Third Quarter Earnings Are Here, Market Slides Today

U.S. Stocks continue to decline as Dow, Nasdaq, and the S&P are down over 1% for the day. The double-day decline comes in the midst of a generally positive third-quarter earnings season, which has helped assets rebound selloffs this week and the last. VIX seems to have settled and the bottoming process continues. Investors should hold positions and consider hedging. Another retest of recent lows can be expected in the next two weeks with the lack of volume and technical indicators at the moment. The next overhead resistance on SPY is $280 and the current 50-day moving average is near $286. SPY Seasonal Chart forecast is shown below:

The September FOMC meeting notes were released today and one major takeaway seems to indicate interest rate hikes will continue, almost certainly in December but going forward into 2019 also. Fed Vice Chairman Randal Quarles also recently reiterated the notion, referencing a growing economy and the worry of inflation.

Treasury Yields spiked following the interest rate hike introduced in the late-September FOMC meeting. This caused a market-wide selloff that was slowed by strong earnings from tech and big banks and the ongoing flow of positive economic reports including labor, housing, and production. Investors will continue to look towards earnings as fuel for a rally with over 300 reports next week and even more in the weeks that follow.

Globally, Asian markets lowered while European markets lowered but only slightly. Major Chinese indices hit multi-year lows which have caused some renewed focus on U.S-Chinese negotiations which have, currently, completely stalled. U.S. Sanctions were referenced by Russian President Putin as the cause for massive U.S. bond dumping the country enacted this year. It is yet to be determined if these claims are true or had any effect on U.S. bond markets but are interesting to note in the growing and complicated geopolitical landscape.

Using the “^GSPC” symbol to analyze the S&P 500, our 10-day prediction window shows negative signals. Today’s vector figure of -0.12% moves to -2.60% in five trading sessions. The predicted close for tomorrow is 2,784.72. 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 Performance

Even with increased volatility, Tradespoon technology has been able to provide strong results and accuracy in our post-selloff trading. Similar selloff, to the one we’re seeing this week, in mid-August resulted in 77% winning trades, or 7 out of 9!

Volatility Trade Breakdown

On August 13th, in the midst of the mid-August selloff, we recommended Devon Energy Corp at $42.45 and shorted the stock at $42.24 (32.31% Net Gain!), and that’s just one of many winning trades we had during volatility!

Highlight of a Recent Winning Trade

On October 17th, our ActiveTrader service produced a bullish recommendation for The AES Corporation(AES). ActiveTrader included in all Tradespoon membership plans and is designed for intraday trading.

Trade Breakdown

AES entered the forecasted Entry 1 price range of $15.07 (± 0.06) in its SECOND hour of trading and moved through its Target price of $15.22 in its THIRD hour of trading. The Stop Loss was set at $14.92.

Friday Morning Featured Stock

There is no featured stock for Friday. Currently, there are no confident vector trends in our Stock Forecast Toolbox’s 10-day forecast we strongly recommend following. Today, we recommend investors hold their positions and wait for volatility to bottom out. Earnings season is here and markets should rebound next week.

*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.

Oil

West Texas Intermediate for November delivery (CLX8) is priced at $68.72 per barrel, down 1.35% 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 $14.56  at the time of publication, down 1.79% from the open. Vector figures show -1.69% today, which turns -2.17% 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.

Gold

The price for December gold (GCZ8) is up 0.18% at $1,229.60 at the time of publication. 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 $116.12, up 0.29% at the time of publication. Vector signals show +0.40% 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 down 1.33% at 3.16% at the time of publication. The yield on the 30-year Treasury note is down 0.53% at 3.35% 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 mostly positive signals in our 10-day prediction window. Today’s vector of +0.10% moves to +0.83% 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 19.48% at $20.79 at the time of publication, and our 10-day prediction window shows positive signals. The predicted close for tomorrow is $16.79 with a vector of +3.47%. 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.