Tech slides, energy and consumer-staples rise as investors look to the Fed

Stock market indexes today are trading a bit lower as the we see a sell-off in the technology sector. This downturn negated the gains in other sectors- particularly energy and consumer-staples. The energy sector and crude markets are up as OPEC releases optimistic outlooks on the global production cut agreement. A series of speaking events from Fed officials will take place this week, and investors will be focusing in on the commentary for guidance. Last week, the Fed announced the beginning of “The Great Unwind”- the offloading of its multi-trillion dollar balance sheet slated to start in October. The U.S. dollar is gaining today- particularly against a sliding Euro following the results of Germany’s general election. Although the incumbent alliance led by Angela Merkel won as expected, there was a drop in support for the major parties and an uptick in support for far-right political platforms. This indicates potential turbulence in the subsequent formations of political alliances and policy agendas.

The DJIA is currently down 0.33%, or 73.48 points, at 22,276. The S&P 500 is currently trading at 2,495- down 0.30% from the open. The Nasdaq-100 is down 0.98% at 6,364.

Using the ^GSPC symbol to analyze the S&P 500, our 10-day prediction window shows  overall negative signals. Today’s negative vector figure of -0.14% trends to oscillate around -0.50% before seeing a slight positive correction at the end of the forecast window.  Today’s predicted support and resistance is 2,490.59 (± 3.34) and 2,499.00 (± 3.35), respectively. The predicted close today is 2,494.24. 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 September 22, we closed a successful long position for Raytheon (RTN) in our Expert Stock & Options Picks service.

Trade Breakdown

This pick was made on September 4, and we saw a $3.31 (45.97%) gain for the stock trade, a $2.75 (33.13%) net gain for the options trade and a $1.10 (32.35%) net gain for the options spread trade.

*Stock % Gain/Loss is calculated by dividing the $ Gain/Loss by the Max Risk which is the posted Stop Loss for the trade.

Must-buy Stock for Tuesday

Our must-buy stock for Tuesday, MetLife Inc. (MET) is showing incrementally building bullish movement in our Stock Forecast Toolbox’s 10-day forecast.  Our 10-day prediction model shows positive vector signals building from +0.93% to above +3.4% within four trading sessions.

The stock is currently trading at $50.60, up 0.12% from the open with a +0.93% vector figure for today.

Tuesday’s prediction shows an open price of $50.96, a low of $50.88 and a high of $51.80.

The predicted close for Tuesday is $51.47. Vector figures show +1.70% for Tuesday, which continues to incrementally build throughout the forecast.  

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 figures calculate the change of the Forecasted Average Price relative to “today’s” actual price. The figure 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.

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Oil

Market participants are reacting to the results of an OPEC committee meeting on Friday which showed a 116% compliance rate for August for both member and nonmember countries included in the accord. There is also a general expectation in the market that the OPEC deal will be extended, and some rates of production cuts may intensify. West Texas Intermediate for October delivery is currently priced at $51.38 per barrel, up 1.84% from the open.  

Looking at USO, a crude oil tracker, our 10-day prediction model shows overall positive signals. The fund is currently trading at $10.45, which is up 2.05% from the open. Today’s prediction sees support at $10.20 (± 0.04) and resistance at $10.25 (± 0.04). The predicted close for today is $10.20. Vector figures show +0.05% today, sees two sessions of negative movement but corrects on Sep. 28 onward. 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 December gold is currently up 1.17% at $1,312.50 a troy ounce. Geopolitical tensions have ratcheted up sharply following threatening statement from North Korea, indicating that President Trump had declared war in a recent tweet. Some market participants also contend that U.S equities may be overvalued. Although the U.S. dollar is up, it is majorly attributed to a temporary slide in the Euro due to German political anxieties. Gold prices tend to move inversely with the U.S. dollar- the currency in which the metal is denominated. For the week, we can look to Fed commentary and hints at monetary policy thinking for guidance on gold investments. Investors will now be waiting and hoping for a drawdown in rhetoric between Trump and Kim Jong Un.

Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows strong negative signals. The gold proxy is currently trading at $123.89, up 0.53%. Today’s predicted low is $121.79 (± 0.32) and the predicted high is $123.24 (± 0.32). The predicted close today is $121.93. 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 heading downward today as both U.S. and German government bond prices rose following Germany’s general election results. Both of these are considered temporary safe-havens in times of uncertainty- which is the case currently in German politics. Because mainstream support for the incumbent major parties dropped, it is likely that alliance negotiations will not run as smoothly as the markets are used to. Fed commentary and speaking events will be the main focus this week, as investors look to clues around an interest rate hike and the unwinding of the Fed’s balance sheet.  The yield on the 10-year Treasury note is currently down 2.49% at 2.25%. Bond prices tend to move inversely to yields.

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 -0.42% builds to and hovers around -0.50 in the next few trading sessions. The ETF is currently priced at $127.07- up 0.69% from the open. The predicted close today is $125.53 with a low and high of $125.08 (± 0.23) and $126.57 (± 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.

Volatility

The CBOE Volatility Index (VIX) is currently up 9.28% at 10.48, and our 10-day prediction window shows overall negative signals. The predicted close today is 10.69 with a positive vector of +1.40%. Today’s predicted lows and highs are 9.82 (± 0.24) and 10.93 (± 0.27), 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.

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Click here for my daily recommendations & research tools!