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Stock Index Futures Hit Record, but Off Highs


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January 10, 2020

STOCK INDEX FUTURES

S&P 500, Dow and NASDAQ futures advanced to record highs. However, there was some long liquidation when the moderately weaker than expected U.S. employment report was released.

U.S. nonfarm payrolls increased 145,000 in December, which came below the market consensus of 158,000 new positions. Private payrolls were up 139,000 when a gain of 150,000 were anticipated.

The U.S. unemployment rate remained unchanged at 3.5%, which is a 50-year low. The number of unemployed was also unchanged at 5.8 million.

Average hourly earnings increased 0.1% when a gain of 0.3% was estimated.

The 9:00 central time November wholesale trade report is expected to be unchanged.

I anticipate January will be an up month for stock index futures.

CURRENCY FUTURES

The U.S. dollar is slightly higher despite the slightly weaker on balance U.S. employment numbers.

The British pound is higher even though a Bank of England policymaker said she would be inclined to back an interest rate cut in the months ahead, if the U.K. economy does not pick up.

It was only yesterday thatBank of England Governor Mark Carney surprised markets by saying from a risk management perspective there could be a case for lowering interest rates if the economic weakness seen in late 2019 continues into 2020.

The Canadian dollar is higher after a report showed the unemployment rate in Canada fell to 5.6% in December from 5.9% in November. Economists expected 5.8%.

In addition, employment in Canada increased by 35,200 jobs in December, which compares to the consensus estimate of a gain of 25,000 jobs.

INTEREST RATE MARKET FUTURES

Futures are mixed to higher following the U.S. employment report.

There is a 58% probability that the Federal Open Market Committee will lower its fed funds rate at its December 16, 2020 policy meeting. Yesterday the probability was 52%.

Interest rate market futures are likely to trade broadly sideways in the longer term, although the flight to quality influence will likely reemerge from time to time.

SUPPORT AND RESISTANCE

March 20S&P 500

Support 3272.00 Resistance 3293.00

March 20 U.S. Dollar Index

Support 97.030 Resistance 97.350

March 20Euro Currency

Support 1.11230 Resistance 1.11660

March 20Japanese Yen

Support .91400 Resistance .91750

March 20Canadian Dollar

Support .76420 Resistance .76800

March 20Australian Dollar

Support .6859 Resistance .6908

March 20 Thirty Year Treasury Bonds

Support 156^16 Resistance 157^20

February 20Gold

Support 1543.0 Resistance 1560.0

February 20 Crude Oil

Support 58.88 Resistance 60.13

March 20Copper

Support 2.7950 Resistance 2.8150

Contact Alan for more extensive information on these markets 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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