By Alan Bush | Senior Financial Economist at ADMIS
Stock index futures fell sharply after a leading U.S. manufacturer of cell phones issued its first sales warning in over 10 years, which heightened fears of a slowdown in China’s economy and its effect on corporate profits.
Stock indexes partially recovered when the stronger than expected Automatic Data Processing employment change report was released.
The December ADP national employment report came in up 271,000, which was much higher than the consensus forecast of a gain of 178,000. The December figure was the highest growth rate in 2018.
Initial jobless claims increased 10,000 to 231,000 in the week ended December 29. Economists expected 220,000 new claims last week.
The 9:00 central time December Institute for Supply Management manufacturing index is expected to be 57.9.
It may take a while, but downward pressure on interest rates globally, of course not from the Fed in the short term, will ultimately rescue this market.
It is better to trade other markets where the fundamentals are more lined up in the same direction, as is the case for gold and the thirty year Treasury bond futures.
The U.S. dollar is lower as interest rate differential expectations turn slightly against the greenback.
The euro currency is higher on news that growth in euro zone bank lending to businesses and households picked up in November from October.
Flight to quality buying caused the Japanese yen to surge as investors moved funds into the perceived safety of the Japanese currency as a result of increased concerns about a Chinese and global economic slowdown.
Futures are higher in response to lower stock index futures, with the thirty year Treasury bond futures hitting an eleven month high.
In spite of the Federal Open Market Committee, at its December 19 policy meeting saying it plans to hike its fed funds rate two times in 2019, the financial futures markets believe the Fed may not be able to hike rates even one time in 2019.
Financial futures markets are predicting there is a 12% probability of a 25 basis point rate hike from the FOMC in 2019 from the current rate of 2.25%-2.50% and a 16% chance of a reduction in the fed funds rate by 25 basis points to 2.00%-2.25%.
Tomorrow, Federal Reserve Chairman Jerome Powell will participate in a panel on a to-be-announced topic in monetary policy and central banking at the American Economic Association meeting in Atlanta, Georgia.
Longer term, I expect the interest rate futures market will likely trend higher, led by the thirty year Treasury bond futures.
Continue to trade the interest rate futures from the long side.
Gold futures advanced to a new seven month high today. The yellow metal is now closing in on psychological resistance at the $1,300.00 level.
Gold is likely to continue to advance in the longer term.
March 19 S&P 500
Support 2458.00 Resistance 2503.00
March 19 U.S. Dollar Index
Support 95.930 Resistance 96.370
March 19 Euro Currency
Support 1.13720 Resistance 1.14670
March 19 Japanese Yen
Support .93040 Resistance .94670
March 19 Canadian Dollar
Support .73310 Resistance .74200
March 19 Australian Dollar
Support .6811 Resistance .7007
March 19 Thirty Year Treasury Bonds
Support 146^24 Resistance 148^0
February 19 Gold
Support 1283.0 Resistance 1298.0
March 19 Copper
Support 2.5800 Resistance 2.6250
February 19 Crude Oil
Support 45.28 Resistance 47.68
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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This is not a solicitation of any order to buy or sell, but merely a collection of information related to Archer Financial services and commodities trading provided by Archer Financial services. Any statement of facts herein contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor do they purport to be complete. No responsibility is assumed with respect to any such element, nor with respect to any expression of opinion herein contained.
The risk of loss in trading futures and options on futures can be substantial. Each investor must carefully consider whether this type of investment is appropriate for them. Past performance is not necessarily indicative of future results.