By Alan Bush | Senior Financial Economist at ADMIS
S&P 500, Dow Jones and NASDAQ futures advanced to record highs today on limited news.
Much of the recent gains can be linked to Federal Reserve Chairman Jerome Powell’s congressional testimony last week, which set the stage for the central bank to lower interest rates.
The Federal Reserve of New York's monthly report showed business activity in the manufacturing sector in the New York area in July expanded at a faster pace than expected with the headline Empire State Manufacturing Index jumping to 4.3 in July from -8.6 in June. Economists had expected a reading of 0.8.
My view remains that the global reflation scenario is on track and easier credit conditions from most of the world’s central banks, including the Federal Reserve, are coming and will be the dominant fundamental that supports stock index futures in the long term.
The U.S. dollar index is a little higher and the euro currency is slightly lower even though interest rate differential expectations have turned slightly bearish for the greenback in light of Fed Chair Powell’s dovish congressional testimony last week.
The British pound is lower on news that U.K. house prices declined for the first time this year in July.
The Canadian dollar and the Australian dollar are higher in light of higher crude oil prices.
Financial futures markets are predicting there is almost a 100% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points or more at its July 30-31 policy meeting. A second rate cut is anticipated by financial futures markets later this year.
In the longer term, higher prices are likely for futures, as most major central banks are likely to embark on a new round of accommodation.
Futures appear to be building a symmetrical triangle congestion pattern on the daily chart. The rule of thumb is that prices come out of a congestion pattern in the same direction that they came into the pattern approximately 60% to 65% of the time.
Higher prices are likely for gold futures in the long term.
September 19 S&P 500
Support 3005.00 Resistance 3027.00
September 19 U.S. Dollar Index
Support 96.310 Resistance 96.590
September 19 Euro Currency
Support 1.13110 Resistance 1.13450
September 19 Japanese Yen
Support .92880 Resistance .93290
September 19 Canadian Dollar
Support .76700 Resistance .76950
September 19 Australian Dollar
Support .7021 Resistance .7058
September 19 Thirty Year Treasury Bonds
Support 153^0 Resistance 154^4
August 19 Gold
Support 1408.0 Resistance 1423.0
September 19 Copper
Support 2.6800 Resistance 2.7300
August 19 Crude Oil
Support 59.73 Resistance 61.13
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.