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Stock Index Futures Recovery Likely from Early Lows


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March 21, 2019

STOCK INDEX FUTURES

In what appears to be a buy the rumor and sell the fact situation, stock index futures advanced ahead of yesterdays Federal Open Market Committee meeting and came under profit taking pressure after the as expected Feds dovish policy statement was out of the way.

The uncertain outcome of the U.S.-China trade talks and a still unresolved Brexit drama in Europe caused investors to remain cautious.

President Donald Trump yesterday warned that Washington may leave tariffs on Chinese goods for a substantial period to ensure Beijings compliance with any trade agreement. China-U.S. trade talks are scheduled to resume next week.

The Philadelphia Federal Reserve manufacturing index was 13.7, which compares to expectations of 4.6.

U.S. jobless claims fell 9,000 to 221,000 in the week ended March 16, as layoffs showed no sign of rising.Consensus expectations called for initial claims to be 225,000.

The 9:00 central time February leading indicators report is expected to show a .1% increase.

Since the lows were made in late December, stock index futures have been performing better than the news would suggest, which should be viewed as a sign of long term strength.

I expect a recovery for stock index futures from the current lower levels.

CURRENCY FUTURES

After a sharp decline yesterday afternoon for the U.S. dollar, when the Federal Reserve reiterated its dovish monetary policy stance, prices have partially recovered today.

The British pound continues to trade lower due to the uncertainties of the Brexit situation.

The Bank of Englands Monetary Policy Committee agreed unanimously to leave the U.K. central bank's main policy rate at 0.75% and the size of its bond portfolio unchanged.

Markets in Japan were closed for a public holiday.

The Canadian dollar is lower in spite of news that wholesale sales climbed 0.6% in January.

INTEREST RATE MARKET FUTURES

Futures advanced yesterday afternoon with follow-through today after the Federal Open Market Committee delivered a more dovish than expected policy statement. This is the Feds second dovish surprise in a row.

The U.S. central bank cut its expectations for 2019 interest rate increases from two to zero and downgraded its economic outlook. Chairman Jerome Powell stressed that it was a great time to be patient.In addition, Powell said the Fed will freeze bond sales from its $3.8 trillion balance sheetlater this autumn.

Financial futures markets are predicting there is a 63% probability that the fed funds rate will remain unchanged at the current level of 2.25%-2.50% this year. There is a 37% chance for a 25 basis point or more decline in the fed funds rate in 2019.

SUPPORT AND RESISTANCE

June 19S&P 500

Support 2809.00 Resistance 2839.00

June 19 U.S. Dollar Index

Support 95.210 Resistance 95.780

June 19Euro Currency

Support 1.14550 Resistance 1.15330

June 19Japanese Yen

Support .90830 Resistance .91360

June 19Canadian Dollar

Support .75010 Resistance .75580

June 19Australian Dollar

Support .7123 Resistance .7188

June 19 Thirty Year Treasury Bonds

Support 146^20 Resistance 147^18

April 19Gold

Support 1309.0 Resistance 1326.0

May 19Copper

Support 2.9200 Resistance 2.9750

May 19 Crude Oil

Support 59.53 Resistance 60.55

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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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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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