U.S NAFTA demands rejected, Dow returns above 23,000 with another round of strong corporate earnings

Mexico and Canada have rejected strict demands from U.S. negotiators around the North American Free Trade Agreement talks, which have concluded the fourth round of meetings. The fifth round is slated for the first week of November, so market participants will be in wait-and-see mode to gauge the tone of the negotiations. Equities are performing strong today as solid earnings reports spark gains and push indexes through a consistent upbeat trend. International Business Machines Corp. (IBM) lead the push after rising 8%, following an impressive quarterly report.

This afternoon (2 p.m. Eastern), we’ll see a Beige Book report from the Fed. This economic snapshot will be of contextual interest, following recent weak housing data for September.  

Treasury Secretary Steven Mnuchin insisted in a Politico interview recently that hope for a tax cut plan was the driving force behind market rallies, and that we would see sharp reversals if the agenda item does not come to fruition. Although tax reform is one component of the pro-growth agenda which sparked the Trump rally, it is not the sole cause for the uptrend. Regardless of legislative efforts under the new administration, we’ve seen increasingly healthy corporate performance and an all-around global economy boost.  

At the time of publication, the DJIA is up 0.64%, or 146.96 points, at 23,144. The S&P 500 is trading at 2,562- up 0.09% from the open. The Nasdaq-100 is up 0.06% at 6,628.

Using the ^GSPC symbol to analyze the S&P 500, our 10-day prediction window shows  initial positive signals followed by a negative downturn. Today’s positive vector figure of +0.08% reverses to -0.05% within three trading sessions.  Today’s predicted support and resistance is 2,556.85 (± 1.73) and 2,562.39 (± 1.73), respectively. The predicted close today is 2,560.27. 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

Just today, our ActiveTrader service- included in all of our membership plans- generated a Bearish trade recommendation for Adobe Systems Inc. (ADBE).

Trade Breakdown

Within the first hour of trading, ADBE passed through the Entry 1 ($149.84, ± 0.70) and Entry 2 ($149.09, ± 0.70) price ranges before climbing through its Target of $151.34. The Stop Loss was set at $148.34.

Must-buy Stock for Thursday

Our must-buy stock for Thursday is Wal-mart Stores Inc. (WMT). This retail giant is showing strong bullish momentum in our Stock Forecast Toolbox’s 10-day forecast. Our 10-day prediction model shows vector figures climbing above +1.50% within the next three trading sessions. Our benchmark for vector figures is +1.00%.

The stock is trading at $86.26 at the time of publication, up 0.33% from the open with a +0.85% vector figure.

Thursday’s prediction shows an open price of $86.80, a low of $85.62 and a high of $87.52.

The predicted close for Thursday is $88.46. Vector figures show +1.01% for tomorrow, which continue to rise for the remainder of 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 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 are fluctuating today as today’s EIA data shows a domestic supply drop of 5.7 million barrels for the week ending Oct. 13. This is above an S&P Global Platts forecast, but came in below American Petroleum Institute data. Keep an eye on conflicts between the Iraqi military and the Kurdish Regional Government, as destabilization in the OPEC member country will undoubtedly impact crude markets. West Texas Intermediate for November delivery is priced at $52.03 per barrel at the time of publication, up 0.06% from the open.  

Looking at USO, a crude oil tracker, our 10-day prediction model shows initial negative signals followed by a positive correction. The fund is trading at $10.48 at the time of publication, which is down 0.05% from the open. Today’s prediction sees support at $10.21 (± 0.04) and resistance at $10.49 (± 0.04). The predicted close for today is $10.40. Vector figures show -0.55% today, moving to -1.02% in three trading sessions before reversing to positive momentum.  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 down 0.22% at $1,282.20 a troy ounce at the time of publication. The yellow metal is drawing down from the psychologically-important $1,300 level as the U.S. dollar sees gains and a potential interest-rate hike on the horizon. U.K. inflation rates are up, which can have a proxy effect on investor sentiment around domestic wage growth and economic vitality. Optimistic outlooks for inflation can work against the value of gold. Today’s release of the Fed Beige Book for September will be in focus, as the report will be centered on inflation.

Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows consistent positive signals. The gold proxy is trading at $121.73, down 0.33% at the time of publication. Today’s predicted low is $122.13 (± 0.25) and the predicted high is $123.13 (± 0.25). The predicted close today is $122.94. 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

Expectations of a December Fed interest-rate hike continues to build, sparking a sell-off in government bonds.  Investors will typically dump government paper in preparation for new bonds offering a higher yield. There is also the impending replacement of Fed Chairwoman Janet Yellen, which is due to be announced by the Trump administration in the first week of November. It is anticipated that the new appointee will be more hawkish than Yellen, lending more weight to bets on quickly-delivered rate hikes.  The yield on the 10-year Treasury note is up 1.52% at 2.34% at the time of publication. 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 consistent positive signals in our 10-day prediction window. Today’s vector of +0.31% moves to +1.10% within three trading sessions. The ETF is priced at $124.98 at the time of publication- down 0.75% from the open. The predicted close today is $126.18 with a low and high of $125.39 (± 0.18) and $126.86 (± 0.19), 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 2.62% to 10.04 at the time of publication, and our 10-day prediction window shows overall positive signals.  The predicted close today is 10.15 with a negative vector of -0.57%. Today’s predicted lows and highs are 10.03 (± 0.14) and 10.37 (± 0.14), 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.