Stock Index Futures Recovery

October 12, 2018

STOCK INDEX FUTURES

U.S. stock index futures are set for their biggest gains in over six months today, after equity markets suffered their largest two day declines since February.

U.S. Treasury Secretary Steven Mnuchin said President Donald Trump would go through with plans to meet with Chinese President Xi Jinping at next months G20 summit if it appeared that it would be a constructive meeting.

U.S. import prices grew 0.5% in September from the previous month, which was the first monthly gain since May. Economists expected a 0.3% gain in September.

The 9:00 central time October consumer sentiment index is expected to be 99.5.

The still relatively low interest rate environment and a likely less hawkish Federal Open Market Committee next year suggests recent weakness is a correction and we have not seen the top for stock index futures.

CURRENCY FUTURES

The U.S. dollar recovered as equity markets gained.

The euro currency declined after European Central Bank President Mario Draghi moderated his inflation outlook for the euro zone.

Selling in the euro was limited by news that industrial production in the euro zone was 1% higher in August than in July, when economists had expected a monthly gain of only 0.2%.

Although the greenback is higher today, interest rate differential expectations appear to be turning against the U.S. dollar.

INTEREST RATE MARKET FUTURES

Federal Reserve speakers today are Atlanta Federal Reserve Bank PresidentRaphael Bosticat 11:30 and Federal Reserve Vice Chairman for SupervisionRandal Quarles at 9:30 this evening.

Futures are lower on the belief that the Federal Open Market Committee is still on track to increase interest rates later this year.

According to the financial futures markets, the probability of a fed funds rate hike at the Federal Open Market Committees December 19 policy meeting is 83%, which compares to 76% yesterday.

However, it is my belief that the Federal Reserve may not be quite as aggressively hiking interest rates next year.

Also, I anticipate that in the weeks ahead Federal Reserve officials will back off a little from their hawkish rhetoric. The FOMC cannot increase interest rates unilaterally with the rest of the global economy either growing slowly, just steady, or slowing as is the situation in China.

However, the long term trend for the interest rate futures is still lower.

SUPPORT AND RESISTANCE

December 18 S&P 500

Support 2744.00 Resistance 2789.00

December 18 U.S. Dollar Index

Support 94.590 Resistance 95.030

December 18 Euro Currency

Support 1.16020 Resistance 1.16690

December 18 Japanese Yen

Support .89250 Resistance .89750

December 18 Canadian Dollar

Support .76710 Resistance .77030

December 18 Australian Dollar

Support .7107 Resistance .7143

December 18 Thirty Year Treasury Bonds

Support 137^24 Resistance 138^18

December 18 Gold

Support 1216.0Resistance 1230.0

December 18 Copper

Support 2.7700 Resistance 2.8350

November 18 Crude Oil

Support 70.73 Resistance 72.33

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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.