By Alan Bush | Senior Financial Economist at ADMIS
The 9:00 central time December Job Openings and Labor Turnover Survey (JOLTS) is expected to be 5.9 million.
Most analysts believe the recent pressure on stock index futures is due to rising interest rates. I believe this is only partially true.
I am probably the only one saying this, but I believe the weakness in stock index futures is primarily a result of the heightened political tensions in Washington rather than the increasing interest rates.
Political uncertainty almost always means lower prices.
I am putting the current situation in the same category as every other political, or geopolitical event that has taken place since the bull market began on March 9, 2009. Do you remember what stock index futures did during the European debt crisis, Brexit and all the other geopolitical events? Each and every time stock index futures fell initially only to make new highs later.
Technical damage has been done, no doubt, and it may take some time to build a base. However, this is not the beginning of any new long term bear market.
The U.S. dollar is higher due to flight to quality buying in light of lower stock index futures. However, once stock index future stabilize, lower prices for the greenback are likely.
The main trend for the U.S. dollar is lower.
The euro currency is lower in spite of news that German factory orders surged in the last month of 2017.
Orders, adjusted for seasonal swings and inflation, increased 3.8%, which compares to the median estimate of a .7% increase.
Although the euro currency is lower now, the currency of the euro zone is likely to be supported by speculation that the European Central Bank will remove some of its accommodation later this year. In addition, some analysts are predicting an interest rate hike from the ECB in the first quarter of 2019.
The main trend for the currency of the euro zone is higher.
The Bank of England will hold its policy meeting on Thursday.
The Reserve Bank of Australia held a policy meeting today and left its cash rate unchanged at a record low 1.5%,
Thirty year Treasury bond futures are higher in a flight to quality move.
The Treasury will auction three year notes today.
The probability of a fed funds rate increase at the FOMC’s March 21 policy meeting is 69%, which compares to 77% yesterday.
Once the flight to quality influence fades, futures are likely to work lower, as commodity and wage inflation accelerates this year.
This will adversely impact the 30 year Treasury bond futures the most, since the long end of the curve is the most susceptible to the inflation influence.
March 18 S&P 500
Support 2527.00 Resistance 2647.00
March 18 U.S. Dollar Index
Support 89.230 Resistance 89.980
March 18 Euro Currency
Support 1.25430 Resistance 1.24770
March 18 Japanese Yen
Support .91430 Resistance .92550
March 18 Canadian Dollar
Support .79510 Resistance .80050
March 18 Australian Dollar
Support .7821 Resistance .7920
March 18 Thirty Year Treasury Bonds
Support 145^8 Resistance 147^26
April 18 Gold
Support 1328.0 Resistance 1355.0
March 18 Copper
Support 3.1650 Resistance 3.2250
March 18 Crude Oil
Support 63.03 Resistance 64.19
For more information about these markets, please contact Alan at 312.242.7911 or via email at firstname.lastname@example.org. Thank you.
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Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The risk of loss in trading futures and options can be substantial. The views and opinions expressed in this letter are those of the author and do not reflect the views of ADM Investor Services, Inc. or its staff. Research analyst does not currently maintain positions in the commodities specified within this report. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright © ADM Investor Services, Inc.
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