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After recording solid gains yesterday, markets are trading lower with all three major U.S. indices on track to close with over 5% losses today. The growing number of Coronavirus cases world-wide, and the latest oil developments, continue to impact global markets as both Asian and European markets closed in the red. In Europe, the growing number of cases have caused major shutdowns in Italy while the U.K. is moving forward with an interest rate cut in response to COVID-19’s economic effect. While the U.S. issued an emergency rate cut last week, it does not appear another economic intervention will likely be issued in the near future, as stated by Treasury Secretary Steve Mnuchin. Elsewhere, the latest CPI data showed a slight increase in inflation last month. We expect the market to trade in the range of $240-$315 for the SPY ETF in the next 2-3 weeks. Still, markets will have to close two days in a row with higher highs and higher lows before we are able to call the bottom. With yesterday’s reversal and treasury yield rally, I believe the market will rebound close to the $300 (SPY) level next week as we approach the ECB and Fed decision. However, the rebound will be short-lived and recent lows could be retested shortly after. For reference, the SPY Seasonal Chart is shown below:
Markets saw early morning pressure as the spread of the Coronavirus continued, with a growing death toll and the number of cases in the U.S. rising at alarming rates. Slight relief was received by the market yesterday as all three major U.S. indices recorded gains while today gains were erased as all three dip further into red territory. The Dow, Nasdaq, and S&P are all on track for 5% losses following the WHO declaration of a pandemic on the COVID-19 virus. The latest from D.C. signaled no immediate economic intervention as mentioned by Secretary Treasury Steve Mnuchin. Over in Europe., the U.K.’s central bank slashed rates to help subvert the economic impact of the virus while millions are facing quarantine in Italy. Markest unanimously lowered in Europe while Asian markets saw similar drops. Globally, oil is also impacting markets as the 25% drop to start the week caused major global disruptions. Brent crude and futures are lowering today which continues the slide for the commodity.
Other news in focus today includes the latest CPI and Federal Budget data. Last month’s CPI data showed the consumer price index was up 0.1% showing a rising cost of living with modest inflation change. Tomorrow, look out for weekly employment data as well as the monthly Producer Price Index and Q4 U.S. Financial Accounts. On Friday, February Import Price Index and March Consumer Sentiment Index are due to release. Earnings remain light with Adobe, Dollar General, Broadcom, and Slack Technologies releasing tomorrow. Next week, the latest FOMC meeting and decision will be held with Fed Chair Powell meeting with the press on Wednesday.
Using the “^GSPC” symbol to analyze the S&P 500 our 10-day prediction window shows a near-term mixed outlook. Prediction data is uploaded after the market closes at 6 p.m. CST. Today’s data is based on market signals from the previous trading session.
ROBOINVESTOR SPECIAL:
On February 25th, our ActiveTrader service produced a bullish recommendation for General Motors Company (GM). ActiveTrader is included in several Tradespoon membership plans and is designed for day trading, with signals meant to last for 1-2 days.
Trade Breakdown
GM entered its forecasted Strategy B Entry 2 price range $33.26(± 0.22) in its first hour of trading that day and passed through its Target price of $32.76 in the following hour of trading. The Stop Loss price was set at $34.42.
Our featured symbol for Thursday is Ipath S&P 500 VIX Short-Term Futures (VXX). VXX is showing a steady vector in our Stock Forecast Toolbox’s 10-day forecast. This stock is assigned a Model Grade of (B) indicating it ranks in the top 25th percentile for accuracy for current-day predicted support and resistance, relative to our entire data universe.
The stock is trading at $39.1 at the time of publication, with a -8.07% vector figure.
Prediction data is uploaded after the 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 the next trading session relative to the average of actual prices for the last trading session. The column shows the 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.
*Please note: At the time of publication Vlad Karpel does have a position in the featured symbol, VXX. Our featured symbol 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 MonthlyTrader recommendations. If you are interested in receiving Vlad’s personal picks, please click here.
West Texas Intermediate for Crude Oil delivery (CL.1) is priced at $31.04 per barrel, down 24.81% 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 $6.98 at the time of publication. Vector figures show -0.39% today, which turns to -18.38% in three trading sessions. Prediction data is uploaded after the market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.
Gold
The price for the Gold Continuous Contract (GC00) is up 0.10% at $1,674.00 at the time of publication.
Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows mixed signals. The gold proxy is trading at $154.85, at the time of publication. Vector signals show -0.90% for today. Prediction data is uploaded after the market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.
The yield on the 10-year Treasury note is down to 0.581% at the time of publication.
The yield on the 30-year Treasury note is down to 1.049% 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. Prediction data is uploaded after the 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 $53.41 at the time of publication, and our 10-day prediction window shows mixed signals. Prediction data is uploaded after the market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.
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