Tax-cut questions and crude oil surprises weigh heavy on equities as investors turn risk-off.

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Tax-cut questions and crude oil surprises weigh heavy on equities as investors turn risk-off.

November 15, 2017
By Vlad Karpel


Two major factors are compounding today’s broad market drops across all major indices: a questionable timeline for tax reform and a series of crude oil data which dropped benchmark prices. We’ve moved past earnings season at this point, so investors are much more sensitive to economic data and other political news that were previously sidelined by strong corporate performance. We can expect to see major indices becoming more acutely sensitive as they were before earnings season.

Tuesday reports from Washington indicated there may be a move by Republican senators to add a repeal of the individual insurance mandate attributed to Obamacare. This shake-up, which also further deviates from the House version of the bill, is injecting uncertainty into equities and the U.S. dollar’s strength.

A Tuesday report from Paris-based International Energy Agency has slashed global demand for crude oil in its forecasts, and went further to forecast a U.S. shale boom in the near future. Compounding this was an unexpected report from the American Petroleum Institute late Tuesday, which showed increases in U.S. inventories for both crude and gasoline.  

The CBOE Volatility Index (VIX), or the ‘fear gauge’, spiked to around 14 today which is a 21% jump.  The Dow Jones Industrial Average had dropped over 100 points today, with other major indices seeing downward pressure as well.

At the time of publication, the DJIA is down 0.34%, or 80.57 points, at 23,329. The S&P 500 is trading at 2,571- down 0.31% from the open. The Nasdaq-100 is down 0.27% at 6,720.

Using the ^GSPC symbol to analyze the S&P 500, our 10-day prediction window shows  consistent negative signals. Today’s negative vector figure of -0.09% moves to +0.18% within three trading sessions.  Today’s predicted support and resistance is 2,558.70 (± 2.80) and 2,578.87 (± 2.82), respectively. The predicted close today is 2,576.94. 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.  

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