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Stock Index Futures Higher on Limited News

by Archer Financial Services | Feb 05, 2019

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

The 8:45 central time January PMI services index is expected to be 54.2 and the 9:00 January Institute for Supply Management nonmanufacturing index is anticipated to be 57.1.

S&P 500 results in the fourth quarter showed an average earnings growth rate of 12.4%.

However, analysts are reducing their earnings expectations for the first quarter of 2019.

Keep in mind that corporate earnings are a lagging indicator for the stock index futures. In fact, they are one of the most lagging of lagging indicators.

The secret is to find leading indicators. That is the key.

Stock index futures have been performing better than the news would suggest lately, with the S&P 500 enjoying its best January in more than 30 years, which should be viewed as a sign of strength.

 

CURRENCY FUTURES

Much of the trade appears to be evening up ahead of tonight’s State of The Union Address from President Donald Trump. 

Although the U.S. dollar is a little higher today, it has underperformed the news recently.

The euro currency is lower over worries that the euro zone economy is struggling. 

Euro zone retail sales in December fell at the fastest monthly rate since May 2011. The decline was 1.6%, which was in line with expectations.

The British pound is lower after a report showed the U.K.'s service sector stagnated last month with new orders falling for the first time in two and a half years.

Concerns about Brexit also weighed on the pound.

The Bank of England is scheduled to meet this Thursday and is widely expected to keep interest rates unchanged.

The Reserve Bank of Australia kept its cash rate steady at a record low 1.5% after the first policy meeting since early December. The cash rate hasn't been adjusted since the middle of 2016.      

The Australian dollar advanced due to the RBA's upbeat statement.

Longer term, the Canadian dollar and the Australian dollar should trend higher, as industrial commodity prices are likely to increase in price.

 

INTEREST RATE MARKET FUTURES

They Treasury will auction three year notes today.

Financial futures markets are predicting an 83% probability that the fed funds rate will remain unchanged at the current level of 2.25%-2.50% this year.

There is a 9% chance of an increase in the fed funds rate by 25 basis points, and there is an 8% probability of a 25 basis point rate cut in 2019.

Futures will probably drift lower, as optimism for a U.S.-China trade deal is likely to increase.

 

SUPPORT AND RESISTANCE

March 19 S&P 500

Support    2713.00      Resistance    2739.00

 

March 19 U.S. Dollar Index

Support    95.460        Resistance    95.790

 

March 19 Euro Currency

Support    1.14430      Resistance    1.14890

 

March 19 Japanese Yen

Support    .91050        Resistance    .91460

 

March 19 Canadian Dollar

Support    .76130        Resistance    .76500

 

March 19 Australian Dollar

Support    .7193          Resistance    .7277

 

March 19 Thirty Year Treasury Bonds

Support    144^28       Resistance    145^22

 

April 19 Gold

Support    1311.0        Resistance    1326.0

 

March 19 Copper

Support    2.7900        Resistance    2.8450

 

March 19 Crude Oil

Support    53.40          Resistance    55.55


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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