Delayed Tariffs Offer Hope, Weak Global Economic Data Weighs on Markets

by Vlad Karpel |

U.S. indices in deep red

Markets are trading lower today following weak global economic data and the inversion of the U.S. yield curve. All three major indices are on track to close in the red, led by the banking sector which is trading sharply lower.

President Trump delay additional tariffs

U.S.-China trade tension remains at the forefront of market focus with the latest development coming from President Trump’s decision to delay the additional tariffs, originally set to kick in on September 1st. The additional 10% tariff was pushed back to December and will give time for both sides to meet in September to continue negotiations.

Multi-year lows for China industrial output

Economic data from China showed a severe decline in July, led by multi-year lows for industrial output and credit data, causing global concern. With most major earnings behind us, market focus shifts to economic data which included core CPI yesterday, up 0.3%, and retail sales tomorrow.

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Potential for the market to overshoot 50-days MA on SPY

Currently, SPY short term support sits at $277-$280 and we see the potential for the market to overshoot 50-days MA on SPY which would be around $293-$294 level. We expect further volatility and encourage Market Commentary readers to have clearly defined stop levels for all positions. Taking this into consideration, we will sell when the market is near $290 and look to buy near $278 for the SPY. For reference, the SPY Seasonal Chart is shown below:

U.S. yield curve inversion push markets in red

Yesterday’s big announcement pushed tariffs back until December and eased some concerns over global trade and tension. Still, stocks traded lower as the U.S. yield curve inverted, primarily affecting the banking sector.

Banking sector trading sharply lower

Citi, Bank of America, and JPMorgan Chase are on track to close today 5% lower while treasury yields are also seeing large losses.

Look for retail data tomorrow as well as Q2 productivity, July’s industrial production, and manufacturing output. On Friday, August consumer sentiment index will be key. Earnings have significantly slowed but some key reports to monitor include Cisco Systems, Canopy Growth, Alibaba, Nvidia, and Walmart. Macy’s reported before the market opened today and widely missed expectations, causing shares to lower over 10%.

Besides the underwhelming Chinese data, Germany also reported slow down in GDP. This, coupled with continued Brexit uncertainty and reports of British inflation, caused global trade concerns to heighten. Globally, Asian markets closed in the green while European markets were unanimously down. With concerns on several fronts, continue monitoring global trade news as we approach September and October which could be key months. In September, Chinese trade representatives will head to D.C. to continue negotiations while October will feature the latest Brexit deadline. Other news making waves today includes the agreed-upon merger of CBS and Viacom, Facebook’s settlement within the EU, and an increase in volatility, not just in the U.S. but across all global markets.

Using the “^GSPC” symbol to analyze the S&P 500 our 10-day prediction window shows negative signals. Today’s vector figure of -0.83% moves to -0.58% in five trading sessions. Prediction data is uploaded after the market close at 6 pm, CST. Today’s data is based on market signals from the previous trading session.

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Highlight of a Recent Winning Trade

On August 1st, our ActiveTrader service produced a bullish recommendation for Entergy Corp (ETF). ActiveTrader is included in all paid Tradespoon membership plans and is designed for day trading.

Trade Breakdown

ETR entered its forecasted Strategy B Entry 1 price range $105.62 (± 0.23) in its first hour of trading and passed through its Target price $106.68 in the second hour of trading that day. The Stop Loss price was set at $104.56

Thursday Morning Featured Symbol

*Please note: At the time of publication we do own 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.

Our featured symbol for Thursday is iPath S&P 500 VIX Short Term (VXX). VXX is showing a confident vector trend in our Stock Forecast Toolbox’s 10-day forecast. This stock is assigned a Model Grade of (C) indicating it ranks in the top 50th percentile for accuracy for predicted support and resistance, relative to our entire data universe.

The stock is trading at $29.82 at the time of publication, up 11.43% from the open with a -1.80% 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 the 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 Crude Oil delivery (CL.1) is priced at $54.54 per barrel, down 4.48% 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 $11.24 at the time of publication, down 5.31% from the open. Vector figures show +0.16% today, which turns -0.96% 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 the Gold Continuous Contract (GC00) is up 0.66% at $1,524.20 at the time of publication.

Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows positive signals. The gold proxy is trading at $143, up 0.86% at the time of publication. Vector signals show +0.54% 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 6.69% at 1.59% at the time of publication. The yield on the 30-year Treasury note is down 5.94% at 2.04% 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 +0.28% moves to +2.94% 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 up 25.40% at $21.97 at the time of publication, and our 10-day prediction window shows positive signals. 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.

Sign up now for Lifetime Access and pay less than the cost of just 1 year and lock in …
PERMANENT UNLIMITED ACCESS!

  • Subscribe now for less than the cost of one year at the regular rate!

  • With 36 month trailing gains of 1,276%, and an 75% win-rate, a lifetime Membership could easily turn $100,000 into $1,375,798

  • Tradespoon Premium is the only trading service you’ll ever need.

CLICK HERE TO SIGN UP