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Trade Flight to Quality Vehicles from the Long Side

by Archer Financial Services | Aug 12, 2019

By Alan Bush | Senior Financial Economist at ADMIS   

STOCK INDEX FUTURES

U.S. stock index futures are under pressure due to a variety of geopolitical issues, including trade war fears. President Donald Trump told reporters on Friday that while talks with China remain ongoing “we're not ready to make a deal.” 

In addition, there are the Hong Kong protests, renewed political uncertainties in Italy and global economic growth worries.

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.
 

CURRENCY FUTURES

In light of ongoing geopolitical worries, the flight to quality currencies, the Japanese yen and the Swiss franc are higher.

There was pressure on the euro currency after Germany's Ifo Institute said its quarterly survey of business and economic experts suggests significantly weaker growth in world trade.

In the overnight session the British pound fell to its lowest level since March 2017 before a recovery.

Trade the flight to quality currencies, the Japanese yen and the Swiss franc, from the long side.

INTEREST RATE MARKET FUTURES

Futures are higher due to a variety of geopolitical worries, which are causing flight to safety capital flows.

Financial futures markets are predicting there is almost a 100% probability that the Federal Open Market Committee will lower its fed funds rate by another 25 basis points at its next meeting on September 18. Another rate cut after that is very likely before the end of the year.

In the longer term, higher prices are likely for futures, especially at the long end of the curve, as most major central banks, including the Federal Reserve, are likely to embark on a new round of easier credit policies. 

Continue to trade the interest rate market futures from the long side, especially the 30 year Treasury bond futures.

SUPPORT AND RESISTANCE

September 19 S&P 500

Support    2889.00      Resistance    2935.00

September 19 U.S. Dollar Index

Support    97.040        Resistance    97.600

September 19 Euro Currency

Support    1.11850      Resistance    1.12620

September 19 Japanese Yen

Support    .94800        Resistance    .95580

September 19 Canadian Dollar

Support    .75430        Resistance    .75960

September 19 Australian Dollar

Support    .6747          Resistance    .6811

September 19 Thirty Year Treasury Bonds

Support    161^2         Resistance     162^28

October 19 Gold

Support    1490.0        Resistance     1516.0

September 19 Copper

Support    2.5650        Resistance     2.6150

September 19 Crude Oil

Support    53.40          Resistance     55.34




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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