Markets Lower Ahead of FOMC, Interest Rate Cut Expected 

by Vlad Karpel |

The end of multi-day streaks for all three major U.S. indices

Following multi-day streaks for all three major U.S. indices, U.S. stocks retreated from record range today. This comes ahead of this week’s two-day FOMC meeting, beginning tomorrow, and following last week’s European Central Bank’s decision to cut rates.

All eyes on FOMC meeting

Oil is on the rise today following an attack on a Saudi Arabian oil facility over the weekend which resulted in a 5% global supply loss. All eyes remain on this week’s FOMC where another interest rate cut is expected.

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Short term support is at the 50-days MA on SPY $295

The SPY is trading between $294-$302 and we do not see the potential for the market to overshoot an all-time high of $302. With the market out of the August range of $280-$295, short term support is at the 50-days MA on SPY $295. We believe the market is range-bound and not at a true breakout until we see other key asset classes, such as TLT, breakout out of their existing trends.

Buy when SPY is near $282

We will look to buy when SPY is near $282 and encourage Market Commentary readers to maintain clearly defined stop levels for all positions. For reference, the SPY Seasonal Chart is shown below:

Eight-day streak of recording gains ends

Major U.S. indices are on track to close in the red today following an eight-day streak of recording gains. Indices reached record highs before retreating today behind oil complications in the Middle East and tomorrow’s FOMC.

One of the largest oil disruptions ever, resulting in 10-15% for oil shares and futures

Over the weekend, an attack on a Saudi Arabian oil production facility resulted in 5.7 million barrels per day production loss which impacted both oil and energy sectors. This is one of the largest oil disruptions ever, resulting in 10-15% for oil shares and futures.

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Tuesday is the first day of the two-day FOMC

Tomorrow, look for the first day of the two-day FOMC in which many expect the Fed to cut interest rates. Strong retail and continued strong labor data have supported the notion of another interest rate cut from the FOMC will come in 2019. Following the two-day meeting, Fed Chair Jerome Powell will meet with the press.

Optimism ahead of the next round of trade talks

Globally, Asian markets were mixed while European markets closed in the red. U.S.-China trade negotiations are set for early October with both sides pushing back additional tariffs, providing optimism ahead of the next round of trade talks. Several tariff exemptions were also released by China which have also eased tensions.

Slow down in industrial output and retail sales in China

The latest economic data from China showed a slow down in industrial output and retail sales, which have turned markets in China lower. In the U.K., parliament continues to look for Brexit solutions and will likely push back the upcoming Brexit deadline. Besides the FOMC, this week lookout for U.S. industrial production data on Tuesday, August existing home sales on Thursday.

Using the “^GSPC” symbol to analyze the S&P 500 our 10-day prediction window shows mixed signals. Today’s vector figure of +0.27% moves to -0.66% in five trading sessions. The predicted close for tomorrow is 2,926.72. Prediction data is uploaded after the market close at 6pm, 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 September 6th, our ActiveTrader service produced a bullish recommendation for TJX Companies (TJX). ActiveTrader is included in all paid Tradespoon membership plans and is designed for day trading.

Trade Breakdown

TJX entered its forecasted Strategy B Entry 1 price range $55.77 (± 0.38) in its first hour of trading and passed through its Target price $56.33 in the first hour of trading that day. The Stop Loss price was set at $55.21

Tuesday Morning Featured Symbol

*Please note: At the time of publication we do own 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.

Our featured symbol for Tuesday is iPath S&P 500 VIX Short-Term(VXX). VXX is showing a confident vector trend 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 predicted support and resistance, relative to our entire data universe.

The stock is trading at $23.28 at the time of publication, up 0.87% from the open with a +4.55% vector figure.

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 the next trading session relative to the average of actual prices for the 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.

Oil

West Texas Intermediate for Crude Oil delivery (CL.1) is priced at $62.49 per barrel, up 13.95% from the open, at the time of publication.

Looking at USO, a crude oil tracker, our 10-day prediction model shows positive signals. The fund is trading at $12.96 at the time of publication, up 12.96% from the open. Vector figures show +0.50% today, which turns +1.35% in five 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.

Gold

The price for the Gold Continuous Contract (GC00) is up 0.72% at $1,510.30 at the time of publication.

Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows mostly negative signals. The gold proxy is trading at $141.5, up 0.96% at the time of publication. Vector signals show +0.19% 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.

Treasuries

The yield on the 10-year Treasury note is down 2.91% at 1.84% at the time of publication. The yield on the 30-year Treasury note is down 2.84% at 2.31% 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. Today’s vector of -1.02% moves to -4.56% in three 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.

Volatility

The CBOE Volatility Index (^VIX) is up 6.77% at $14.67 at the time of publication, and our 10-day prediction window shows positive signals. The predicted close for tomorrow is $15.26 with a vector of +4.61%. 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.

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

Sign up now for Lifetime Access and pay less than the cost of just 1 year and lock in …
PERMANENT UNLIMITED ACCESS!

  • Subscribe now for less than the cost of one year at the regular rate!

  • With 36 month trailing gains of 1,314%, and an 75% win-rate, a lifetime Membership could easily turn $100,000 into $1,414,472

  • Tradespoon Premium is the only trading service you’ll ever need.

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