U.S. Stocks Trade Sharply Lower, Additional Stimuli Could Be In-Play

by Vlad Karpel

U.S. indices book losses of at least 2% today

Markets are continuing to trade lower this week as all three major U.S. indices booking losses of at least 2% today while all 11 S&P sectors finished lower. With notable surges throughout the U.S., COVID concerns are once again impacting U.S. stocks; the latest data shows an increase of cases in several states that have eased restrictions such as Texas, California, and Florida. U.S.-Europe relations are in question again with news that the White House is considering imposing new tariffs, in the range of $3 billion, on the U.K. and several EU nations. Globally, cases are also seeing spikes in certain areas as European markets closed unanimously lower while Asian markets were mixed.

SPY to trade between $270-$330 level in the next 2-3 weeks

Still, we believe the market is unlikely to retest $260 SPY level. Our latest models are projecting the SPY to trade between $270-$330 level in the next 2-3 weeks and we will continue monitoring the VIX- as the market can overshoot support and resistance levels when VIX is trading near $30 level. It is our opinion the market is still overbought and, in the short term, we will be buyers into any corrections. Short-term traders could consider adding to positions when SPY near $293 and reducing exposure to the market at $320. SPY continues to trade above $300 and aggressive traders can consider adding to their positions until the market reaches $320 level. Investors should consider hedging portfolios into the rallies and, as always, we encourage maintaining clearly defined stop-levels for all positions. For reference, the SPY Seasonal Chart is shown below:

The S&P saw losses of 2.5% while the Nasdaq traded 2.1% lower and the Dow lost 2.7%. Gold saw a modest drop while oil lowered sharply. The dollar edged higher while long-term U.S. Treasury notes saw yields dip.

Key U.S. Economic Reports/Events This Week

  • Weekly Jobless Claims (6/20) – Thursday
  • Core Capital Goods Orders (May) – Thursday
  • Durable Goods Orders (May) – Thursday
  • GDP Revision (Q1) – Thursday
  • Atlanta Fed President Raphael Bostic Speech – Thursday
  • Fed Bank Stress Tests Results – Thursday
  • Personal Income (May) – Friday
  • Consumer Spending (May) – Friday
  • Core Inflation (May) – Friday

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For reference, the S&P 10-Day Forecast is shown below:

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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Thursday Morning Featured Symbol

Our featured symbol for Thursday is Apple Inc. (AAPL). AAPL is showing a steady vector 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 current-day predicted support and resistance, relative to our entire data universe.

The stock is trading at $366.53, with a vector of -0.26% 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 have a position in the featured symbol, AAPL. 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 $37.99 per barrel, down 5.90% 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 $28.72 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 0.43% at $1,774.30 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 $166.48, at the time of publication. Vector signals show 0.00% 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 0.683% at the time of publication.

The yield on the 30-year Treasury note is down, at 1.435% 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 $33.84 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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