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Traders Focus on Midterm Elections

by Archer Financial Services | Nov 05, 2018

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

Stock index futures have traded in a relatively narrow range in advance of tomorrow’s midterm elections.

The 8:45 central time October PMI services index is expected to be 54.7 and the 9:00 October Institute for Supply Management nonmanufacturing index is anticipated to be 59.2.

Major downtrend lines were taken out in the S&P 500 and Dow futures to the upside last Wednesday.

Third quarter corporate results have been stronger than expected with approximately 78% of the companies so far beating analysts’ estimates.

Traders are focusing on the midterm elections tomorrow.

It is a good idea to reduce trading size going through tomorrow’s elections, since it is very likely that volatility will be extreme.

Regardless of tomorrow’s election results it will be the still relatively low interest rate environment that will provide long term underling support for stock index futures.

 

CURRENCY FUTURES

The British pound is higher as expectations grow that the U.K. and the European Union are inching closer to a Brexit agreement.

Gains in the pound were limited by news that business activity in Britain’s services sector slowed to a seven month low last month and firms’ expectations for 2019 are the gloomiest since just after the 2016 Brexit vote.

The Japanese yen is steady after Bank of Japan Governor Haruhiko Kuroda ruled out the chance of a near term interest rate increase, arguing that hiking rates now would only add to strains for financial institutions by threatening to derail Japan’s economic recovery.

Firmer crude oil prices supported the “commodity currencies,” the Canadian dollar and the Australian dollar.

 

INTEREST RATE MARKET FUTURES

At 6:00 this evening Dallas Federal Reserve Bank President Robert Kaplan will participate in a moderated discussion on national and global economic issues at the Federal Reserve Bank of Dallas.

The Federal Open Market Committee will hold its regularly scheduled policy meeting on Wednesday and Thursday. The probability of a fed funds rate hike at that meeting is 7%.

According to the financial futures markets, the probability of a fed funds rate hike at the Federal Open Market Committee’s December 19 policy meeting is 77%, which is unchanged from Friday.

 

SUPPORT AND RESISTANCE

December 18   S&P 500

Support    2709.00      Resistance    2735.00

 

December 18   U.S. Dollar Index

Support    96.050        Resistance    96.550

 

December 18   Euro Currency

Support    1.13810      Resistance    1.14470

 

December 18   Japanese Yen

Support    .88370        Resistance    .88790

 

December 18   Canadian Dollar

Support    .76240        Resistance    .7666

 

December 18   Australian Dollar

Support    .7177          Resistance    .7218

 

December 18   Thirty Year Treasury Bonds

Support    137^0         Resistance    137^28

 

December 18   Gold

Support    1226.0        Resistance    1241.0

 

December 18   Copper

Support    2.7500        Resistance    2.8350

 

December 18   Crude Oil

Support    62.33          Resistance    64.18


For more information about these markets, please contact Alan at 312.242.7911  or via email at alan.bush@admis.com. 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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