Mexico and U.S. Renegotiate NAFTA, Powell Doubles Down on Hikes
U.S. indices continue breaking records to crack all-time high levels in the SPX. QQQ, and IWM today, after already notching new highs in the Nasdaq and S&P on Friday. With some analysts pointing to the seasonally thin volumes, I recommend investors consider hedging. The market’s rally today is fueled by U.S. trade renegotiation with Mexico. These negotiations will likely continue to impact markets and, although the U.S. will continue to move away from NAFTA, specific portions of the trade agreement with Mexico are being negotiated. On the other hand, Trump announced, for the time being, negotiations with China will come to a pause. However volatile August seemed, most assets have trended up with all three major indices on track to make 1-3% gains for the month, making it five in a row for the Nasdaq. Below, the SPY Seasonal Chart forecasts 10, 20, 30, 40, and 50-day levels.
Reports that Mexico and the U.S. continue to work towards a trade deal has provided optimistic sentiment for markets today. Having already levied several tariffs against China and the European Union, these renegotiations with Mexico indicate a positive step in cooling off escalating trade war fears and clearing the path for future U.S. renegotiations with both NAFTA and non-NAFTA members. With geopolitical issues settling down, hold-over domestic concerns from last week test market resilience.
As second-quarter earnings began to wrap up last week, the major news that looked to latch on to the market were Trump’s legal fiascos. Having both Paul Manafort, former Trump campaign director, and Michael Cohen, former Trump lawyer, face guilty verdicts looked to surely rattle markets as impeachment rumors began to swirl. Still, markets did not flinch, looking towards the FOMC meeting minutes from earlier in the month and a good set of retail earnings to guide market sectors rather than the looming fear of an unfolding political scandal. The week wrapped up with Jerome Powell and other Fed officials in Jackson Hole for a summit in which Powell reiterated his and the Reserve’s intention to continue increasing interest rates this year to combat inflation concerns. Powell affirmed the reserve’s belief the economy is strong enough to accept this hikes but not in danger of overheating, which should in turn help with inflation levels.
Today we will see minimal earnings action with just 13 reports, highlighted by iHeartMedia, while tomorrow’s earnings will feature Hewlett Packard and a handful of retailers, such as Best Buy, DSW.
Using the ^GSPC symbol to analyze the S&P 500, our 10-day prediction window shows mostly positive signals. Today’s vector figure of +0.26% moves to -0.16% in three trading sessions and then returning to positive territory after another three trading sessions. The predicted close for tomorrow is 2,893.34. 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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Tuesday Morning Featured Stock
Our featured stock for Tuesday is Alphabet Inc. (GOOGL). GOOGL 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 $1254.19 at the time of publication, up 1.41% from the open with a -0.08% vector figure.
Tuesday’s prediction shows an open price of $1212.45, a low of $1210.78 and a high of $1229.44.
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 $68.77 per barrel, up 0.10% from the open, at the time of publication. A decline in compliance between OPEC and non-OPEC producers has oil futures making slight movements today, edging lower and higher throughout the day.
Looking at USO, a crude oil tracker, our 10-day prediction model all negative signals. The fund is trading at $14.49 at the time of publication, up 0.42% from the open. Vector figures show -0.16% today, which turns -0.21% in two 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 up 0.29% at $1,216.80 at the time of publication. Last week, gold ended higher after stringing together a few losing weeks as the dollar continued to advance. The dollar suffered a small hiccup last week which slowed its movement and allowed gold to turn positive.
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 $114.47, up 0.27% at the time of publication. Vector signals show +0.24% 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 remains flat at 0.00% movement at 2.82% at the time of publication. The first of three government bond auctions is scheduled for later today and is likely the cause of the muted action we’re seeing.
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 +0.26% moves to +0.76% 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 1.83% at $12.21 at the time of publication, and our 10-day prediction window shows all mixed signals. The predicted close for tomorrow is $12.57 with a vector of +2.93%. 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.
