Dollar Rebounds as Chinese Tariffs Kick In and Trade Talks Begin

U.S. stocks continue rising today after reaching all-time highs yesterday amid strong earnings and renewed optimism in Chinese trade negotiations. The previously proposed U.S. tariffs on $16 billion of Chinese goods went into effect today, prompting China to retaliate with their own levies on American goods. With the back and forth tariff escalation continuing, as talks between U.S. and China are set to take place, Beijing has once more strongly spoke out against the actions taken by the U.S. and are planning to file a complaint to the World Trade Organization. A quick glance at our Seasonal Charts will uphold the recent uptick in movement, forecasting strong, rising predictions for the next 50 days that U.S. stocks are trending up, SPY featured below.

The dollar has rebounded after suffering a string of losses while emerging markets in Europe and China struggle for footing, with Chinese currencies closing slightly higher, as the Euro closes slightly lower. Looking at global government bonds, Asian yields continue to lower while U.S. notes are up today. At this point, both sides have traded tariffs on $50 billion worth each other’s goods. Tariff threats that are still out there include the U.S. imposed 25% tariff on an additional $200 billion of Chinese goods and the Chinese response of tariffs on an additional $60 billion worth of American goods. Look for more developments on the issue this week and next as U.S. and Chinese officials are set to meet in the coming days.

Tariffs aside, Trump’s legal issues remain at the forefront of investors’ minds as fallout from the Manafort and Cohen cases continues to grab headline news. Previously, the market has had little issue shrugging off Trump’s legal fiascos but the current cases are worth monitoring if they continue to balloon. Once more, impeachment whispers are making their rounds, which, until tangible action or news is presented have no equity or monetary impact.

Big movers today include Alibaba Group Holding Ltd, that opened the day to 3.5% gains after a stronger than expected earnings report, only to fall and trade lower in the mid-day trading. L Brands Inc, home to Victoria’s Secret, Bath & Body Works as well as other retailers, reported earnings above expectations but dropped today as project profits for the year continue to decrease. HP Inc. will report after the closing bell today while a handful of smaller earnings will be released tomorrow, as well as throughout next week.

Using the ^GSPC symbol to analyze the S&P 500, our 10-day prediction window shows mostly positive signals. Today’s vector figure of -0.10% moves to +0.56% in five trading sessions. The predicted close for tomorrow is 2,849.43. 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 22nd, our ActiveTrader service produced a bullish recommendation for Honeywell Intl Inc. (HON). ActiveTrader is included in all paid Tradespoon membership plans and is designed for intraday trading.

Trade Breakdown

HON opened within the forecasted Entry 1 price range of $156.19 (± 0.53) and moved through its Target price of $157.75, in the first hour of trading the following day, reaching a high of $158.52. The Stop Loss was set at $154.63.

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Friday Morning Featured Stock

Our featured stock for Friday is Nike Inc. (NKE). NKE is showing a confident vector trend 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 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 $83.32 at the time of publication, up 0.82% from the open with a +0.31% vector figure.

Friday’s prediction shows an open price of $83.18, a low of $82.90 and a high of $84.18.

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.

Oil

West Texas Intermediate for October delivery (CLV8) is priced at $67.64 per barrel, down 0.25% from the open, at the time of publication. Oil prices jumped to one of their highest levels of the month after domestic crude inventories surprisingly dropped last week after rising for most of August. The rise in weekly U.S. natural-gas supplies was also smaller than expected which helped push prices lower.

Looking at USO, a crude oil tracker, our 10-day prediction model mostly mixed signals. The fund is trading at $14.26 at the time of publication, down 0.07% from the open. Vector figures show 0.86% today, which turns -0.67% in four 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 December gold (GCZ8) is down 0.76% at $1,194.10 at the time of publication. After cracking the $1,200 level, gold retreats below it, amid a strengthening dollar. The dollar, which has dropped in recent days, rallied as new tariffs were both proposed and imposed, weakening emerging markets globally. Gold began to drop yesterday closer to the closing bell, minutes from the previous Fed Reserve meeting that signaled another interest rate hike in the oncoming September meeting.

Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows positive signals. The gold proxy is trading at $112.38, up down 0.79% at the time of publication. Vector signals show +0.03% 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 0.03% at 2.82% at the time of publication. After the above mentioned minutes from the early August FOMC meeting were released and led investors to believe another interest rate hike was likely to come from the next reserve meeting, long-dated notes like the 10 and 30-year bonds fell. Today, bonds opened to traded lower but have since somewhat rebounded, holding slight gains for the day.

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. Today’s vector of -0.06% moves to +0.31% 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 0.49% at $12.31 at the time of publication, and our 10-day prediction window shows mostly all positive signals. The predicted close for tomorrow is $12.56 with a vector of +3.46%. 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.

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