By Alan Bush | Senior Financial Economist at ADMIS
U.S. stock index futures are under pressure due to poor economic data from China and Germany.
China's economy weakened in July with industrial growth at a 17-year low. The gross domestic product in Germany fell 0.1% compared with the previous quarter, according to the Federal Statistics Office.
This, in addition, to a variety of geopolitical issues, including trade war fears, Hong Kong protests, political turmoil in Italy, elections in Argentina and global economic growth worries overhang the market.
Mortgage applications in the week ended August 9 increased 21.7%, which compares to the 5.3% increase last week.
Prices for foreign made goods imported to the U.S. increased 0.2% in July from June. Economists had expected a 0.1% decline.
The 9:00 central time August Atlanta Federal Reserve business inflation expectations report is expected to be 1.9%.
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.
However, in the short term there are better opportunities in trading the long side of the flight to quality vehicles.
In light of ongoing geopolitical worries, the flight to quality currencies, the Japanese yen and the Swiss franc are higher.
The euro currency is lower after it was reported that Germany's economy contracted.
German 10 year bund yields hit a record low.
The British pound is a little higher after a report showed U.K. inflation beat expectations at 2.1% year-to-year.
Continue to trade the flight to quality currencies, the Japanese yen and the Swiss franc, from the long side.
The 30 year Treasury bond futures advanced to their highest levels since November 2016 due to a variety of geopolitical worries, which are causing flight to safety capital flows.
Market participants believe 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 17-18.
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.
September 19 S&P 500
Support 2879.00 Resistance 2939.00
September 19 U.S. Dollar Index
Support 97.410 Resistance 97.720
September 19 Euro Currency
Support 1.11840 Resistance 1.12300
September 19 Japanese Yen
Support .94840 Resistance .94880
September 19 Canadian Dollar
Support .75110 Resistance .75800
September 19 Australian Dollar
Support .6736 Resistance .6820
September 19 Thirty Year Treasury Bonds
Support 162^12 Resistance 165^12
October 19 Gold
Support 1497.0 Resistance 1531.0
September 19 Copper
Support 2.5750 Resistance 2.6400
September 19 Crude Oil
Support 54.73 Resistance 56.93
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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.