Markets Move Higher in Anticipation of Economic Stimulus Package
Promise of signing stimulus package markets continue to rise
As details of the U.S. stimulus package circulated today, with expectation the bill will be signed soon, markets maintained gains throughout the day following all three major U.S. indices recording gains yesterday. Although the deal did not get done during the trading session, markets finished higher, though slightly off today’s highs. Dow led the pack with a nearly 2.5% increase while the S&P rose over 75 points before settling at $2,475. Crude oil prices rose today while gold dropped and U.S. Treasuries remained largely unchanged; Asian and European markets saw impressive gains. Most asset classes were able to sustain a two-day rally indicating the bottoming process has started. For the past five days, technology has been underperforming the rest of the sectors. At this point, the worst part of the selloff is over and long-term investors can consider buying equities with dollar-cost averaging in mind.
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The market in the short term is overbought and probably will selloff at $260-$280 levels. Markets broke through their December 2018 lows and are susceptible to another 10-20% selloff. VIX, GLD, DXY, and TLT are stabilizing and we could see the market reaching its low point by the first week of April. Market Commentary readers are encouraged to maintain clearly defined stop-levels for all positions. For reference, the SPY Seasonal Chart is shown below:
Boeing up over 20%
Today, markets moved higher in anticipation of the $2 trillion stimulus bill which is making its way through Congress. Although the deal is not yet complete, details of the deal began to circulate and anticipation for the economic relief sent markets higher. Specifically, the Dow saw impressive gains, at one point reaching 8% gains, before settling for near 3% gains with heavyweights such as Boeing up over 20%. S&P followed closely behind with gains of 1% while the Nasdaq, at one point in the green, closed in the red. The stimulus package plan will provide increased unemployment benefits and additional funding for loans. Within the bill, support for hospitals will near $100 billion, small business assistance at $350 billion, and $500 billion in aid for corporations. Look for more on the deal in the days to come as well as several key economic reports out this week.
Key U.S. Economic Reports Out This Week:
- GDP (Q4) – Thursday
- Weekly Jobless Claims (Weekly) – Thursday
- Personal Income (Feb.) – Friday
- Consumer Spending (Feb.) – Friday
- Core Inflation (Feb.) – Friday
- Consumer Sentiment (Mar.) – Friday
Using the “^GSPC” symbol to analyze the S&P 500 our 10-day prediction window shows a near-term negative 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 Recent Winning Trade
On March 20th, our ActiveTrader service produced a bullish recommendation for Southwestern Energy Company (SWM). ActiveTrader is included in several Tradespoon membership plans and is designed for day trading, with signals meant to last for 1-2 days.
SWM entered its forecasted Strategy A Entry 1 price range $2.03(± 0.02) in the second hour of trading that day and passed through its Target price of $2.05 in the final hour of trading that day. The Stop Loss price was set at $2.01.
Thursday Morning Featured Symbol
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 (C) indicating it ranks in the top 50th percentile for accuracy for current-day predicted support and resistance, relative to our entire data universe.
The stock is trading at $50.9 at the time of publication, with a +7.95% 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 $24.31 per barrel, up 1.25% 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 $4.94 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.
The price for the Gold Continuous Contract (GC00) is down 1.08% at $1642.90 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 $140.11, at the time of publication. Vector signals show -1.47% 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 0.861% at the time of publication.
The yield on the 30-year Treasury note is down to 1.446% 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.
The CBOE Volatility Index (^VIX) is $60.74 at the time of publication, and our 10-day prediction window shows positive 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.