Tax hype pushes indices into record territory, led by bank stocks.

After closing at record highs on Friday, all major U.S. indices are seeing broad gains today as GOP lawmakers rally behind their tax overhaul bill.  Previously, Bob Corker of Tennessee and Marco Rubio of Florida were hinting at not voting for the bill. Last week, both got behind the plan and the only uncertainty that remains is with Senator John McCain of Arizona. McCain will likely be missing the vote this week as he undergoes rehabilitation therapy. While the corporate tax cuts will undoubtedly prop up earnings going forward, it is still unknown if we will see significant impacts down the chain- including higher wages or increased hiring rates.  

Bitcoin has another futures contract currently trading on the Chicago Mercantile Exchange, with a debut on Sunday opening above $20,000. BTCF8, a January contract, is down 2% at $18,990 at the time of publication. So far, the opening up of futures trading for the cryptocurrency has failed to enact a short-selling spree which had been predicted by some analysts.

At the time of publication, the DJIA is up 0.75%, or 184.76 points, at 24,836. The S&P 500 is trading at 2,693- up 0.64% from the open. The Nasdaq-100 is up 0.84% at 6,995.

Using the ^GSPC symbol to analyze the S&P 500, our 10-day prediction window shows  overall positive vector signals, with a late downturn. Today’s positive vector figure of +0.17% moves to +0.46% within three trading sessions.  Today’s predicted support and resistance is 2,661.53 (± 4.77) and 2,686.32 (± 4.82), respectively. The predicted close today is 2,669.71. 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.  

Highlight of a Recent Winning Trade

On December 14, our ActiveTrader service- which is included in all Tradespoon membership plans- generated a bullish trade for Etsy Inc. (ETSY). Our ActiveTrader service is designed for intraday trading.

Trade Breakdown

ETSY opened within the Entry 1 ($19.99, ± 0.18) price range and moved through its Target of $20.19 within the first hour of trading. The Stop Loss was set at $19.79.

Must-buy Stock for Tuesday

Our must-buy stock for Tuesday is Etsy Inc. (ETSY). This stock is projected to hit a bullish uptrend in our Stock Forecast Toolbox’s 10-day forecast. ETSY is assigned a Model Grade of B, indicating it ranks in the top 25th percentile for accuracy relative to our entire data universe. Our 10-day prediction model shows vector figures hitting +2.50% within the next two trading sessions. Our benchmark for vector figures is +1.00%.

*Please note: Our must-buy stock 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 ActiveInvestor recommendations.  If you are interested in receiving Vlad’s personal picks, please click here.

The stock is trading at $20.83 at the time of publication, up 1.61% from the open with a +1.33% vector figure.

Tuesday’s  prediction shows an open price of $20.75, a low of $20.69 and a high of $20.98.

The predicted close for Tuesday is $20.86. Vector figures show +2.50% for tomorrow and build incrementally.  This is a good signal for trading opportunities, because the vectors are a primary factor in determining price movements for stocks and ETF.

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 next trading session relatively to average of actual prices for last trading session. The column shows expected average price movement “Up or Down”, in percent. Trend traders should trade along predicted direction of the Vector. The higher the value of the Vector the higher its momentum.

Crude prices saw some earlier gains today, which followed a boost on Friday due to lower U.S. active rig counts reported by Baker Hughes (BHGE). Domestic drilling activity, tracked by active drilling rig numbers, had been rising for three straight weeks. Decreases in drilling activity, and therefore future U.S. output, provides a bump for oil prices.

West Texas Intermediate for January delivery (CLF8) is priced at $57.27 per barrel at the time of publication, down 0.51% from the open.  

Looking at USO, a crude oil tracker, our 10-day prediction model shows increasing negative signals. The fund is trading at $11.38 at the time of publication, down 0.70% from the open. Today’s prediction sees support at $11.27 (± 0.05) and resistance at $11.60 (± 0.05). The predicted close for today is $11.45. Vector figures show -0.08% today, moving to -0.15% in three 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.   

Gold

The price for February gold (GCG8) is up 0.47% at $1,265.70 a troy ounce at the time of publication. A slipping ICE dollar index is contributing to gains, although the expected passing of the GOP tax plan may weigh on prices. A risk-on sentiment is a likely result of lower corporate tax rates, although the tax bill may also stoke inflation for 2018. Investors will also be monitoring a speech today from President Trump regarding national security plans. It is possible that rhetoric in this speech may drum up geopolitical tensions- particularly with North Korea.

Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows overall positive signals. The gold proxy is trading at $119.92, up 0.62% at the time of publication. Today’s predicted low is $118.92 (± 0.26) and the predicted high is $119.50 (± 0.26). The predicted close today is $119.21. 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.   

Treasuries

Yields are rising today ahead of the expected GOP tax bill passing this week. The tax cuts will lead to a widened deficit going into 2018- which will trigger an uptick in debt issuance. This increase in treasuries supplies can put pressure on prices which move inversely to yields. The yield on the 10-year Treasury note is up 1.07% at 2.38% 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. Today’s vector of -0.29% moves to -0.33% tomorrow and fluctuates between positive and negative movement for the remainder of the forecast. The ETF is priced at $127.47 at the time of publication, down 0.69%. The predicted close today is $127.42 with a low and high of $126.68 (± 0.22) and $128.35 (± 0.23), respectively.  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.

Cryptocurrencies

Bitcoin futures trading has been defying expectations of a short-selling trend, with a recent Sunday debut on the Chicago Mercantile Exchange (CME) for a January contract. CME Group is considered a rival of CBOE, who had launched their own futures contract last week. CME’s BTF8 opened at $20,000 on Sunday and is currently down 3.08%, or $600.00, at $18,900.

Using Grayscale’s Bitcoin Investment Trust (GBTC) as a Bitcoin tracker in our Stock Forecast Toolbox, we see extremely strong positive signals in our 10-day prediction window. Today’s vector of +104.32% moves to +92.57% in four trading sessions. These are not typical vector levels and are due to the dramatic swings which characterize Bitcoin’s price movements. The trust is priced at $3,222.00 at the time of publication, up 19.38% or $523.00. The predicted close today is $2,835.71 with a low and high of $2,516.08 (± 246.63) and $2,978.59 (± 291.96), respectively.  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.

Volatility

The CBOE Volatility Index (VIX) is down 1.59% from the open at 9.27 at the time of publication, and our 10-day prediction window shows steady positive movement.  The predicted close today is 9.14 with a positive vector of +3.15%, which moves to +8.04% in three trading sessions. Today’s predicted lows and highs are 9.14 (± 0.21) and 10.90 (± 0.26), respectively. 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.