TODAY IN THE MARKETS - WED, 5/23

S&P 500 
THE GIST (The "What"):

The index rebounded after reaching the day’s low at 2707.38, erasing some of day’s losses and registering the day’s high at 2731.97 as investors digested these latest developments and as Industrials and Defensive stocks gained. With 7 out of

11 primary sectors ending the day lower, the index closed the session off lows at 2727.76, losing 0.20% (down 5.53 points).

THE DETAILS (The "How & Why"):

 Please check the outlook and forecast for tomorrow, Fri 5/25 below:


The S&P 500 index continues to be range bound between the 2700 and 2745 band, successfully testing the strong support level of its 100 DMA found at 2710 several times this month. Stocks were sent tumbling at the opening after President Trump called off his summit with North Korean leader Kim Jong Un which was due to take place on June 12. Several other news headlines also played in the background weighing down on the market sentiment during the early trading session.

Defensive stocks benefited from the latest developments in geopolitical and trade tensions, led by a rally in Raytheon Company. Industrial stocks also recovered from the sell-off experienced post the trade truce news between U.S and China gaining 0.60%. Meanwhile, global automakers stocks such as Volkswagen AG, Daimler AG and BMW AG fell after President Trump announced his decision to launch a national security investigation on cars imported into the U.S. in an attempt to renegotiate the NAFTA agreement. U.S. automakers such as Ford Motor Co. and General Motors, however, gained over this latest development.

Oil prices fell for the third straight day weighing down on the Energy sector and making it the biggest drag on the index, losing 1.67%. Financial sector lost 0.71% as the 10-year Treasury yield settled at 2.978%, staying below the psychologically important 3% mark. Rising mortgage rates coupled with surging home prices weighed down on the Real Estate sector.

On the economic front, the initial jobless claims reached the highest level in seven weeks at 234,000 as against the expected 220,000. Meanwhile, shortage of properties resulted in the existing home sales to come out below expectations.

S&P 500 OUTLOOK for FRI 5/25

Please check the outlook and forecast for tomorrow, Fri 5/25 below:

https://tradersai.blogspot.com/2018/05/s-500-outlook-for-fri-0525.html

S&P 500 testing the 2715-05 consolidation band AGAIN

https://tradersai.blogspot.com/2018/05/s-500-testing-2715-05-consolidation.html

TODAY IN THE MARKETS - WED, 5/23

S&P 500 

THE GIST (The "What"):

Extending yesterday’s losses the S&P 500 index opened the session down 10.24 points as skepticism over the US–China trade agreement grew after President Trump told reporters that the current state of talks appear “to hard to get done” while also casting doubts on his upcoming summit with North Korea leader Kim Jong Un. However, after the release of FOMC minutes at 2pm EDT indicated that the Federal Reserve will not get aggressive in interest rate hikes, the day's losses were erased and the index rallied to end the session at 2,733.29, gaining 0.32% and 8.85 points above previous day’s close. 


As mentioned in the outlook for tomorrow, the consolidation forecast last night can be deemed as completed today.

THE DETAILS (The "How & Why"):

The index traded mostly lower but holding onto the support level of around 2710 (as alerted in the real time commentary this morning) ahead of the release of FOMC meeting minutes due in the afternoon as investors looked for clues on the pace of future rate hikes expecting an increase in fiscal stimulus after President Trump indicated a possibility of additional tax cuts before November.
Financial stocks led early session losses after the Congress passed a plan to repeal 2010 Dodd- Frank Act, exempting small and medium sized banks from the strictest regulations passed post the 2008 financial crisis. The 10 –year yield pulled back after the release of FOMC minutes, settling at 2.995%, falling below the psychologically important 3% mark leading the Financials sector to be the biggest drag in the index with a 0.60% loss.

Industrials continued to be battered as investors digested the latest development around US–China trade tensions, albeit erasing some losses during the final hour of trading, losing 0.15% intraday. Energy stocks also fell for the second straight day as crude oil prices slumped on the back of an increase in U.S. crude stockpiles coupled with the expectation that OPEC might lift their oil output ahead of supply shortage from Iran and Venezuela. 

Tiffany & Co. and Ralph Lauren Corp. were the best performers gaining 23.39% and 14.34% respectively, on the back of solid performance that topped estimates. On the economic data front, the IHS Markit U.S. Manufacturing Managers index for May was up 56.6 from 56.5 last month, indicating economic expansion. Meanwhile, new-home sales in April came out below expectations at a seasonally adjusted rate of 662,000.

S&P 500 Index #SPX testing 100dma at 2710

S&P 500 Index #SPX testing the 100 Day Moving Average at 2710. If it breaks, next stop would be the strong support level of 2705-2700. 

Our medium term models indicate that the current weakness in the index is a consolidation rather than a sign of outright bearisness. If short selling the market, be cautious of potential rebounds off of the 2705-2700 support band or off of the 2690 support level. 2680 has to be broken for the models to turn bearish. 

For the indicated trading strategies for medium-term investors or aggressive/professional/intraday traders, please see the detailed trading plans in the nightly outlook published last night. 

Do we have a crystal ball to predict the markets accurately, day after day? 



#SP500 #SPX #SPY #ES

DO WE HAVE A MARKET CRYSTAL BALL?

You read it here in last night's S&P 500 OUTLOOK FOR TOMORROW, WED 05/23 - published before 5pm yesterday - which said: "As published last night, the index is likely heading to consolidate into the 2715-2705 band, before any further directional bias could develop.". 
S&P 500 Index futures already hit 2704.50 (0.50 points more than predicted) in the overnight session - within less than 12 hours after that forecast! Yes, regular readers can figure that this is more than a few times that our forecast levels are coming true. No, it still does NOT make our (or, anyone's) models and algos any crystal ball that can guarantee you trading riches! But, the interesting and relevant question you should ponder is: what do you think YOU (or, your friend or co-worker who seems so much into the markets and trading - do them a favor by sharing this post/blog) could do if you had such a market crystal-ball which gives you the forecasts that keep coming true day after day?  Human psychology and behavioral finance research say, "not much, really!". Because, your trading results are determined mainly by your trading psychology and discipline than by some magical predictive tool in your hands.  Use these forecasts and predictions just as a tool to train and guide your discipline and trading psychology, and then it could do wonders to your investment/trading results!  Happy market-day ahead!

#SP500 #SPX #SPY #ES #Bulls #Bears #Stocks #Bonds #Invest #Trade

S&P 500 TODAY, TUE. 05/22 - THE WHAT, HOW AND WHY:

Riding on Monday’s optimism, the index opened with slight gains (up 5 points) led by the Industrial stocks. Early morning gains lost steam on reaching the day’s high at 2,742.24 following mixed signals from the White House around U.S.-China trade policies. Trading within a narrow range while attempting to hold on to the gains, the index accelerated the loss in the final hour of the session as President Trump casted his doubts on the historic summit with North Korea. With only 4 primary sectors ending the day with gains, the index closed near session low at 2,724.44, down 8.57 points, losing 0.31%. 

Industrial stocks extended their Monday’s rally during session opening, further supported by the announcement of a cut in import duties by the Chinese government on passenger cars from 25% to 15%, lifting Auto stocks along. Technology sector also received a boost as both countries indicated that they were nearing an agreement to settle the ZTE Corp controversy. But gains reversed as the optimism faded after President Trump announced his displeasure with the recent trade talks.

Energy was the worst performing sector, losing 1.28% as crude oil prices retreated from their multi-year high levels, followed by a 1.25% loss in Industrials sector. Weaker third quarter guidance due to rising costs by Kohl’s and Toll Brothers Inc. also weighed down on investor sentiments. Steel stocks however recovered from their Monday’s slump after U.S. announced heavy duties on Chinese steel shipped from Vietnam while maintaining the previously imposed duties. Financials were the top gainers in the index, gaining 0.59% despite a drop in Treasury yields as investors look forward to the unwinding of the 2010 Dodd-Frank regulation. 

S&P 500 OUTLOOK and TRADING PLAN for TOMORROW, WED. 05/23