Third-Quarter Earnings Continue to Beat Expectations and Support Market

Major U.S. indices are up today, returning their yearly and monthly gains to positive territory after a turbulent start to the week had U.S. indices down. A continuation of positive earnings likely supported the rally, though it should be noted that next week’s midterm elections will continue to hold a cap on such rallies. Likewise, until elections are through, expect volatility to remain in the $20-$28 range. Late stages of a bull market look to continue by the end of November and through the first quarter of 2019. For reference, Tradespoon Seasonal Chart for SPY is shown below. If current levels of support and resistance, $260-$280, are violated, expect next level to be in the range of $255-$287:

Yesterday’s positive third-quarter earnings are powering markets to trade higher. Big-names like Facebook, General Motors, eBay, and T-Mobile reported after market close yesterday to top expectation and raise shares soundly, gains ranging between 4%-8%. Kellogg shares lowered today after earnings reported below expectations while Yum! Brands, releasing earnings this morning before market, rose by 4%. Allstate, Pandora Media, and Sprint are still set to report today while over 300 companies are set to report tomorrow, including Apple and Spotify.

Globally, European and Asian markets are also up today. The dollar continues to edge up, lowering gold, while oil, in continued anticipation of the Iran sanctions, stays lower. Private sector jobs for the month of October beat expectations, rising once again, while further labor data, such as jobless claims, unemployment rate, and third-quarter productivity will be due later this week.

Using the “^GSPC” symbol to analyze the S&P 500, our 10-day prediction window shows mixed signals. Today’s vector figure of +0.31% moves to -1.43% in five trading sessions. The predicted close for tomorrow is 2,686.02. 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 Performance

Even with increased volatility, Tradespoon technology has been able to provide strong results and accuracy in our post-selloff trading. Similar selloff, to the one we’re seeing this week, in mid August resulted in 77% winning trades, or 7 out of 9!

Trade Breakdown

On October 16th, in the midst of last week’s volatility, we recommended Netflix (Option) call spread at $0.54 and shorted the stock at $0.10 (36.36% Net Gain!), and that’s just one of many winning trades we had during volatility!

Highlight of a Recent Winning Trade

On October 23rd, our ActiveTrader service produced a bullish recommendation for McCormick & Co Inc (MKC). ActiveTrader is included in all Tradespoon membership plans and is designed for intraday trading.

Trade Breakdown

MKC entered the forecasted Entry 1 price range of $139.90 (± 0.70) in its first hour of trading and hit its Target price of $141.30 in the second to last hour of the trading day. The Stop Loss was set at $138.50.

Thursday Morning Featured Stock

Our featured stock for Thursday is Merck & Co. (MRK). MRK is showing a confident vector trend in our Stock Forecast Toolbox’s 10-day forecast. This stock is assigned a Model Grade of (A) indicating it ranks in the top 10th percentile for accuracy for predicted support and resistance, relative to our entire data universe.  

*Please note: Our featured 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 $74.06 at the time of publication, up 1.63% from the open with a +1.00% 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 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.

Oil

West Texas Intermediate for December delivery (CLZ8) is priced at $66.00 per barrel, down 1.48% from the open, at the time of publication. Looking at USO, a crude oil tracker, our 10-day prediction model shows negative signals. The fund is trading at $13.81 at the time of publication, down 1.57% from the open. Vector figures show +0.32% today, which turns -2.47% 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.

Gold

The price for December gold (GCZ8) is down 0.82% at $1,215.30 at the time of publication. Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows mostly negative signals. The gold proxy is trading at $114.88, up 0.79% at the time of publication. Vector signals show -0.09% 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.  

Treasuries

The yield on the 10-year Treasury note is up 0.88% at 3.15% at the time of publication. The yield on the 30-year Treasury note is up 0.85% at 3.39% 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 positive signals in our 10-day prediction window. Today’s vector of -0.02% moves to + 1.64% 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.

Volatility

The CBOE Volatility Index (^VIX) is down 12.12% at $20.52 at the time of publication, and our 10-day prediction window shows mixed signals. The predicted close for tomorrow is $23.24 with a vector of -1.56%. 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.