U.S. Stocks Move Higher Despite Beige Book Decline

by Vlad Karpel

Potential for the market to retest $260 SPY level is unlikely

Currently, our models are projecting the SPY to trade between $270-$310 level in the next 2-3 weeks. The potential for the market to retest $260 SPY level is unlikely as most sectors have already broken through their recent overhead resistance levels. All three major U.S. indices opened and traded higher today as sentiment continues turning positive despite the latest economic data. Although today’s release of the Beige Book showed a sharp decline in economic activity throughout the twelve districts, analysts are predicting we are nearing a likely bottom for poor economic-data releases affected by the virus.

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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. We will continue monitoring the VIX as the market can overshoot support and resistance levels when VIX is trading near $30 level. In the short term, we still believe the market is overbought; long-term investors can consider buying equities with dollar-cost averaging in mind. Market Commentary readers are encouraged to maintain clearly defined stop-levels for all positions. For reference, the SPY Seasonal Chart is shown below:

Elsewhere, Hong Kong was officially determined no longer autonomous from China by the U.S.; globally, Asian markets traded lower, apart from Japan, while European markets closed unanimously higher. Earnings season continues to wind down with only a handful of notable earnings left, such as Costco and Salesforce tomorrow, while key economic reports to monitor this week include April Consumer Spending, Core Inflation, and Personal Income. Oil moved lower while gold and the dollar, traditionally trading inversely of each other, traded higher. Long-term U.S. Treasury notes saw yields edge lower.

Key U.S. Economic Reports/Events This Week

  • Beige Book – Wednesday
  • Weekly Jobless Claims (5/23) – Thursday
  • Durable Goods Orders (April) – Thursday
  • Core Capital Goods Orders (April) – Thursday
  • Pending Home Sales Index (April) – Thursday
  • Personal Income (April) – Friday
  • Core Inflation (April) – Friday
  • Consumer Spending (April) – Friday

Key Corporate Earnings Out This Week

  • COST – Costco Wholesale – Thursday, May 28th
  • CRM – Salesforce.com – Thursday, May 28th
  • DG – Dollar General – Thursday, May 28th
  • ULTA – Ulta Beauty – Thursday, May 28th
  • JWN – Nordstrom – Thursday, May 28th
  • DLTR – Dollar Tree – Thursday, May 28th
  • CGC – Canopy Growth – Friday, May 29th\

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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.


Thursday Morning Featured Symbol

Our featured symbol for Thursday is AT&T Inc (T). T 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 $30.82, with a vector of  +0.39% 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, T. 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 $32.20 per barrel, down 6.20% 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 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 up 0.21% at $1,709.10 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 $161.18, at the time of publication. Vector signals show -0.14% 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 down, at 0.700% at the time of publication.

The yield on the 30-year Treasury note is down, at 1.457% 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 $27.62 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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