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Stock Index Futures Likely to Recover from Early Pressure

by Archer Financial Services | Feb 26, 2019

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

U.S. housing starts ended 2018 on a soft note with starts tumbling in December.  Housing starts dropped 11.2% in December from November to an annualized rate of 1.078 million, which is the lowest level in over two years. The median estimate called for starts to be 1.260 million.

Building permits, which is an indicator of future construction activity fell 0.3% in December to an annualized rate of 1.326 million.  The median estimate called for permits to be 1.290 million. 

The main event today will be at 8:45 central time when Federal Reserve Chairman Jerome Powel will deliver his semiannual monetary report to Congress before the Senate Banking Committee. Tomorrow Fed Chair Powell will give his semi-annual testimony before the House Finance Committee at 9:00.

There two 9:00 reports. The February consumer confidence report is expected to be 125 and the February Richmond Federal Reserve manufacturing index anticipated to be 3.

Stock index futures have been performing better than the news would suggest since the lows were made in late December, which should be viewed as a sign of long term strength.

I would not be surprised to see a recovery from the current lower levels to higher on the day.

 

CURRENCY FUTURES

The U.S. dollar fell when the weaker than expected housing starts report was released.   

The British pound hit a four month high against the U.S. dollar and a 21 month high against the euro on hopes for a Brexit delay.

The Canadian dollar and the Australian dollar are a little lower today.

However, longer term, the Canadian dollar and the Australian dollar, the “commodity currencies,” will probably trend higher, as prices for most industrial commodities are likely to advance.

 

INTEREST RATE MARKET FUTURES

Futures advanced when the weaker than expected housing starts report was released. 

The Treasury will auction seven year notes today.

Financial futures markets are predicting a 78% probability that the fed funds rate will remain unchanged at the current level of 2.25%-2.50% this year. There is a 2% chance for a 25 basis point increase in 2019 and there is a 20% probability of a 25 basis point reduction this year.

The thirty year Treasury bond futures have remained in a broad trading range since the first week in January. A U.S.-China trade agreement, or strong hint of one, would be a catalyst to take futures lower.

 

SUPPORT AND RESISTANCE

March 19 S&P 500

Support    2780.00      Resistance    2802.00

 

March 19 U.S. Dollar Index

Support    96.050        Resistance    96.380

 

March 19 Euro Currency

Support    1.13570      Resistance    1.13980

 

March 19 Japanese Yen

Support    .90110        Resistance    .90600

 

March 19 Canadian Dollar

Support    .75510        Resistance    .75980

 

March 19 Australian Dollar

Support    .7138          Resistance    .7186

 

March 19 Thirty Year Treasury Bonds

Support    146^0         Resistance    146^28

 

April 19 Gold

Support    1323.0        Resistance    1336.0

 

March 19 Copper

Support    2.9300        Resistance    2.9650

 

April 19 Crude Oil

Support    54.93          Resistance    55.88

 


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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