure of -0.45% moves to -0.46% in five trading sessions. Prediction data is uploaded after the market close at 6 pm, CST. Today’s data is based on market signals from the previous trading session.
On July 17th, our ActiveTrader service produced a bullish recommendation for AES Corporation (AES). ActiveTrader is included in all paid Tradespoon membership plans and is designed for day trading.
Trade Breakdown
AES entered its forecasted Strategy B Entry 1 price range $17.29 (± 0.07) in its first hour of trading and passed through its Target price $17.46 in the second hour of trading that day. The Stop Loss price was set at $17.12.
*Please note: At the time of publication we do not own 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.
Our featured symbol for Friday is Micron Technology Inc (MU). MU is showing a confident vector trend 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 predicted support and resistance, relative to our entire data universe.
The stock is trading at $44.33 at the time of publication, up 2.00% from the open with a -0.72% vector figure.
Prediction data is uploaded after 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 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 $55.25 per barrel, down 2.69% from the open, at the time of publication.
Looking at USO, a crude oil tracker, our 10-day prediction model shows positive signals. The fund is trading at $11.47 at the time of publication, down 2.00% from the open. Vector figures show +0.08% today, which turns +0.43% in five trading sessions. Prediction data is uploaded after 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 0.32% at $1,427.90 at the time of publication.
Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows negative signals. The gold proxy is trading at $134.66 at the time of publication. Vector signals show +0.76% for today. Prediction data is uploaded after 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 up 0.67% at 2.06% at the time of publication. The yield on the 30-year Treasury note is up 1.00% at 2.58% 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 negative signals in our 10-day prediction window. Today’s vector of -0.13% moves to -0.72% in three sessions. Prediction data is uploaded after 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 up 0.07% at $13.98 at the time of publication, and our 10-day prediction window shows negative signals. The predicted close for tomorrow is $13.34 with a vector of -0.83%. Prediction data is uploaded after market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.
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