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Main Trend for Stock Index Futures is Higher


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December 5, 2016

STOCK INDEX FUTURES

Prices are higher after crude oil futures advanced to a 17 month high.

The 8:45 central time November U.S. Services PMI is expected to be 54.9. Also at 8:45 is the U.S. composite PMI. The previous month’s figure was 54.9.

The 9:00 November Institute for Supply Management nonmanufacturing composite index is anticipated to be 55.5.

The long term trend is higher.

CURRENCY FUTURES

Euro currency futures declined to a one year low on news that the Italian prime minister resigned after losing a referendum. However, prices quickly reversed and are now trading higher.

There was some support for the currency of the euro zone on news that Germany’s composite PMI was 55, compared to an earlier estimate of 54.9.

In a flight to quality move the U.S. dollar index was initially higher on the Italian referendum news. However, the greenback is lower currently.

I would expect the U.S. dollar to trade higher from the current lower levels.

Also, in the longer term, the U.S. dollar is likely to advance due to prospects of higher interest rates in the U.S.

The British pound is higher for a third day as a result of increased optimism that the U.K. can reach a single market agreement with the European Union.

INTEREST RATE MARKET FUTURES

Prices declined due to higher stock index and energy futures. In addition, there was pressure when Dudley of the Federal Reserve said he favors gradual increases in interest rates if the economy stays on track.

At 1:05 St. Louis Federal Reserve Bank President Bullard will speak on the U.S. economy and monetary policy.

It appears very likely that the Federal Open Market Committee will hike its fed funds rate at its upcoming policy meeting.

The probability that the FOMC will increase the fed funds rate at the December 13-14 meeting is close to 100%, which compares to 94% on Friday. The probability was 68% in early November.

Last week the thirty year Treasury bond futures fell to a 17 month low.

The main trend is lower for the entire complex, but especially for the thirty year Treasury bond futures.

SUPPORT AND RESISTANCE

December 16 S&P 500

Support 2176.00 Resistance 2209.00

December 16 U.S. Dollar Index

Support 100.350 Resistance 101.890

December 16 Euro Currency

Support 1.0500 Resistance 1.0743

December 16 Japanese Yen

Support .87310 Resistance .88660

December 16 Canadian Dollar

Support .74730 Resistance .75590

December 16 Australian Dollar

Support .7404 Resistance .7468

March 17 Thirty Year Treasury Bonds

Support 149^2 Resistance 151^24

December 16 Gold

Support 1159.0 Resistance 1188.0

December 16 Copper

Support 2.5950 Resistance 2.7000

January 17 Crude Oil

Support 50.95 Resistance 52.85

___________________________________________________________________________

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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About the author


Alan Bush has been a commodity analyst since 1976 focusing on the fundamental and technical aspects of stock index, interest rate and foreign currency markets. He has authored several articles for Stocks Futures and Options magazine and produced the “Futures Tech Focus” program, which is a technically based market outlook.

Alan served on the faculty of Oakton College as instructor of a course entitled, “Principles of Technical Analysis.” He has been interviewed on many national television programs, appearing on the Nightly Business Report, CNBC, CNN Moneyline, Reuters Television and Web FN. In addition, he has been frequently quoted in The Wall Street Journal, USA Today, The Bond Buyer and the Chicago Tribune and has been regularly interviewed on Chicago’s WMAQ radio business reports.

Alan can be reached at (312) 242-7911, or via email at alan.bush@admis.com.

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