SPX Nearing Record High, Q2 Earnings Nearing End
As trade relations continue to improve and the situation in Turkey gets stabilized, U.S. assets rose respectively today, with both Treasuries and Materials sector significantly up. The SPX is reaching an all-time high and is facing overhead resistance. Either TLT or SPX will likely sell off, forward-thinking investors should look to hedge their long positions. Major market movers today are Pepsi and Nike which, coupled with their positive earnings and recent headlines, have helped support both Nasdaq and Dow. See our seasonality chart for the S&P below using the symbol SPY.
Shares of Nike surged over 3% after the athletic company announced it is planning on trimming its excess inventory, with investors and analysts responding alike, both expecting shares to continue to rise. Other big movers for today include Tyson and Pepsico which both announced company acquisitions over the weekend to help support their current growth. Pepsico is on track to complete their purchase of SodaStream International LTD for $3.2 billion, while Tyson announced its intent to buy Keystone Foods for $2.16 billion in cash. Tesla continues its slide as part of the “taking Tesla private” tweet fallout, which has launched a formal SEC investigation regarding the also announced “secured funding,” caused the company to have its worst two trading weeks in company history, and generated pushback and distrust in the company from most investors and analysts alike. JPMorgan recently cut its price on Tesla shares from $308 to $195. Other big names moving in the wrong direction is the pharmaceutical Lannett Co. Inc. which dropped over 58% when it was announced that its distribution agreement with Jerome Stevens Pharma will not be renewed.
Globally, tensions seem to ease as both the U.S. and China are working on meeting for more trade talks to improve trade relations and address the escalating tariffs. In Turkey, the lira continues to struggle but has stopped the severe bleeding as global markets continue to try to prevent the economic crisis from escalating further. Although Turkey accounts for less than 1% of the world’s economy, a major national economic crisis sinking one currency can have an enormous, troublesome reaction throughout the world. Also worth noting, Turkey’s bid to enter the EU could be at stake, as it currently does not meet EU requirements and could hinder its ability to join the union for the time being. European markets rose today while Asian markets, which have somewhat rebounded over the weekend after escalated tariff pressure pushed Asian assets significantly lower, recorded modest losses.
Investors should look for last month’s FOMC meeting minutes to be released this week as Q2 earnings season is all but wrapped up. This week, earnings releases will mostly feature major retailers such as TJX, Target, Lowe’s, Gap, and more.
Using the ^GSPC symbol to analyze the S&P 500, our 10-day prediction window shows mostly negative signals. Today’s vector figure of +0.08% moves to -0.17% tomorrow.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
On August 15th, our ActiveTrader service produced a bullish recommendation for UnitedHealth Group Inc (UNH). ActiveTrader is included in all paid Tradespoon membership plans and is designed for intraday trading.
UNH opened within Entry 1 price range of $261.10 (± 0.90) and moved through its Target price of $263.71, in the fifth hour of trading the following day. The Stop Loss was set at $258.49.
Live Trading Room Update
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Symbol Net Gain%
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Tuesday Morning Featured Stock
Our featured stock for Tuesday is Merck & Co (MRK). MRK is showing a confident vector trend in our Stock Forecast Toolbox’s 10-day forecast. This stock is assigned a Model Grade of (A) indicating it ranks in the top 10th percentile for accuracy for predicted support and resistance, relative to our entire data universe.
*Please note: Our featured stock 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 ActiveInvestor recommendations. If you are interested in receiving Vlad’s personal picks, please click here.
The stock is trading at $69.9 at the time of publication, up 1.22% from the open with a +0.79% vector figure.
Tuesday’s prediction shows an open price of $69.59, a low of $69.57 and a high of $70.26.
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 relative to the 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 the predicted direction of the Vector. The higher the value of the Vector the higher its momentum.
West Texas Intermediate for September delivery (CLU8) is priced at $66.06 per barrel, up 0.42% from the open, at the time of publication. A surprise jump in crude U.S. inventories hurt prices last week but with Iran supply concerns bubbling up and what appears to be a restart in trade negotiations in between the U.S. and China, oil looks to record its third straight day of gains.
Looking at USO, a crude oil tracker, our 10-day prediction model shows mixed signals. The fund is trading at $13.76 at the time of publication, up 0.47% from the open. Vector figures show 0.48% today, which turns +1.08% in two 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.
Looking to record its best day in the month of August, gold continues to climb as the dollar is down for the day and dealing with new-found volatility. After recording sustainably loses last week, gold looks to act like the safe haven it usually offers during times of geopolitical concern, which global economies currently face with the currency crisis in Turkey and the ongoing tariffs between U.S. and China. The price for December gold (GCZ8) is up 0.92% at $1,195.60 at the time of publication.
Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows negative signals. The gold proxy is trading at $112.65, up 0.46% at the time of publication. Vector signals show -0.39% 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.
The spread between 2-year and 10-year notes is reaching its tightest ever, signaling the flattest treasury yield curve in over 10 years. Expectation of the increased interest rates along with a weaker growth is likely causing both short and long-dated yields to decline. The yield on the 10-year Treasury note is down 1.41% at 2.83% at the time of publication. The yield on the 2-year Treasury note is down 0.79% at 2.59% 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 +0.15% moves to +1.14% in four 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.
The CBOE Volatility Index (^VIX) is down 0.17% at $12.47 at the time of publication, and our 10-day prediction window shows all positive signals. The predicted close for tomorrow is $13.25 with a vector of +3.39%. 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.