Markets Lower Following ECB Decision, Critical FOMC Next Week
Markets cautious ahead of today’s significant Q2 earnings data
After closing to mixed results yesterday, major U.S. indices opened lower today ahead of today’s significant Q2 earnings data.
Notable earnings reports today
Google parent company Alphabet Inc, Amazon, and Intel are due to release their corporate earnings after the market closes. Also reporting today will be Comcast, Starbucks, 3M, T-Mobile, and Raytheon.
ECB prepare for rates cuts
Also influencing markets today are reports that the European Central Bank is looking into short-term interest rates cuts as well as further stimulus objectives. The ECB expressed interest in keeping rates at their current rates through the first half of 2020 but will look into added measures in future meetings. This clears the way for the Federal Reserve to be one of the first major central banks to reduce policy rates.
GDP data in focus tomorrow
Tomorrow, GDP data is set to release while next week the FOMC will meet, where an interest rate cut could be introduced.
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SPY dependent on FOMC
With the SPY trading near an all-time high level, we encourage our readers to consider avoid chasing near $300 level and consider buying closer to $290. Corporate earnings and the FOMC remain the biggest factor to markets through the end of July but we do not see market momentum pushing SPY much higher than $300, potentially overshooting to $305. For reference, the SPY Seasonal Chart is shown below:
ECB lay the framework for possible rate cuts
Leading markets today is news from the ECB which decided to keep interest rates at present or lower level through the first half of 2020, laying the framework for possible rate cuts.
Along with interest rate cuts, the ECB will look to instill several stimuli to support markets, such as relaunching the government-bond purchasing program. Next week, the FOMC is set to meet for a two-day summit which will be the first opportunity to cut rates since Fed Chair indicated to Congress earlier this month a cut could soon come. The meeting will take place on July 30-31. Included in the last FOMC meeting minutes, a substantial number of Fed members indicated interest in cutting rates. Also worth monitoring is tomorrow’s release of Q2 U.S. GDP.
Earnings remain the big draw of market news this week as Amazon and Google are scheduled to report after the markets close today. Yesterday, Facebook reported better than expected results but were not able to capitalize off that as shares lowered this morning. News of the $5 billion FTC settlement, along with SEC fine, have weighed on shares, currently down over 2%. PayPal data yesterday returned better than expected but saw shares lower off weak guidance. Other earnings to monitor for today includeIntel, Comcast, Starbucks, Anheuser-Busch, T-Mobile, 3M, Raytheon, and Waste Management today; McDonald’s, HDFC Bank, Charter Communications, and Twitter tomorrow. Next week, look out for Apple, Mastercard, Procter & Gamble, Qualcomm, General Electric, Yum! Brands, Verizon, and Exxon earnings.
Using the “^GSPC” symbol to analyze the S&P 500 our 10-day prediction window shows mixed signals. Today’s vector figure of +0.25% moves to -1.01% in five trading sessions. Prediction data is uploaded after the market close at 6 pm, 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 July 17th, our ActiveTrader service produced a bullish recommendation for AES Corporation (AES). ActiveTrader is included in all paid Tradespoon membership plans and is designed for day trading.
AES entered its forecasted Strategy B Entry 1 price range $17.29 (± 0.07) in its first hour of trading and passed through its Target price $17.46 in the second hour of trading that day. The Stop Loss price was set at $17.12
Friday Morning Featured Symbol
*Please note: At the time of publication we do not own the featured symbol, WFC. 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 Friday is Wells Fargo & Company (WFC). WFC 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.
The stock is trading at $48.37 at the time of publication, with a +0.19% 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.
West Texas Intermediate for Crude Oil delivery (CL.1) is priced at $56.41 per barrel, up 0.95% 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 $11.65 at the time of publication, up 0.52% from the open. Vector figures show -0.84% today, which turns -5.05% 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.
The price for the Gold Continuous Contract (GC00) is down 0.55% at $1,415.70 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 positive signals. The gold proxy is trading at $133.47, down 0.67% 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.
The yield on the 10-year Treasury note is up 1.23% at 2.08% at the time of publication. The yield on the 30-year Treasury note is up 0.83% at 2.60% 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 +0.10% moves to +0.39% 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.
The CBOE Volatility Index (^VIX) is up 10.19% at $13.3 at the time of publication, and our 10-day prediction window shows positive signals. The predicted close for tomorrow is $12.85 with a vector of +6.45%. 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.