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Some Economists Turning Bearish on Stock Index Futures


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November 15, 2017

STOCK INDEX FUTURES

Stock index futures are lower in response to weaker crude oil prices and uncertainty over the state of U.S. tax reforms.

Retail sales increased modestly in October after a surge in September. Retail sales increased .2% in October, which was better than expectations of unchanged. There was a .5% rise in the previous month.

The November Atlanta Federal Reserve business inflation expectations report will be released at 9:00. The October report came in at 1.8%.

The 9:00 September business inventories report is anticipated to show an increase of .1%.

While traders and some economists are focusing on politics as a negative, it will be the still relatively low global interest rate environment that sustains this bull market in the long term.

In spite of lower prices today, this is not the beginning of a new bear market for stock index futures.

CURRENCY FUTURES

The U.S. dollar is lower and the euro currency advanced to a one month high. The euro continues to be supported by recent stronger than anticipated economic data from the euro zone.

The British pound is higher after a report showed workers' total earnings in the U.K. rose by an annual 2.2% in the third quarter, which is better than the average forecast of a 2.1% gain.

The Australian dollar declined after a weaker than expected Australian wage index was reported.

INTEREST RATE MARKET FUTURES

Flight to quality buying is coming into the long end of the curve in light of weaker stock index futures.

Federal Reserve Bank of Chicago President Charles Evans said he has an open mind about whether to vote for another interest rate increase in December.

At 3:00 Boston Federal Reserve Bank President Eric Rosengren to speak about the U.S. economy.

According to financial futures markets, the probability that the Federal Open Market Committee will increase its fed funds rate at the December 12-13 meeting is over 98%.

In addition, analysts are predicting two or three more fed funds rate hikes in 2018.

SUPPORT AND RESISTANCE

December 17 S&P 500

Support 2553.00 Resistance 2579.00

December 17 U.S. Dollar Index

Support 93.180 Resistance 93.850

December 17 Euro Currency

Support 1.18010 Resistance 1.18960

December 17 Japanese Yen

Support .88160 Resistance .89100

December 17 Canadian Dollar

Support .78180 Resistance .78770

December 17 Australian Dollar

Support .7564 Resistance .7640

December 17 Thirty Year Treasury Bonds

Support 152^26 Resistance 154^8

December 17 Gold

Support 1276.0 Resistance 1292.0

December 17 Copper

Support 3.0300 Resistance 3.0700

December 17 Crude Oil

Support 54.85 Resistance 55.78

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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