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Flight to Quality Vehicles Trade Higher


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May 22, 2019

STOCK INDEX FUTURES

U.S. stock index futures are lower, as fears of a possible escalation in the trade war between the U.S. and China were rekindled after reports that Washington could impose sanctions on another Chinese technology company.

My view remains that the global reflation scenario is on track and easier credit conditions from most of the worlds central banks, including the Federal Reserve, are coming and will be the dominant fundamental that supports stock index futures in the long term.

But, first we need to get past the U.S.-China trade hurdle.

CURRENCY FUTURES

The euro currency is lower in spite of concerns about upcoming European parliamentary elections.

Investors sought safety in the Japanese yen and the Swiss franc, which are likely to continue to advance while the U.S.-China trade issues simmer.

The British pound is lower in spite of news that U.K. core inflationaccelerated to a 2.1% annual rate in April, moving ahead of the Bank of Englands 2% target and putting pressure on the central bank to hike interest rates.

The Canadian dollar is higher on news that retail sales in Canada increased for the second consecutive month, rising 1.1% in March from February.

INTEREST RATE MARKET FUTURES

St. Louis Federal Reserve Bank President James Bullard,a voter in the rate-setting committee this year, late Tuesday said the central bank could lower its short term interest rate to help to achieve the Feds 2% inflation target even if economic growth maintains its momentum.

Federal Reserve speakers today are New York Federal Reserve Bank PresidentJohn Williams at 9:00 central time, Atlanta Federal Reserve Bank PresidentRaphael Bostic at 9:10, Dallas Federal Reserve Bank PresidentRobert Kaplan at 9:15 and Atlanta Federal Reserve Bank PresidentRaphael Bostic at 3:00.

The Federal Open Market Committee will release the minutes of its April 30-May 1 policy meeting at 1:00.

The minutes from the Fed should provide additional information on how its members assessed an unexpected downtick in inflation during the first quarter and could provide hints on future policy changes.

Financial futures markets are predicting there is a 68% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points or more at its December 11 policy meeting, which is unchanged from yesterday.

I expect the flight to quality vehicles to trade higher in this atmosphere of U.S.-China trade uncertainties.

SUPPORT AND RESISTANCE

June 19S&P 500

Support 2844.00 Resistance 2872.00

June 19 U.S. Dollar Index

Support 97.710 Resistance 97.990

June 19Euro Currency

Support 1.11660 Resistance 1.12090

June 19Japanese Yen

Support .90550 Resistance .90890

June 19Canadian Dollar

Support .74530 Resistance .74960

June 19Australian Dollar

Support .6872 Resistance .6906

June 19 Thirty Year Treasury Bonds

Support 149^0 Resistance 149^24

June 19Gold

Support 1269.0 Resistance 1281.0

July 19Copper

Support 2.6750 Resistance 2.7300

July 19 Crude Oil

Support 62.00 Resistance 63.13

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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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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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