July 12, 2019
STOCK INDEX FUTURES
S&P 500 and Dow futures advanced to record highs today on limited news. Much of the recent gains can be linked to Federal Reserve Chairman Jerome Powells congressional testimony earlier this week, which set the stage for the central bank to lower interest rates.
The June producer price index was up .1% as expected and the producer price index, excluding food and energy, advanced .3% when a gain of .2% was anticipated.
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.
The U.S. dollar index fell for a third day now that interest rate differential expectations have turned slightly bearish for the greenback in light of Fed Chair Powells dovish congressional testimony.
The Australian dollar showed little reaction to reports that Chinas exports dropped less than expected in June. China's exports were down 1.3% from a year earlier when a 2.0% decline was anticipated and imports fell 7.3% when down. 3.8% was estimated.
The Canadian dollar advanced due to rising crude oil prices, as oil production in the Gulf of Mexico has been reduced by Tropical Storm Barry that threatened the area.
INTEREST RATE MARKET FUTURES
Yesterdays 30 year Treasury bond auction was not well received.
There are no Fed speakers today.
Financial futures markets are predicting there is almost a 100% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points or more at its July 30-31 policy meeting. A second rate cut is anticipated by financial futures markets later this year.
In the longer term, higher prices are likely for futures, as most major central banks are likely to embark on a new round of accommodation.
Futures appear to be building a symmetrical triangle congestion pattern on the daily chart. The rule of thumb is that prices come out of a congestion pattern in the same direction that they came into the pattern approximately 60% to 65% of the time.
Higher prices are likely for gold futures in the long term.
SUPPORT AND RESISTANCE
September 19S&P 500
Support 2998.00 Resistance 3017.00
September 19 U.S. Dollar Index
Support 96.440 Resistance 96.770
September 19Euro Currency
Support 1.12900 Resistance 1.13400
September 19Japanese Yen
Support .92430 Resistance .92980
September 19Canadian Dollar
Support .76550 Resistance .76970
September 19Australian Dollar
Support .6980 Resistance .7028
September 19 Thirty Year Treasury Bonds
Support 152^28 Resistance 154^0
Support 1402.0 Resistance 1419.0
Support 2.6700 Resistance 2.7200
August 19 Crude Oil
Support 59.73 Resistance 60.97
Contact Alan for more extensive information on these markets at 312.242.7911 or via email at firstname.lastname@example.org. Thank you.
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