Brewer Futures Group Daily Futures Commentary

Daily Futures Commentary March 18, 2010

2010-03-18T12:37:00Z

Thursday, March 18, 2010

U.S. stock indices are trading flat overnight. Traders have largely ignored the weakness in the Euro over Greece concerns. This may mean that today’s menu of U.S. economic reports will have a bigger influence on stock prices.

The first report is Weekly Initial Claims. Traders will want to see improvements in the U.S. job situation in order to get a gauge of the developing U.S. recovery. The Consumer Price Index, due out at 7:30 am CT, will give traders a clue about U.S. inflation. Leading Indicators and Philadelphia Fed will give traders information about the robustness of the recovery.

With cheap money expected to be around for an extended period of time, continue to look for the stock market to rise. A strong rally in the Dollar however, is likely to put pressure on equity prices due to profit-taking.

June Treasury Bonds have finally broken out above the recent double-tops at 118’02. The charts indicate the next upside target is 118’17. Traders are reacting to the recent FOMC policy statement and to the possibility ...

Daily Futures Commentary March 17, 2010

2010-03-17T12:29:00Z

Wednesday, March 17, 2010

On Tuesday, the Federal Reserve left its benchmark interest rate unchanged and reiterated that interest rates would remain low for “an extended period”. In its statement, it also mentioned that inflation remains subdued, and that the weak employment situation seems to have stabilized. While this may sound rosy, the Fed did express concerns about housing and employer reluctance to increase payrolls.

The tone of the statement suggests that while the Fed seems to have a plan as to how to begin reducing stimulus and returning interest rates to normal, it still is having trouble deciding when to initiate the first rate hike. One obstacle it faces is the possibility it will kill the recovery if it hikes too soon. The other more important obstacle is inflation. Although by its standards, inflation is low, there is a possibility that all of the liquidity that has been pumped into the financial system may trigger a spike in prices.

The overall dovish tone of the statement gave the go ahead for traders to continue to use the Dollar as a ...

Daily Futures Commentary March 16, 2010

2010-03-16T13:00:00Z

Tuesday, March 16, 2010

The U.S. Dollar is trading lower ahead of this afternoon’s FOMC policy meeting. This weakness is helping to boost April Gold prices overnight. The recent break in gold stopped short of the late February bottom at $1088.50 to maintain the uptrend.

Buyers came in on Monday to support prices after the hard sell-off in the British Pound triggered concerns that the currency would collapse over concerns about its ability to service its debt and a possible cut in its credit rating. As long as this is an issue, look for buyers to support gold as they debate whether hard assets are a better investment than paper currencies.

Stock indices are trading higher this morning boosted by demand for higher yielding assets. On Monday, the market turned around late in the session, proving once again that investors like to buy dips. As long as stocks continue to provide a positive return, look for investors to maintain their upside bias. At this time there aren’t many investments around offering a high yield which should keep investors interested in the ...

Daily Futures Commentary March 15, 2010

2010-03-15T12:41:00Z

Monday, March 15, 2010

A drop in Asian equity markets is leading to spillover selling in the U.S. markets. The followthrough to the downside overnight appears to be a continuation of the sharp break from the high on Friday. Concerns over a credit rating cut in the U.K. and the lack of a bailout plan for Greece are two reasons for the selling pressure. This morning’s weakness will be a good test of investor demand since they have grown accustomed to buying dips throughout the recent rally.

Trader demand for safety is helping to underpin the June Treasury Bonds. Friday’s closing price reversal bottom has not been confirmed yet, but a sharp break in the equity markets is likely to drive up demand for safer, lower-yielding assets.

April Gold is trading higher despite the stronger Dollar. This is an indication that investors are becoming concerned about the possibility of a sharp decline in the British Pound. The threat of a downgrade from Moody’s is pressuring the Pound and raising concerns about its ability to cover the servicing of its sovereign debt. ...

Daily Futures Commentary March 12, 2010

2010-03-12T14:13:00Z

Friday, March 12, 2010

Stocks Poised to Continue Rally; Demand for Risk Weakens Dollar

Retail Sales just came out bullish. Equity markets are soaring. Bonds are breaking. The Dollar is plunging. The market reads this report as good. The key will be to be able to separate the report from the trade. The question is will U.S. investors chase equity market higher or wait for a pullback? Overall, however, it looks like a strong report.

U.S. equity markets are trading better overnight ahead of this morning’s Retail Sales Report. Demand for higher risk assets, the weaker Dollar and low volatility are helping to support the indices. The March E-mini daily swing chart has been projecting a test of 1156.00 by March 12th. Strong overnight action has this market in position to test this level. In addition the March E-mini Dow chart shows this market has room to run to the upside with the January high at 10687 the next likely target.

Demand for risk is pressuring the June Treasury Bonds. This market is currently testing a major 50% price at ...

Daily Futures Commentary March 11, 2010

2010-03-11T13:45:00Z

Thursday, March 11, 2010

U.S. equity markets are expected to open weaker this morning but off their lows. Last night’s news that China’s inflation was higher than expected, fueled speculation of a rate hike which helped drive down demand for higher yielding assets. The lack of follow-though to the downside has triggered a short-covering rally which is helping to boost equity prices from their overnight lows. Yesterday the March E-mini S&P 500 stopped at its January high of 1148.00, triggering a profit-taking break. The overnight rally from its low and building momentum could trigger another test of this level today. The daily swing chart suggests a breakout over this level will ignite a rally to 1156.00 by March 12th.

June Treasury Bonds are trading lower. Traders are selling Treasuries in anticipation of a rate hike by China. Technically, this market is hugging a 50% line at 116’04. This price will dictate the direction of the next move. Holding above it means the market is discounting the news. Falling below it will indicate a further drop to 115’06. Today’s Weekly Initial Claims Report should ...

Daily Futures Commentary March 10, 2010

2010-03-10T13:48:00Z

Wednesday, March 10, 2010

Stocks Continue to Rally despite Drop in Volatility

U.S. equity markets are trading firm overnight after yesterday’s surge to the upside. Buying pressure dried up late in the session, but no damage was done to the uptrend. Volatility is falling which is making traders appear complacent. This could be both good and bad. On the good side, it could mean traders are gaining confidence in the recovery which will send prices higher. On the bad side, too much complacency leaves the markets vulnerable to a bearish surprise or could trigger the start of a sizeable correction. At this time let’s just focus on the trend and determine what it is telling us. The main trend is up in the March E-mini S&P 500. The swing chart indicates 1156.00 is the next upside target by March 12th.

June Treasury Bonds are trading lower but finding support at a 50% level at 116’04. If this area fails to hold, then look for a further correction to 115’24. A pick-up in demand for risky assets and additional supply concerns is putting ...

Daily Futures Commentary March 9, 2010

2010-03-09T13:42:00Z

Tuesday, March 9, 2010

The lack of major economic reports today means the direction of the Dollar is likely to exert more influence on the U.S. equity markets. With the Dollar up overnight because of risk aversion, traders are selling equities. Yesterday’s tight trading range and lack of follow through during the New York session may have been indications that the stock markets are overbought. The daily March E-mini S&P chart suggests that a break through 1128.75 may accelerate the move to the downside.

June Treasury Bonds are trading better overnight as traders shift money out of higher risk assets and into the lower-yielding, lower-risk Treasuries. In addition, short term support has been reached at a 50% level at 116’04.

April Gold is feeling pressure because of the stronger Dollar. In addition, a report that China may be buying less gold in the future is hurting demand for the precious metal. This morning, gold is testing minor support at $1117.20. A break through this level could trigger a further break to $1110.40.

The strengthening Dollar and weaker demand ...

Daily Futures Commentary March 8, 2010

2010-03-08T13:33:00Z

Monday, March 8, 2010

U.S. equity markets are expected to open better this morning due to a pick-up in demand for higher yielding assets. Investors are also feeling more confident in the long side following last Friday’s better than expected Non-Farm Payrolls Report. The lack of fresh major economic news until at least Thursday could keep the indices on course for further upside action. The daily March E-mini S&P 500 chart indicates the possibility of a rally to 1156.00 by March 12th.

June Treasury Bonds are expected to be under pressure today. Traders are still adjusting positions following last Friday’s improved jobs news. Investors are factoring in the prospect of an interest rate hike by the Fed before the end of the year. The daily chart suggests that a move to 116’04 is likely. Watch for a technical bounce on the first test of this level. Despite the weaker Dollar, April Gold is trading lower. This market is having trouble attracting buyers at a 50% level at $1136.75. Liquidation by traders hoping for the demise of the Euro may be holding back gains. ...

Daily Futures Commentary March 5, 2010

2010-03-05T13:26:00Z

Friday, March 5, 2010

U.S. equity markets are trading higher ahead of this morning’s U.S. Non-Farm Payrolls Report. Appetite for risk is up overnight which could spillover to the U.S. markets if the jobs number shows that the economy is improving.

June Treasury Bonds are trading slightly lower. Holding 117’23 is the key to sustaining the rally in this market. The next upside target is 118’17. A break back under 117’23 could trigger a sharp break to 116’04. Today’s jobs report will move this market. If fewer than 50,000 jobs are lost then look for T-Bonds to break. A greater than expected loss will be bullish for TBonds. The direction of April Gold and June Crude Oil will be dictated by the movement of the Dollar. A weaker Dollar should increase demand for riskier assets which will drive up gold and crude oil.

The U.S. Dollar is trading mixed overnight ahead of this morning’s Non-Farm Payrolls Report. Demand for risky assets is up overnight putting pressure on lower yielding currencies. Traders are looking for a loss of about 50,000 jobs. This ...

Daily Futures Commentary March 4, 2010

2010-03-04T13:43:00Z

Thursday, March 4, 2010

U.S. equity markets are trading flat to lower ahead of this morning’s weekly jobless claims report. In addition, investors seem to be taking a non-committal approach in front of tomorrow’s U.S. Non-Farm Payrolls Report. The Forex markets indicate that investor sentiment is shifting back toward risk aversion which could pressure equity markets today. A downside break could be led by the Dow and NASDAQ which posted closing price reversal tops yesterday.

Demand for lower yielding assets is helping to give June Treasury Bonds and June Treasury Notes a slight lift this morning. A rapid acceleration to the downside in the equity market could lead to more upside pressure in the Treasuries. The key area to watch in the T-Bonds is 117’23. Regaining this area will be a sign of strength.

The stronger Dollar is helping to keep April Gold on the defensive. Currently this market is trading lower while sitting on a major 50% level at $1136.75. Bullish traders will try to create support at this price in order to set up another rally to perhaps $1158.52. ...

Daily Futures Commentary March 3, 2010

2010-03-03T13:34:00Z

Wednesday, March 3, 2010

Stocks Trading Flat Ahead of ADP Jobs Report

Besides news regarding the debt crisis in Europe, futures and Forex traders will be focusing on today’s Challenger jobs report and the ADP private sector jobs report for direction. Traders expect the ADP report to show a loss of 20,000 jobs. An amount greater than 20,000 should support the Dollar as it will indicate a weaker economy. Later in the day, the Fed releases the Beige Book of economic conditions.

U.S. equity markets are trading flat to lower ahead of the job data reports. In addition, traders are reacting to the mixed news that is coming out of the Euro Zone. This news seems to be changing by the hour which is helping to create investor indecision and some light volatility. Yesterday U.S. stock indices opened higher but failed to maintain the upside momentum throughout the day and weakened into the close. Investors seem to be nervous about holding risky positions which could lead to a profit-taking break today. Worse than expected jobs data is expected to lead to ...

Daily Futures Commentary March 2, 2010

2010-03-02T13:52:00Z

Tuesday, March 2, 2010

Investor optimism over a resolution to the sovereign debt problem in Greece and improvements in the U.S. economy are helping to boost U.S. equity markets following a change in trend to the upside on Monday. Traders expect the trend to continue today as the charts indicate very little resistance to the upside. The lack of major economic reports today indicates that traders are likely to focus on any new developments coming out of Greece. The key to an early rally will be whether U.S. investors decide to chase the markets higher after a strong overnight gain. If buyers back off, then look for an early retracement to the downside.

Treasury futures are trading lower as sovereign debt fears eased demand for lower yielding, lower risk assets. After reaching resistance at 118’24, the June Bonds may see a short-term correction to 116’00 over the short-run.

The possibility of a weaker Dollar because of optimism that a deal will be reached between Greece and the European Union is helping to boost demand for higher risk assets, thereby underpinning ...

Daily Futures Commentary March 1, 2010

2010-03-01T13:30:00Z

March 1, 2010

U.S. stock indices are trading better this morning ahead of the U.S. session. Although they are off their highs, there seems to be enough demand for higher risk despite the strengthening Dollar and the falling Euro and British Pound. This could mean that traders are confident that the EU and Greece are close to reaching an agreement regarding the budget deficit crisis or it may be a vote of confidence in the U.S. economy. Traders may turn against risk if the Euro continues to weaken.

Today’s U.S. economic reports may have some say in the matter. Personal income is expected to show no growth while consumer spending is predicted to show a modest gain. The ISM Manufacturing Index has been up for 6 straight months, but this month is called flat. The predicted range is 55 to 60. Finally, Construction Spending is called lower. The drop in home sales should have a negative influence on construction spending. Early guesses for Friday’s Non-Farm Payrolls Report is for a loss of 50,000 jobs.

June Treasury futures are trading lower. Traders don’t seem ...

Daily Futures Commentary February 26, 2010

2010-02-26T13:34:00Z

Friday, February 26, 2010

Despite a pick-up in demand for higher risk assets and higher Asian equity markets, U.S. stock indices are predicting a flat to lower opening. Traders seem to be taking a cautious approach before the release of this morning’s U.S. GDP, Chicago PMI, consumer confidence and existing home sales reports.

Treasury markets are trading higher this morning. Investors appear to be anticipating U.S. economic reports to come out lower than expected. This will keep the pressure on the Fed to keep interest rates down.

The weaker Dollar is helping to support both April Gold and April Crude Oil. A stronger Dollar is likely to keep downside pressure on commodity markets. Any flare-up in Greece should send traders into gold.

Concerns about sovereign debt issues in Greece eased overnight helping to increase demand for higher risk assets. In addition, good economic news from Japan and higher stock markets in Asia helped increase optimism over the global economic recovery.

With tensions easing regarding the sovereign debt problems in some of the European Union nations, ...

Daily Futures Commentary February 25, 2010

2010-02-25T13:54:00Z

Thursday, February 25, 2010

Today, Fed Chairman Bernanke will continue his testimony before the House Financial Services Committee. Yesterday he said the U.S. economic recovery has been “nascent” and requires low interest rates to help it sustain growth. He also said that low employment and subdued inflation allow the FOMC to keep downside pressure on interest rates.

Today’s January Durable Goods Report came out better than expected, but that wasn’t enough to help the equities. Stock indices are down on the news that initial claims rose by 22,000 to 496,000. Traders had been looking for a decrease.

U.S. stock markets are under pressure overnight because of another shift in risk sentiment. Sovereign debt issues in Greece are putting fear into traders triggering liquidation of risky asset position. It’s highly doubtful that Bernanke will say anything today which can turn this market around so traders should look for downside pressure throughout the day. A break through 1090.00 in the March E-mini S&P 500 could trigger a further decline to 1084.50.

March Treasury Bonds and March Treasury Notes soared to ...

Daily Futures Commentary February 24, 2010

2010-02-24T13:21:00Z

Wednesday, February 24, 2010

U.S. stock indices are trading flat this morning ahead of the U.S. opening. Investors seem reluctant to take a side ahead of today’s testimony by Fed Chairman Bernanke. Today’s emphasis will be on jobs and the Fed’s exit strategy. Bernanke may be asked to explain how the Fed plans to withdraw stimulus and raise interest rates without shocking the financial markets. Dovish comments by Bernanke are likely to decrease demand for higher risk assets while putting pressure on equities. Hawkish comments, or hints at a rate hike this year could also trigger the start of a sizeable correction. The only thing investors can count on today is volatility.

Trading has been mixed overnight in the Treasury markets following a strong rally on Tuesday. Yesterday, investors bought T-Bonds and T-Notes after the release of less than stellar U.S. economic reports. Today, traders will react to any comments by Bernanke regarding interest rates. Talk of tightening will pressure March Treasury Bonds and March Treasury Notes.

If Bernanke’s testimony helps the Dollar then look for more pressure on Gold and ...

Daily Futures Commentary February 23, 2010

2010-02-23T13:47:00Z

Tuesday, February 23, 2010

U.S. equity markets are expected to open lower as risk sentiment wanes a little following a drop in the Euro. Investors appear to be taking risk off the table over concerns about debt issues in Europe and a slow down in the U.S. economy. Traders will be focusing on the Case-Shiller Housing and Consumer Confidence Reports for direction. Investors are also uncertain about the Fed’s next interest rate play now that they have raised the discount rate. The great debate remains, will they or won’t they raise rates in 2010?

Aversion to risk and oversold conditions are helping to give Treasury futures a boost. While the stronger Dollar and weaker Euro is pressuring April Gold and April Crude Oil.

The U.S. Dollar is trading higher against all major currencies except the Japanese Yen as risk sentiment has shifted back toward safety. Investors are buying the Dollar and the Yen as they scale back their appetite for more risky investments.

Today, U.S. traders will focus on the S&P Case-Shiller HPI and Consumer Confidence Reports. Economists are predicting ...

Daily Futures Commentary February 22, 2010

2010-02-22T13:25:00Z

Monday, February 22, 2010

U.S. stock indices are trading in a tight range overnight as investors await testimony before the House Financial Services Committee by Fed Chairman Bernanke. Expectations are for Bernanke to talk about the state of the employment situation as well as addressing whether more financial stimulus is required.

Investors will be looking for clues as to if or when the Federal Reserve will begin to hike interest rates in 2010. Signs that rates will rise will likely support the Dollar which could put pressure on U.S. stock markets. Technically, the March E-mini S&P 500 is indicating that this market wants to move higher. The overnight trade took out a .618 retracement level at 1107.00. This price is new support. A failure to hold this level could trigger a break to 1094.50.

Slightly better equity markets overnight are helping to pressure Treasury futures. Currently, the March Treasury Bonds are in a downtrend but trading inside a retracement zone at 117’01 to 116’14. Concerns over the Fed hiking interest rates are keeping bullish traders away from the long-side.

...

Daily Futures Commentary February 19, 2010

2010-02-19T13:30:00Z

Friday, February 19, 2010

U.S. stock indices sold off after Thursday’s hike in the Fed discount rate. The immediate reaction by traders was to sell because many traders thought this move served as a sign that the Fed would begin tightening its monetary policy. The Fed, however, is emphasizing that this move is not a deviation from its policy statement that interest rates will remain low for an “extended period”. This news is helping to stabilize the stock indices, leading to a shortcovering rally overnight.

The March E-mini S&P 500 is still negative, but trading well off of its low. The current shortcovering rally indicates that yesterday’s late session break may have been overdone. Don’t be surprised if this market tries to regain the psychological barrier at 1100.00.

March Treasury Bonds and Notes sold off sharply after the Fed hiked the discount rate, but in a case of sell the rumor, buy the fact, they both turned positive overnight. Oversold conditions are most likely contributing to the rally. In addition, bond traders are buying into the Fed’s comments that the discount ...

Daily Futures Commentary February 18, 2010

2010-02-18T13:52:00Z

Thursday, February 18, 2010

U.S. stock indices are expected to open flat this morning. The stronger Dollar on Wednesday kept a lid on prices despite better than expected U.S. economic news and a positive FOMC report from the Fed. The trading action shows that risk is still a concern for investors, and that traders are reluctant to buy strength. This may mean that another correction may be necessary to attract fresh buying. The psychological 1000 barrier in the March E-mini is providing resistance this morning.

The March Treasury Bonds turned the main trend to down following yesterday’s friendly U.S. economic reports. Without any new supply hitting the market this week, bond traders will be focused on the U.S. economy. Better than expected economic reports should continue to push yields up and bonds and March Treasury Notes lower.

News that the International Monetary Fund is getting ready to resume gold sales is pressuring the precious metal. It’s hard to tell at this time if there is enough liquidity available for the gold market to absorb the sales. More supply is leading to ...

Daily Futures Commentary February 17, 2010

2010-02-17T13:43:00Z

Wednesday, February 17, 2010

U.S. investors are driving stock indices higher ahead of this morning’s housing starts and industrial production reports. Renewed confidence in higher risk assets is also contributing to the strength. Trading could slow down after the morning session as investors flatten out ahead of this afternoon’s FOMC minutes.

The charts indicate that the main trend remains down in the three major indices and that this current rally is being driven by short-covering following the recent sharp sell-off. At this time the March E-mini S&P 500 is trading inside a key retracement zone at 1094.50 to 1107.00.

March Treasury Bonds and Notes are trading a little lower. Short-covering could drive the March Treasury Bonds to 118’04 to 118’15. On the downside, a break under 116’23 will turn the main trend to down and could trigger an acceleration to the downside. Yesterday it was reported that China sold off enough Treasury investments in December to help Japan regain the title as the largest holder of U.S. debt. This could be a sign that China is concerned about the growing U.S. ...

Daily Futures Commentary February 16, 2010

2010-02-16T13:47:00Z

Tuesday, February 16, 2010

Confidence that the European Union, Greece situation is close to a resolution is helping to drive up demand for risky assets. This is helping to boost the U.S. stock indices ahead of the opening. Traders are also becoming more confident in corporate earnings reports because of the recent improvements in the economy.

The improving economy and talk of higher interest rates by Fed Chairman Bernanke are helping to boost yields, thereby pressuring March Treasury Notes and March Treasury Bonds. Last week’s auction boosted supply which helped weaken Treasuries further.

The pick-up in demand for risky assets is helping to underpin April Gold and April Crude Oil. Gold is trading as if speculators anticipate a drop in the Dollar.

Greater appetite for risk is helping to pressure the Dollar overnight. Reduced demand for safer assets is helping to drive up higher-yielding currencies. The weaker Dollar is providing a boost for stocks and commodities.

Oversold conditions are helping to buoy the March Euro. Some traders feel that short traders may have overreacted to the ...

Daily Futures Commentary February 12, 2010

2010-02-12T23:09:00Z

February 12, 2010

U.S. Stocks Mount Strong Recovery after Early Session Weakness

Equity markets finished nearly unchanged on Friday after a volatile and tumultuous trading session. The indices weakened in premarket trading following a surprise move by China’s central bank to curb excessive credit demands. Recent data has shown that China’s economy may be heating up too fast which could lead to an asset bubble in the real estate and housing markets.

Commodity markets were hit hard following the increase in the China bank reserve rate. This put selling pressure on commodity-linked stocks. Risk aversion returned to the markets which led to the early session sell-off.

Better than expected U.S. Retail Sales helped to give equity markets a boost, but news that consumer sentiment fell according to the Michigan Survey helped to limit early session gains. Thin trading conditions may have led to the late session strength.

The stronger Dollar put pressure on April Gold, erasing the vast majority of Thursday’s gain. The short-term chart indicates the possibility of a wide range next week with $1106.00 upside resistance ...

Daily Futures Commentary February 12, 2010

2010-02-12T13:03:00Z

Friday, February 12, 2010

Equity markets are trading weaker overnight following a surprise move by China’s central bank to curb excessive credit demands. Recent data has shown that China’s economy may be heating up too fast which could lead to an asset bubble in the real estate and housing markets.

Commodity markets are getting hit hard following the increase in China bank reserves. This is putting selling pressure on commodity-linked stocks. Risk aversion is returning to the markets which could lead to downside pressure throughout the day.

The stronger Dollar is putting pressure on April Gold, erasing almost all of yesterday’s gain. The short-term chart indicates a move to $1071.50 is likely. Look for downside pressure throughout the day as long as the Dollar remains firms and traders averse to risky assets.

March Crude Oil is trading lower as demand is falling for commodities. The current chart pattern suggests that a break to $72.60 is likely over the short-term. Look for more downside action as long as the Euro remains under pressure.

Weaker commodity markets ...

Daily Futures Commentary February 11, 2010

2010-02-11T13:50:00Z

Thursday, February 11, 2010

Strengthening Gold Market Indicates EU/Greece Pact is Imminent.

The strengthening April Gold market is a strong indication that the pact between the European Union and Greece is imminent, thereby driving up demand for risky assets. Speculators are anticipating that the agreement to shore up the debt in Greece will be released shortly. This news should pressure the Dollar and underpin the gold market.

March Crude Oil is trading sharply higher overnight after taking out a key retracement zone. Oversold conditions and the possibility of a weaker Dollar are helping to boost this market. Traders are looking for increased demand for risky assets to continue today. In addition, signs of an improving economy may increase demand for energy.

Equity markets are trading higher overnight. Confidence is returning to the markets. Traders feel that an agreement between the EU and Greece will increase appetite for risk and are buying in anticipation of the news. Tonight’s rally is being driven by Asia and Europe. The key to higher markets will be whether demand comes in from U.S. traders. ...

Daily Futures Commentary February 10, 2010

2010-02-10T13:45:00Z

February 10, 2010

Stock Indices, gold and crude oil are trading relatively flat overnight. Yesterday’s strong buying has been met with uncertainty following the inability of the European Union to reach a loan guarantee agreement with Greece.

Investors are taking a cautious approach ahead of an EU announcement. The longer the EU delays the announcement, the more nervous traders will become, thereby forcing weaker longs out of the market. This could lead to general weakness today.

Today’s focus will be on appetite for risk. Simply stated, if the EU makes the announcement to guarantee Greece against sovereign default, then look for an increase in demand for risk to send stocks, gold and crude oil soaring. Otherwise, expect these markets to drift sideways-to-lower.

Treasury futures are up slightly. This could be a sign that traders are hedging against a down move in risky assets.

All major currencies are down versus the U.S. Dollar overnight after the European Union failed to deliver a resolution to the Greece sovereign debt problem. Yesterday, currencies, led by a rally in the Euro, ...

Daily Futures Commentary February 9, 2010

2010-02-09T13:52:00Z

Tuesday, February 9, 2010

Global equity markets are up sharply after reports that the Greek sovereign debt problems will be resolved shortly. Stock investors are driving up indices as confidence is being restored to the markets. Bargain hunters are also stepping in to take advantage of lower priced equities.

Last night, the Dow closed under 10,000 for the first time since November 2009. Some read this as a bearish sign while other saw this as a chance to gobble up cheap stock. For days, the major indices had been trading as if waiting for a catalyst. The developing story out of the Euro Region could be the catalyst which drives these indices sharply higher today.

Treasury futures could be under pressure today. Demand for higher risk assets could lead to liquidation of safety plays put on by nervous investors the past few days. Additional pressure could be coming from the increase in supply from the upcoming Treasury auction. One sign of impending weakness is the penetration of a support level at 118’24.

The weaker Dollar is helping to trigger ...

Daily Futures Commentary February 8, 2010

2010-02-08T13:46:00Z

Monday, February 8, 2010

An easing of investor risk sentiment is helping to support equity price overnight. Early in the trading session, stock markets followed through to the upside following Friday’s strong finish and talk of a possible resolution of the fiscal problems plaguing the Euro Region.

Appetite for risk was on the rise as the Dollar weakened and the Euro rose. Optimism that a viable solution could be reached to assure investors that Greece would adhere to its budget, helped drive investor confidence up. It looks as if today could start out choppy until investors decide whether to embrace risk or repel it.

March Treasury Bonds are trading lower. The overnight weakness is being triggered by a combination of falling demand for lower risk assets and the new supply of debt which is ready to come to the market courtesy of the U.S. Treasury. Overnight support is being established at a 50% level at 118’24. A failure to hold this level is likely to trigger an acceleration to the downside.

The weakening Dollar helped April Gold rally ...

Daily Futures Commentary February 5, 2010

2010-02-05T13:06:00Z

Friday, February 5, 2010

Today’s U.S. Non-Farm Payrolls Report appears to be taking a backseat to the fear that sovereign debt woes in the Euro Region will escalate. Traders continue to monitor the financial difficulties in Greece while keeping one eye on the key U.S. jobs report. This morning’s report is expected to show that 25,000 jobs were added last month. This is down from a guess of 40,000 earlier in the week.

Key retracement levels were violated in the March E-mini S&P 500 yesterday. Look for continued weakness with 1069.50 the nearest resistance. The charts indicate there is room to the downside with 1021.00 a potential near-term target. Today’s jobs data will have to blow away estimates or a solution to the fiscal problems in Greece will have to be reached in order to trigger a rally.

March Treasury Bonds continued higher overnight. Key support at 118’24 is holding which could trigger a rally to 119’24. A higher than expected jobs report will trigger a break in this market provided traders decide to focus on the economic outlook rather ...

Daily Futures Commentary February 4, 2010

2010-02-04T13:09:00Z

Thursday, February 4, 2010

Commodity and stock markets are trading lower overnight as risk aversion is driving investors toward safer, lower-yielding assets. U.S. economic reports may have to take a backseat today as traders express their concerns with growing European sovereign debt issues by selling off higher risk assets. Trading may be volatile today as thin conditions ahead of tomorrow’s U.S. Non-Farm Payrolls Report continue to be the highlight.

The key level to watch in the March E-mini S&P 500 is 1084.50. Holding this level could attract buyers which will limit losses. A failure to build support at this level is likely to pressure this market further with 1069.50 the next downside target.

March Treasury Bonds are trading higher. This market could see a sharp rise to the upside if European debt worries continue to pressure equity markets. Traders may be encouraged to buy Treasury Bonds and Notes for safety. A medium-term view indicates that 118’24 is resistance. The developing downtrend pegs 116’06 as the next downside target.

The stronger Dollar is pressuring April Gold. Selling pressure has ...

Daily Futures Commentary February 3, 2010

2010-02-03T13:50:00Z

Wednesday, February 3, 2010

U.S. stocks markets are trading flat ahead of this morning’s ADP Employment Report. Expectations are for this report to show that 30,000 jobs were lost during the last month. This is better than the 84,000 lost in December. Today’s ISM Non-Manufacturing Index Report should be a market mover today. Traders are looking for this index to cross over the important 50 barrier. A number higher than 50 indicates upside momentum.

The March E-mini S&P 500 is on target to test a major retracement zone at 1109.25 to 1118.25. A retracement to 1084.00 must hold if tested. The March E-mini Dow has an upside target of 10341. Look for support on a pullback to 10130. The March E-mini NASDAQ is lagging behind the two other markets. This markets needs to regain 1774.50 to show strength.

April Gold surged overnight to $1126.40 before backing down. This price was inside of a retracement zone at $1120.50 to $1131.40. A weaker Dollar is necessary for this market to continue its rise. If the Dollar strengthens, then look for a pullback to ...

Daily Futures Commentary Feb 2, 2010

2010-02-02T14:59:00Z

Tuesday, Feb 2, 2010

A combination of oversold conditions and a weakening Dollar is helping to fuel a strong recovery rally in April Gold. After failing to attract fresh selling pressure following the break under the December bottom at $1076.50, this market formed a two-day support base before moving higher. Based on the short-term range of $1166.70 to $1074.40, traders should look for a retracement to $1120.50 to $1131.40.

U.S. equity markets could not follow-through to the upside overnight after yesterday’s rally. This may be indicating the possibility of a rangebound day. Last night’s news that the Bank of Australia passed on an interest rate hike could put a little pressure on the markets today. Traders are trying to decide if risk is on or off. On the bullish side, thinning volume because of this Friday’s U.S. employment report could mean the way of least resistance is up.

The March E-mini S&P 500 closed above the 50% price at 1084.50 which should help trigger further upside movement. The charts indicate a rally to 1107.00 is likely over the near-term.

...

Daily Futures Commentary February 2, 2010

2010-02-02T13:39:00Z

Tuesday, February 2, 2010

The U.S. Dollar is trading mixed against most major currencies after a volatile, two-sided overnight trade. Thinning trading conditions and position squaring ahead of this Friday’s U.S. Non-Farm Payrolls Report is having an influence on this week’s trading action.

The Reserve Bank of Australia announced overnight that interest rates would remain unchanged at 3.75%. It is being reported that this was surprise news, but the handwriting was on the wall a couple of week’s ago when China decided to begin tightening its monetary policy. This led to speculation the Australian economy would be threatened which I believe was a major influence on the RBA’s decision. The RBA wants to see how recent events affect the economy before making its next decision.

The March Euro is trading better as pressures from the financial crisis in Greece seem to be fading. Investors expect to hear more upbeat news on Wednesday when the European Union releases its official opinion on Greece’s efforts to shore up its budget. Upside momentum could take this market back to the last main bottom at ...

Daily Futures Commentary February 1, 2010

2010-02-01T13:57:00Z

Monday, February 1, 2010

U.S. equity markets are showing small gains overnight as traders begin lightening up positions ahead of this Friday’s Non-Farm Payrolls Report. Economic reports may take a backseat throughout this week as traders try to determine how the employment picture has changed during the month.

Many investors are banking on a slight increase in jobs because of government census hiring. The kicker will be whether businesses have seen enough improvement in the economy to warrant new hiring.

Investors continue to remain skittish about holding stocks because of less demand from China, problems in Greece and the Euro Zone and the prospect of weaker earnings later in the year.

Treasury futures are trading choppy overnight with a bias to the downside. Fear has been driving investors into the safety of the March Treasury Bonds and March Treasury Notes. The bigger picture still indicates that March Bonds are trading inside a major retracement zone at 118’24 to 119’24. A close under 118’24 will indicate weakness that could trigger the start of a break back to 116’06. ...

Daily Futures Commentary Jan 29, 2010

2010-01-29T13:52:00Z

Friday, Jan 29, 2010

Better GDP Report Likely to Support Equity Rally

U.S. stock indices are likely to see fresh buying today since the GDP exceeded the consensus estimate of 4.5%. What this market needs right now is a shot of confidence, and news that the economy is improving at a better rate than forecast could be exactly what investors have been waiting for. The problem is whether investors will be paying more attention to past data such as the GDP or current reports regarding sovereign debt issues in Greece and Portugal.

If the situation in the Euro Zone continues to escalate and capture the bulk of the headlines, then look for investors to turn more risk averse. This would trigger a rally in the Dollar and pressure stock indices and gold. Overnight, the March E-mini S&P 500 traded down to .618 support before mounting a short-covering rally. This level at 1069.50 is now being read as major support. Regaining the 50% level at 1084.50 will be a sign of strength and could help form of a closing price reversal bottom.

...

Daily Futures Commentary January 29, 2010

2010-01-29T13:26:00Z

Friday, January 29, 2010

The U.S. Dollar is slightly better against a basket of currencies this morning after trading in a tight and narrow range overnight. Trading action was subdued as investors await this morning’s key U.S. GDP data. The Dollar is trading higher versus the Euro, Yen and Aussie Dollar while weakening against the British Pound, Swiss Franc, Canadian and New Zealand Dollars. In addition to the GDP report, traders will also get the chance to react to the Employment Cost Index, Chicago PMI and Consumer Sentiment.

The Employment Cost Index is a measure of total employee compensation costs, including wages and salaries as well as benefits. Since the U.S. economy has become so sensitive to jobs related data, this report may carry some additional weight today. Last month’s report showed a rise in the index of 0.4%. This month, the range of this report is projected at 0.4% to 1.5% with the consensus at 0.4. Traders expect to see that continued high employment and salary freezes have kept employment costs soft.

The Chicago PMI is usually a market mover. ...

Daily Futures Commentary January 28, 2010

2010-01-28T14:02:00Z

Thursday, January 28, 2010

Stock indices could rally today following yesterday’s closing price reversal bottom. A friendly Fed statement and an upbeat speech from Obama could be the catalyst behind this rally. Investor confidence seems to have been restored which has once again generated interest in higher risk assets.

The March E-mini S&P 500 has formed a range between 1148.00 to 1078.50. This makes 1113.25 to 1121.50 a potential upside target. The charts are also indicating a possible rally to 1842.00 to 1855.50 in the March E-mini NASDAQ and to 10371 to 10445 in the March E-mini Dow.

Demand for higher yields is pressuring the March Treasury Bonds and March Treasury Notes overnight. Yesterday’s Fed report signals that it is getting closer to hiking interest rates. The news that the Fed is going to end its quantitative easing program on schedule at the end of March could put upside pressure on yields. Tuesday’s closing price reversal top which started inside a major retracement zone is helping to pressure the March Bonds. All indications are for a possible break ...

Daily Futures Commentary January 27, 2010

2010-01-27T13:42:00Z

Wednesday, January 27, 2010

U.S. equity markets are trading flat to better ahead of this afternoon’s Fed interest rate policy announcement. Traders will most likely be focused on whether the Fed votes to extend or end its mortgage buyback program as this will have a direct effect on the U.S. housing industry.

If this announcement turns out to be a non-event, then stocks could feel pressure as the focus will shift back to the possible developing slowdown in the global economy. This news has been causing traders to take risk off the table as traders seek shelter in lower risk assets.

Treasury futures are trading flat to higher. Look for Treasury futures to rise if the Fed votes to extend its mortgage buyback program. This stimulus measure has kept pressure on interest rates.

The direction of February Gold will be dependent on the direction of the Dollar. A stronger Dollar will put pressure on precious metals. Any hint at higher interest rates is likely to drive the Dollar higher and gold lower. A surprise announcement about inflation will ...

Daily Futures Commentary January 26, 2010

2010-01-26T13:30:00Z

Tuesday, January 26, 2010

U.S. equity markets are called to open lower after a volatile Asian trade triggered by a possible debt rating cut in Japan and another sign that China is serious about tightening its monetary policy.

Yesterday’s gains were erased overnight before the markets mounted a strong comeback. The activity in Asia indicates that sentiment is shifting toward aversion to risk, however the early morning comeback indicates that traders will be influenced by today’s U.S. S&P Case-Shiller Home Price Index and the Consumer Confidence Report.

Treasury futures are once again trading higher because of increased demand for safer assets. Traders leaving equity markets are flocking into the Treasuries, driving down yields. Look for March Treasury Bonds and March Treasury Notes to continue to rally as long as traders prefer to take risk off the table.

February Gold is trading lower. The stronger Dollar is helping to pressure precious metals this morning. New that China is serious about tightening their lending requirements as well as their monetary policy is also encouraging liquidation of speculative positions in precious ...

Daily Futures Commentary January 25, 2010

2010-01-25T13:28:00Z

Monday, January 25, 2010

U.S. equity markets are expected to open better this morning following last week’s hard selloff. Investors dumped stocks late last week as sentiment shifted toward less risky assets. The combination of a stronger Dollar, monetary tightening in China and a proposal by Obama to end financial institution prop trading weighed heavily on traders last week. While these conditions are expected to continue to linger this week, the bulk of the focus will be on the Fed FOMC meeting which takes place on January 27th. Traders will be looking for clues as to when the Fed will decide to begin to raise interest rates.

Treasury futures are trading lower overnight as demand for lower yielding assets dropped overnight in Asia and Europe. Demand for safety helped to lower yields and boost the March Treasury Bonds and Treasury Notes last week. This bodes well for the next auction because it looks as if the Treasury will be able to offer lower yields. Supply concerns are likely to limit gains, however.

February Gold is mounting a strong comeback following ...

Daily Futures Commentary January 22, 2010

2010-01-22T13:48:00Z

Friday, January 22, 2010

U.S. equity markets could feel downside pressure if President Obama’s plan to end trading by financial institutions becomes a law. Investors feel this proposal will have a negative impact on bank earning’s which could weaken their stock prices. In addition, the proposal is making the Dollar less attractive.

Technically, the March E-mini S&P 500 changed the trend to down on the daily chart with its move through 1109.75. A retracement level at 1105.00 stopped the slide, however. Holding this level could trigger a retracement rally to 1126.00. A break through 1105.00 could send the market to 1100.00 then 1095.00.

Demand for safety is helping to lower yields and boost the March Treasury Bonds and Treasury Notes. The March Bonds penetrated a swing top at 119’08 but failed to attract follow-through buying. This market is currently trading inside the retracement zone of the 123’00 to 114’16 range. This zone is at 118’24 to 119’24. Profit-takers could come in if stocks begin to strengthen.

February Gold is still trading down despite the weaker Dollar. It looks ...

Daily Futures Commentary January 21, 2010

2010-01-21T13:29:00Z

Thursday, January 21, 2010

Despite a move by China to tighten its monetary policy, U.S. equity markets mounted a strong recovery late in the trading session on Wednesday. This served as a sign that there is plenty of money on the sidelines and that investors continue to maintain a “buy the dips” mentality.

The March E-mini S&P continues to show strong support at the .618 retracement level of 1124.00. The only obstacle in the way is the high for the year at 1148.00. Volatility has picked up considerably the past three days, highlighted by triple-digit moves in the Dow.

The market has been hit by bearish news all week, but continues to show resiliency. Although a change in trend is unlikely at this time, the S&P 500 still remains vulnerable to a short-term correction to 1105.00. Some traders may be lured into buying a dip today because of the action the past few days, but if you follow the “Rule of 3”, the next break is likely to fail, triggering a sizeable break.

Demand for safety has been ...

Daily Futures Commentary January 20, 2010

2010-01-20T13:42:00Z

Wednesday, January 20, 2010

U.S. Stock markets backed off from Tuesday’s strong closes overnight as China took moves to limit lending in an attempt to slow down the economy. The news sent shockwaves through global equity markets as the Shanghai index dropped 3%. Traders are concerned that less spending from China will derail the global economic recovery.

Last night IBM reported strong earnings but this news couldn’t carry the market. Investors may have been standing aside while awaiting the special election results from Massachusetts. The news that Republican Brown defeated the Democratic machine could pressure healthcare stocks, but insurance stocks may benefit if the current healthcare plan gets defeated.

Today could be a volatile day. The stronger Dollar indicates that investors are looking for lower yields and safety. This could weigh on higher yielding, higher risk assets like equities.

March Treasury Bonds and Treasury Notes are trading higher. Traders are driving down yields as they seek shelter from falling equity markets. If safety remains the theme throughout the day, then look for more appreciation in bonds and notes. ...

Daily Futures Commentary January 19, 2010

2010-01-19T13:41:00Z

Tuesday, January 19, 2010

U.S. equity markets are trading overnight and are expected to open slightly above near-term support. The March E-mini S&P 500 broke an uptrending Gann angle at 1132.25 which has held as support since November 27th. This is a sign of impending weakness. Short-term support is a retracement zone at 1129.00 to 1124.50. Once this zone is broken, the next downside targets will be 1105.00 and 1095.00. The fear of higher interest rates is helping to shift sentiment out of higher risk assets.

The short-term trend is up in the March Treasury Bonds, but the market appears to be stalling inside of a retracement zone at 116’28 to 117’14. Last night’s attempt to breakout to the upside appears to be failing, setting up this market for a potential closing price reversal top. For a while, the strategy used by traders has been sell bonds and buy stocks, but recent action suggests that this strategy may be shifting. Traders should be aware that it is possible that the threat of a rise in interest rates could pressure both equities and fixed income ...

Daily Futures Commentary January 15, 2010

2010-01-15T13:28:00Z

Friday, January 15, 2010

Stock Index Futures are trading lower overnight as investors are shifting out of higher risk assets. Concerns that a tighter monetary policy in China will lead to a slow down in the Chinese economy is encouraging traders to lighten up on higher yielding assets. Traders are also being cautious ahead of today’s earnings reports. Momentum has slowed down despite higher prices this week. Investors are worrying about taxes, bank fees and the healthcare package, and their possible negative impacts on the economy.

Treasury futures are trading higher this morning after a strong turnaround on Thursday. Strong demand for Treasury Bonds at yesterday’s auction helped send yields down and prices up. Falling demand for risky assets could drive more money into fixed income instruments today.

February Gold is trading lower because of the stronger Dollar. News that China’s economy may actually slow down is also triggering lower demand for raw materials. In addition, a slowdown in demand from China will lessen gold’s appeal as a hedge against inflation. The inability to rally back to $1151.00 yesterday is a ...

Daily Futures Commentary January 14, 2010

2010-01-14T14:08:00Z

Thursday, January 14, 2010

Equity markets are flat as traders await this morning’s U.S. Retail Sales Report. Based on previously released new motor vehicles sales and December Chain-Store Sales, traders should expect a healthy report. Look for retail sales to grow by 0.4% and retail sales less autos to increase by 0.2%. Today’s jobless claims report should show an increase of 3K with a range of 400K to 450K.

A bullish report is likely to trigger an upside breakout over this week’s highs. The March E-mini S&P 500 is currently in a position to take out its recent minor top at 1148.00. A weaker report may trigger a set-back to 1129.00, but investors are likely to step in to buy this break.

March Treasury Bonds sold off sharply yesterday as traders dumped safe assets in favor of higher risk assets. A bullish Retail Sales Report is likely to pressure T-Bonds today as traders will once again begin to factor in the possibility of a Fed rate hike. A weak report should be supportive if investors sell off higher risk assets. 116’05 ...