Markets Continue To Lower Amid COVID-19, Congress Aims To Pass Economic Stimulus Bill
Markets susceptible to another 10-20% selloff
Markets broke through their December 2018 lows and are susceptible to another 10-20% selloff. VIX, GLD, DXY, and TLT are stabilizing and the bottom could be near. With this in mind, we could see the market reaching its low point by the first week of April and we will wait for the market to close with higher highs and higher lows two days in a row before the bottoming process will start. All three major U.S. indices saw continued pressure today with the Dow and S&P down over 3% while the Nasdaq is down about 1% during the day.
Treasury Secretary Mnuchin called for Congress “to get this deal done today
Congress continues to work on an economic stimulus plan as Senate failed to pass the bill earlier today; Treasury Secretary Mnuchin called for Congress “to get this deal done today.” This week, we will see several key economic reports, which could provide additional data on COVID-19’s economic impact, including February-reports for New Home Sales, Personal Income, Consumer Spending, and Core Inflation, as well as Q4 GDP and Weekly Unemployment reports.
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In the next few weeks, we expect the market to trade in the range of $200-$270 for the SPY ETF. Market Commentary readers are encouraged to maintain clearly defined stop-levels for all positions. For reference, the SPY Seasonal Chart is shown below:
COVID-19’s spread through the U.S. continues to impact markets
Markets were hoping for a completed economic stimulus bill by Congress today but it appears that will not be the case as all three major U.S. indices closed in the red with no bill passed. Treasury Secretary Mnuchun called for lawmakers to pass the bill as soon as possible. COVID-19’s spread through the U.S. continues to impact markets domestically and abroad as the number of reported cases and death toll rise.
Look for additional info from the White House later this evening
Last week, the Fed slashed rates down to 0% taking immediate action following a tough week for the market which continued through the start of this week. The Fed has followed this up by issuing $300 billion in new lending programs aiming to further combat market disruptions. Look for additional info from the White House later this evening with another press conference. Globally, European and Asian markets closed unanimously lower, apart from Japan which finished higher.
Key U.S. Economic Reports Out This Week:
- Chicago Fed National Activity (Feb.) – Tuesday
- New Home Sales (Feb.) – Wednesday
- GDP (Q4) – Thursday
- Weekly Jobless Claims (Weekly) – Thursday
- Personal Income (Feb.) – Friday
- Consumer Spending (Feb.) – Friday
- Core Inflation (Feb.) – Friday
- Consumer Sentiment (Mar.) – Friday
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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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Highlight of a Recent Winning Trade
On March 20th, our ActiveTrader service produced a bullish recommendation for Southwestern Energy Company (SWM). ActiveTrader is included in several Tradespoon membership plans and is designed for day trading, with signals meant to last for 1-2 days.
SWM entered its forecasted Strategy A Entry 1 price range $2.03(± 0.02) in the second hour of trading that day and passed through its Target price of $2.05 in the final hour of trading that day. The Stop Loss price was set at $2.01.
Tuesday Morning Featured Symbol
Our featured symbol for Tuesday is Akami Technologies (AKAM). AKAM is showing a steady vector 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 current-day predicted support and resistance, relative to our entire data universe.
The stock is trading at $85.94 at the time of publication, with a +4.33% vector figure.
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 not have a position in the featured symbol, AKAM. 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.
West Texas Intermediate for Crude Oil delivery (CL.1) is priced at $23.50 per barrel, up 3.84% 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 $4.94 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.
The price for the Gold Continuous Contract (GC00) is up 5.17% at $1561.30 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 $140.11, at the time of publication. Vector signals show -1.47% 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.
The yield on the 10-year Treasury note is down to 0.768% at the time of publication.
The yield on the 30-year Treasury note is down to 1.329% 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. 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.
The CBOE Volatility Index (^VIX) is $60.74 at the time of publication, and our 10-day prediction window shows positive 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.