Stock index futures are down this morning amid bleak news globally on the manufacturing front, but the big question on many people’s minds is whether the bottom is in after a strong finish to November. The past couple months have been a bloodbath, but there seems to be an abatement of fear in the past few days, ever so slightly.
Stock index futures saw a five-day streak of gains to end the last week of November with their best weekly gain in 34 years, according to Bloomberg. The Dow Jones Industrial Average rose nearly 10 percent in the holiday-shortened week, to 8829.94 points; the S&P 500 gained 12 percent, to 896.24.
May commodities have perked up a bit too as November drew to a close. Gold rose 14 percent in November, to over $816 an ounce, its biggest monthly gain in nine years, while crude oil rose 9 percent on the week, although still down nearly 20 percent for November. With crude oil prices off more than $90 a barrel from this year's historic highs, OPEC has in the past two months announced output reductions totaling about two million barrels a day. Many analysts expect the organization to cut output further, but they're unsure of when. Some delegates of OPEC said "It's only a consultative meeting." OPEC has another gathering scheduled for December 17 in Algeria. See a chart of January crude oil futures below; closes above $56 are needed to turn the trend bullish.
The markets seemed to react positively to the Federal Reserve’s latest measures to buy bad paper and free up consumer credit, and seemed to appreciate President-elect Obama’s picks for his new administration. We also had a bailout of Citigroup that fueled some investor interest last week. Maybe, we were just so far down a rebound was due.
This morning, the financial markets are absorbing retail sales news from “Black Friday” and the holiday weekend, as well a report from the Institute of Supply Management. Its November manufacturing index came in at 36.2, its worst showing since 1982. Data on manufacturing activity in China, the U.K. and the euro-zone also showed declines, causing market weakness globally.
The stock market’s gains last week were encouraging nonetheless, and from a technical standpoint, momentum indicators, the Stochastics and Relative Strength Index (RSI), have turned bullish. However, I think S&P 500 futures need to close above the 20-day moving average at 881 to suggest the bottom is in for this bear market cycle. Do I think a bottom has been posted? I am not sure, but I think maybe, possibly, it has.
Resistance for December S&P futures is at 893 and 917, with support at the 10-day moving average at 843, followed by 739-737 (the April 1997 low) on another big move down.
Financial Fundamental Reports: Week of Dec 1 – Dec 5, 2008
| Date | CT | Release | For |
|
| Consensus | Prior |
|
| Dec 01 | 09:00 | Construction Spending | Oct |
|
| -0.9% | -0.3% |
|
| Dec 01 | 09:00 | ISM Index | Nov |
|
| 38.0 | 38.9 |
|
| Dec 02 | 00:00 | Auto Sales | Nov |
|
| NA | NA |
|
| Dec 02 | 00:00 | Truck Sales | Nov |
|
| NA | NA |
|
| Dec 03 | 07:15 | ADP Employment | Nov |
|
| -173K |
|
|
| Dec 03 | 07:30 | Productivity-Rev. | Q3 |
|
| 0.9% | 1.1% |
|
| Dec 03 | 09:00 | ISM Services | Nov |
|
| 42.6 | 44.4 |
|
| Dec 03 | 13:00 | Fed's Beige Book |
|
|
|
|
|
|
| Dec 04 | 07:30 | Initial Claims | 11/29 |
|
| NA | NA |
|
| Dec 04 | 09:00 | Factory Orders | Oct |
|
| -2.7% | -2.5% |
|
| Dec 05 | 07:30 | Average Workweek | Nov |
|
| 33.6 | 33.6 |
|
| Dec 05 | 07:30 | Hourly Earnings | Nov |
|
| 0.2% | 0.2% |
|
| Dec 05 | 07:30 | Nonfarm Payrolls | Nov |
|
| -300K | -240K |
|
| Dec 05 | 07:30 | Unemployment Rate | Nov |
|
| 6.8% | 6.5% |
|
| Dec 05 | 14:00 | Consumer Credit | Oct |
|
| $2.7B | $6.9B | |
Good luck and good trading!
Please feel free to call me at 866-231-7811 or contact me via email at jfriedman@lind-waldock.com if you have questions on this topic or to discuss specific trading strategies for your unique situation in this or other markets.
Join me Wednesday, December 3 for my monthly market outlook webinar for December, “Friedman’s Futures Forecast.” You can sign up at no charge at www.lind-waldock.com/events and get a more detailed look at technical and fundamental factors affecting a variety of financial as well as commodity futures markets.
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