Fed Promise Continued Economic Support, COVID Fallout “Will Weigh Heavily”
Government-run clinical trials coming out great news for the market
Ahead of today’s FOMC announcement, U.S. stocks saw sharp gains with several positive reports regarding government-run clinical trials coming out. The latest news was able to counter the expectedly underwhelming GDP report, which saw a 4.8% loss in Q1, as well as the hit-and-miss nature of the latest earnings season.
Most companies report slowdowns in their earnings reports
With most companies reporting slowdowns in their earnings reports, several symbols have been seeing shares rise while others lower; for example, Google and Boeing are both seeing gains of over 5% following their earnings report while Starbucks and General Electric are down 2%. Crude oil remains low but June contracts are seeing solid boosts today, gold and treasury remain lower.
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With several sectors having broken through their recent overhead resistance levels, such as small-cap stocks, we no longer believe the market will retest $260 SPY level and we will be a buyer into any short term corrections. Additional mega-cap technology stocks are set to announce earnings and this week will be crucial in deciding if markets will pull back to $270 level or if markets will retest 200 days MA at $300 level for the SPY. In the short term, the market may remain overbought while long-term investors can consider buying equities with dollar-cost averaging in mind. Investors should continue considering hedging portfolios into the rallies. Market Commentary readers are always encouraged to maintain clearly defined stop-levels for all positions. For reference, the SPY Seasonal Chart is shown below:
FOMC announcement make U.S. indices on track for solid gains
Markets started the day trading impressively higher with all three major U.S. indices on track for solid gains. Following the FOMC announcement press conference with Fed Chair Jerome Powel, several sectors began slipping but maintained the majority of their gains by the close. The latest FOMC did not see much action as interest rates are already near zero and several measures to counter the pandemic impact have already been taken. Still, the Fed promised continued support if needed as the virus’s fallout will likely continue to “weigh heavily” on the economy through 2020.
Alphabet earnings report give a nice boost to the tech sector
The tech sector saw a nice boost following Alphabet earnings report while other major tech stocks still to announce earnings this week include Amazon, Apple, and Microsoft. COVID cases in the U.S. have topped the one million mark while the number of death, at the time of publication, is 61,000 with over 140,000 successful recoveries. The latest news on testing and vaccine promoted markets to trade higher as the continued expansion of testing and positive reports regarding government-run clinical trials provide some optimism. With earnings and economic reports continuing to underwhelmed, any positive news regarding the pandemic slowing or vaccine testing will likely support both U.S. and global markets.
European markets closed to impressive gains
Globally, Asian markets were trading slightly higher, apart from Japan which finished modestly lower, while European markets closed to impressive gains. Elsewhere, oil saw another substantial rise while gold also increased. The dollar dipped slightly while U.S. Treasury notes saw modest movement higher today.
Key U.S. Economic Reports Out This Week:
- Gross Domestic Product (Q1) – Wednesday
- FOMC Announcement – Wednesday
- Weekly Jobless Claims (4/25) – Thursday
- Core Inflation (March) – Thursday
- Consumer Spending (March) – Thursday
- Personal Income (March) – Thursday
- Markit Manufacturing PMI (April) – Friday
Key Corporate Earnings Out This Week:
- AMZN – Amazon – Thursday, April 30th
- AAPL – Apple – Thursday, April 30th
- CMCSA – Comcast – Thursday, April 30th
- INTC – Intel – Thursday, April 30th
- TWTR – Twitter – Thursday, April 30th
- V – Visa – Thursday, April 30th
- ABBV – AbbVie – Friday, May 1st
- CLX – Clorox – Friday, May 1st
- CVX – Chevron – Friday, May 1st
- XOM – Exxon Mobil – Friday, May 1st
- HON – Honeywell – Friday, May 1st
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Using the “^GSPC” symbol to analyze the S&P 500 our 10-day prediction window shows a near-term mixed 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 Recent Winning Trade
On April 3rd, our ActiveTrader service produced a bullish recommendation for Gilead Sciences Inc (GILD). 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
GILD entered its forecasted Strategy B Entry 1 price range $76.98(± 0.77) in the second hour of trading that day and passed through its Target price of $77.75 in the fourth hour of trading that day. The Stop Loss price was set at $76.21.
Thursday Morning Featured Symbol
Our featured symbol for Thursday is Chipotle Mexican Grill (CMG). CMG 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 $882.34, with a vector of -0.01% 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, CMG. 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.
Oil
West Texas Intermediate for Crude Oil delivery (CL.1) is priced at $12.92 per barrel, down 23.73% 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 $18 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 0.65% at $1,724.30 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 $161.73, at the time of publication. Vector signals show +0.07% 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 up to 0.626% at the time of publication.
The yield on the 30-year Treasury note is up to 1.248% 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. 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.
(Want free training resources? Check our our training section for videos and tips!)
Volatility
The CBOE Volatility Index (^VIX) is $31.23 at the time of publication, and our 10-day prediction window shows negative 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.
