Market Remains Higher Despite U.S.-China Tension

by Vlad Karpel | 06/01/2020, 17:00

In the short term, we still believe the market is overbought. Our models are projecting the SPY to trade between $270-$310 level in the next 2-3 weeks and the potential for the market to retest $260 SPY level is unlikely – as most sectors have already broken through their recent overhead resistance levels. With this in mind, we will be a buyer into any short term corrections and it is our opinion investors should continue considering hedging portfolios into the rallies.

Chinese government halting agricultural companies from purchasing American farm goods

U.S.-China relations are again making headlines as reports of the Chinese government halting agricultural companies from purchasing American farm goods are making rounds. COVID impact continues to be monitored in the latest economic reports with April U.S. Factory Orders, Trade Deficit, and Consumer Credit data due this week.

Italy is set to lift its inter-regional travel ban on June 3

Elsewhere, Italy and the U.K. are advancing their reopening efforts with schools starting to open doors in the U.K. while Italy is set to lift its inter-regional travel ban on June 3. Zoom, Broadcom, Slack Technologies, and Campbell Soup are set to report earnings this week. We will continue monitoring the VIX as the market can overshoot support and resistance levels when VIX is trading near $30 level. Market Commentary readers are encouraged to maintain clearly defined stop-levels for all positions. For reference, the SPY Seasonal Chart is shown below:

All three major U.S. indices traded higher today following impressive gains booked last week to end the month. The Dow gained 3.8% in May, while the Nasdaq and S&P reported gains of 6.8% and 4.5% respectively. Asian markets traded higher while European markets closed to mixed results, with the U.K. and France trading higher while Germany lowered. Oil moved slightly higher while gold and the dollar, traditionally trading inversely of each other, traded lower. Long-term U.S. Treasury notes saw yields edge higher.

Key U.S. Economic Reports/Events This Week

Motor Vehicle Sales (May) – Tuesday
ADP Employment Report (May) – Wednesday
Factory Orders (April) – Wednesday
Weekly Jobless Claims (5/30) – Thursday
Trade Deficit (April) – Thursday
Consumer Credit (April) – Friday
Unemployment Rate (May) – Friday

Key Corporate Earnings Out This Week

ZM – Zoom Video – Tuesday, June 2nd
CRWD – CrowdStrike – Tuesday, June 2nd
DKS – Dicks Sporting Goods – Tuesday, June 2nd
CPB – Campbell Soup – Wednesday, June 3rd
AVGO – Broadcom Inc. – Thursday, June 3rd
SJM – The J.M. Smucker Company – Thursday, June 3rd
GPS – The Gap, Inc. – Thursday, June 3rd
WORK – Slack Technologies – Thursday, June 3rd

(Want free training resources? Check our our training section for videos and tips!)

Using the “^GSPC” symbol to analyze the S&P 500 our 10-day prediction window shows a near-term positive 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.

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Highlight of a Winning Trade

On May 6th, our ActiveTrader service produced a bullish recommendation for Equifax Inc (EFX). 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

EFX entered its forecasted Strategy B Entry 1 price range $146.62(± 1.47) in the first hour of trading that day and passed through its Target price of $148.09 in the first hour of trading the following day. The Stop Loss price was set at $145.15.

Tuesday Morning Featured Symbol

Our featured symbol for Tuesday is Alphabet Inc. (GOOGL). GOOGL 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 $1433.52, with a vector of +0.34% at the time of publication.

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 not have a position in the featured symbol, GOOGL. 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 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 picks, please click here.

Oil

West Texas Intermediate for Crude Oil delivery (CL.1) is priced at $35.56 per barrel, up 0.20% 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 $25.88 at the time of publication. 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 down 0.05% at $1,750.80 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 $162.91, at the time of publication. Vector signals show -0.26% 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.

Treasuries

The yield on the 10-year Treasury note is up, at 0.659% at the time of publication.

The yield on the 30-year Treasury note is up, at 1.454% 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 mixed 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 $28.23 at the time of publication, and our 10-day prediction window shows negative 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.