U.S. Indices Edge Lower Following Friday’s Rally

Market volatility has reached $30 level for the VIX. Historically, this is the level that points to the end of a selloff if one were to occur. Expect volatility to continue as long as the market stays above $20 level for the VIX. Consider hedging if SPY reaches $280 level. Friday’s sizable rally behind big-bank third-quarter earnings was short lived as all three major indices are back in the red today. After a back and forth start to the day stocks have settled slightly lower. There should be plenty of earnings news this week, including Bank of America today and Netflix tomorrow, to support market movement but for now investors should remain cautious. SPY Seasonal Chart forecast is shown below:

Other big names reporting this week include Goldman Sachs, Morgan Stanley, United Health, CSX, and E-Trade. Earnings could provide a nice boost as big banks displayed on Friday by helping the Nasdaq record its best single-day performance since March and the S&P snap a six-day skid. Treasury yields continue to slowly rise mirroring last week’s levels for the bonds which came in accordance with the selloff, but still slightly lower than 7-year high levels that were reached last week. Other companies reporting this week include American Express, eBay, Progressive, Johnson & Johnson, Abbott Laboratories, and many more.

Globally, Asian markets traded lower today while European assets rose. Geopolitical tensions could be once more a continuous point of interest for investors as Trump threatened Saudi Arabia in regards to a missing U.S. journalist, adding to the growing rift between the new nations that will likely weigh on oil, pushing it higher. Elsewhere, trade tension between the U.S and China looks to be reignited as tariffs were brought back into the limelight this weekend.  During a “60 Minutes” interview this weekend, President Trump threatened a third round of tariffs on Chinese goods which he believes China will not be able to properly retaliate to. If further tariffs or trade talks are to be held is yet to be determined.

Using the “^GSPC” symbol to analyze the S&P 500, our 10-day prediction window shows mixed signals. Today’s vector figure of +0.66% moves to -3.71% in five trading sessions. The predicted close for tomorrow is 2,838.78. 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 August 13th, in the midst of the mid-August selloff, we recommended Devon Energy Corp at $42.45 and shorted the stock at $42.24 (32.31% Net Gain!), and that’s just one of many winning trades we had during volatility!

Highlight of a Recent Winning Trade

On October 8th, our ActiveTrader service produced a bullish recommendation for Philip Morris Intl Inc (PM). ActiveTrader included in all Tradespoon membership plans and is designed for intraday trading.

Trade Breakdown

PM entered the forecasted Entry 1 price range of $83.91 (± 0.33) in its first hour of trading and moved through its Target price of $84.75 in its third hour of trading. The Stop Loss was set at $83.07.

Tuesday Morning Featured Stock

There is no featured stock for Tuesday. Currently, there are no confident vector trends in our Stock Forecast Toolbox’s 10-day forecast we recommend investors hold their positions and wait for volatility to bottom out. Earnings season is here which could help rebound stocks.

*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.

Oil

West Texas Intermediate for November delivery (CLX8) is priced at $71.67 per barrel, up 0.41% 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 $15.155 at the time of publication, up 0.23% from the open. Vector figures show +0.59% today, which turns -1.06% 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 up 0.68% at $1,230.30 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 positive signals. The gold proxy is trading at $116.04, up 0.70% at the time of publication. Vector signals show -0.04% 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 down 0.21% at 3.16% at the time of publication. The yield on the 30-year Treasury note is down 0.28% at 3.33% 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 -0.51% moves to -0.20% in four 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 3.10% at $20.65 at the time of publication, and our 10-day prediction window shows mixed signals. The predicted close for tomorrow is $24.13 with a vector of +4.16%. 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.