Trade Negotiations Resume Thursday, Tariffs Set To Rise Friday

by Vlad Karpel | 05/09/2019, 00:27

Finally U.S. indices in green this week

After trading lower for two straight days this week behind renewed U.S.-China trade tension, major U.S. indices are on track to close with modest gains.

U.S. tariffs could rise from 10% to 25% Friday

Trade talks between the two sides are set to resume in D.C. tomorrow while U.S. tariffs on Chinese goods are could rise from 10% to 25% Friday.

Earnings season continue today with Disney

Disney headlines corporate earnings, reporting after the market closes, while Honda, Marathon, and Kraft have already reported today.

No major economic data today

No major economic reports are scheduled to release today but Core CPI, trade deficit, and Federal Budget are due before week’s end. Several Fed speeches are also scheduled for Thursday and Friday, including Jerome Powell tomorrow morning.

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SPY failed to break support at $286

The market tested it’s 50-day moving average yesterday and SPY failed to break support at $286. We remain bullish on the market and do not see it breaking support at $280.

if additional tariffs are imposed the market to break support on SPY

However, if additional tariffs are imposed the market has a high probability to break support on SPY. For reference, the SPY Seasonal Chart is shown below:

Chinese and U.S. delegations set to resume tomorrow

Trade negotiations between Chinese and U.S. delegations are set to resume tomorrow after last week’s “productive” talks, as reported by Treasury Secretary Steve Mnuchin, in Beijing wrapped up.

Several tariffs on hold or due to increase in the near future

A trade deal is still the main objective for both sides after both nations lobbied tariffs at each other this summer, with several on hold or due to increase in the near future.

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Everything ready to impose tariffs on Friday

President Trump recently stated tariffs on Chinese goods will increase on Friday while just today the U.S. Federal Register formally put forth the necessary paperwork to raise tariffs.

China exports fall 2.7% from the previous year

Recent Chinese economic data showed exports have fallen 2.7% from the previous year while, surprisingly, imports rebounded. Globally, Asian markets closed substantially lower while European markets were in the green.

Yesterday, several surprising earnings reports promoted shares of recently struggling companies to rise. After its initial IPO Lyft saw share modestly lower, though yesterday’s earnings report, which topped revenue expectations, helped shares of the rideshare company rise. Similarly, Papa John’s which mostly saw shares lower following several troubling months experienced far better earnings than expected which caused the stock to rise 4%. Today, major-earnings focus will turn to Walt Disney, which has had a solid 2019 thus far. Disney finalized their Fox acquisition and notched several box office records with their two latest Marvel Studios films. Disney is due for a big 2019 with their new streaming subscription service debuting later in the year and several major releases still planned, including their latest live-action remakes of “Lion King” and “Aladdin.” Other earnings in focus this week will include Duke Energy, Samsung Electronics, and Viacom.

Using the “^GSPC” symbol to analyze the S&P 500, our 10-day prediction window shows mixed signals. Today’s vector figure of +0.09% moves to -1.00% in five trading sessions. The predicted close for tomorrow is 2,919.66. 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 April 25th, our ActiveTrader service produced a bullish recommendation for Constellation Brands Inc (STZ). ActiveTrader is included in all paid Tradespoon membership plans and is designed for day trading.

Trade Breakdown

STZ entered its forecasted Strategy B Entry 1 price range $210.14 (± 1.90) in its first hour of trading and passed through its Target price $212.24 in the first hour of trading that day. The Stop Loss price was set at $208.04.

Thursday Morning Featured Symbol

*Please note: 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 Thursday is iPath S&P 500 VIX (VXX). VXX is showing a confident vector trend in our Stock Forecast Toolbox’s 10-day forecast.

The ETF is trading at $30.34 at the time of publication, with a 1.61% 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 June delivery (CLM9) is priced at $62.07 per barrel, up 1.07% 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 $12.94 at the time of publication up 2.00% from the open. Vector figures show -0.60% today, which turns -4.61% 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 June gold (GCM9) is down 0.32% at $1,3281.50 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 $120.87, at the time of publication. Vector signals show -0.10% 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 up 1.06% at 2.48% at the time of publication. The yield on the 30-year Treasury note is up 0.98% at 2.89% 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 +0.14% moves to +0.68% 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 down 1.24% at $19.08 at the time of publication, and our 10-day prediction window shows negative signals. The predicted close for tomorrow is $17.07 with a vector of -7.57%. 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.