Seasonal is Bullish for Stock Index Futures in December

STOCK INDEX FUTURES

S&P 500 and Dow futures advanced to new records highs in the overnight trade. However, most of the gains were given back, as President Donald Trump revived tariff possibilities on steel and aluminum imports from Brazil and Argentina. This news prompted concerns about trade tensions globally.

The 8:45 central time November PMI manufacturing index is expected to be 52.2.

There are two 9:00 reports. The November manufacturing composite index from the Institute for Supply Management is anticipated to be 49.4 and the October construction spending report is estimated to show a gain of .4%.

My view remains that the global reflation scenario will continue and easier credit conditions, although likely at a slower pace, from most of the worlds central banks are coming and will be the dominant fundamental that underpins stock index futures.

There is a seasonal tendency for December to be the strongest month of the year for stock index futures.

Expect higher prices for futures through the balance of the year.

CURRENCY FUTURES

The U.S. dollar advanced to a seven week high on Friday, as interest rate differential expectations remain slightly bullish on balance for the greenback. However, the U.S. dollar is lower today.

The euro currency is higher after a report showed a German manufacturing PMI climbed to a five-month high, although it remains firmly in contraction territory.

The British pound is lower on news that the U.K. manufacturing downturn continued in November, as output, new orders and employment fell.

INTEREST RATE MARKET FUTURES

There is no one piece of news that would account for the large decline in prices today other than a report that the People's Bank of China governor said the central bank won't resort to competitive quantitative easing, even if interest rates in other major economies approach zero.

In addition, there is a growing, but still minority belief that the global economy is stabilizing.

The Federal Open Market Committees next policy meeting will be held on December 10-11. No change in policy is likely at the Feds last policy meeting of this year.

Financial futures markets are suggesting there is a 43% probability that the FOMC will lower its fed funds rate by 25 basis points at its July 29, 2020 policy meeting. On Friday the probability was 43%.

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

INDUSTRIAL COMMODITIES

If I am correct in my belief that the global economy is stabilizing, it is likely that the industrial commodities, including copper, crude oil and lumber will advance in price in the long term.

Crude oil prices are higher today after Persian Gulf officials said Saudi Arabia will push for an extension of oil production cuts through mid-2020 at an Organization of the Petroleum Exporting Countries summit at the end of this week.

SUPPORT AND RESISTANCE

December 19S&P 500

Support 3138.00 Resistance 3159.50

December 19 U.S. Dollar Index

Support 98.020 Resistance 98.400

December 19Euro Currency

Support 1.10050 Resistance 1.10600

December 19Japanese Yen

Support .91110 Resistance .91500

December 19Canadian Dollar

Support .75080 Resistance .75380

December 19Australian Dollar

Support .6758 Resistance .6808

March 19 Thirty Year Treasury Bonds

Support 157^0 Resistance 158^30

February 19Gold

Support 1457.0 Resistance 1473.0

March 19Copper

Support 2.6450 Resistance 2.6800

January 20 Crude Oil

Support 55.30 Resistance 57.03

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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