Futures Market Technical and Fundamental Recap
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
Today's Futures Analysis summary.
The way of least resistance appears to be up in the stock index futures. Equity markets seem to be looking forward to a strong economy 6 -9 months down the road. The more investors seem to be waiting for a correction; the least likely it will occur.
Now that solid support has been established in the June E-mini S&P 500 at 876.75, this market appears to be poised to challenge the high for the year at 938.25. The key to trading this market today will reading a breakout rally through this price correctly. Upside momentum has to be there when the market breaks through this level. Any hesitation will scare traders out and may trigger the start of a substantial correction back to at least 907.00. There has to be enough upside momentum to make investors think they are missing the rally. This panic buying could be strong enough to launch a huge rally today.
Don’t forget to rollover to the September Treasury Bonds and September Treasury Notes. The bias in these two markets is to the downside. Investors remain convinced that excess supply from the Treasury will keep upside pressure on interest rates. Traders are also beginning to price in the possibility of an economic recovery in the U.S. Without an exit plan from the Fed at this time, many traders feel that there will be an inflationary spike.
10-Year Note and 30-Year Bond traders are taking protection in anticipation of inflation. So far the Fed is standing by its comments that inflation will be minimal, but the market does not seem to believe it. Higher commodity prices, led by a strong surge in crude oil, are convincing traders otherwise. Without a clear exit strategy, the Fed is confusing traders. This is leading most investors to get out of financial instruments and move their money into equities.
The Dollar has lost its safe haven status as investors fear the U.S. government may lose its AAA debt rating. The more the Treasury increases U.S. debt, the more foreign investors will believe it will not be able to fund the growing debt. This will continue to weaken the U.S. Dollar.
The other major world economies are not that strong, but they have not put themselves under a tremendous debt burden like the U.S. The exception is the U.K. which has basically followed the lead of the U.S. The June British Pound is the most difficult market to understand at this time as the growing debt and weak economy does not merit the kind of rally taking place at this time.
Gains may be limited in the June Euro this week. Investors may choose to lighten up positions ahead of the European Central Bank meeting on June 4th. Depending on how the Euro Zone economic data is reported this week, the ECB may decide to cut its benchmark rate to below 1%.
The Bank of Canada is also meeting on June 4th. Expect no change in interest rates and in policy. At the last meeting, it approved a plan to apply quantitative easing to stimulate the economy, but did not implement. This proved to be a wise choice as the currency recovered on the prospect that higher crude oil would help improve the export market. The primary concern at this time is how high the BoC will let the Canadian Dollar rise. If the currency gets out of target range then it may have an adverse effect on exports.
Trading may be active during the early part of the week especially in the equity markets which have been held in a range for about a month. The key report this week is Friday’s Non-Farm Payrolls Report. Although it is a lagging indicator, there is no question the results of this report will be watched closely
July Corn finally popped through resistance at 4.34 with conviction. Traders now have their aim set for the next upside target at 4.49 1/4.
A breakout through 4.49 1/4 will also take out a major top on the weekly chart. The recent upside action makes 4.06 1/4 a new Main Bottom.
Speculators are concerned about the crop condition now that almost all of the corn has been planted. This year's plantings were below average. The late plantings also mean the crop is vulnerable to heat. Cool, wet weather may help the crop catch up to standards, but heat will put the crop under stress which may limit yields.
August Gold posted a daily reversal top which indicates the possibility of the start of a correction. A break through 975.40 will confirm the reversal top.
An uptrending Gann Angle comes in at 970.00 on Tuesday. This combines with the old top at 971.00 to create a price cluster at 971.00 to 970.00. There may be a technical bounce following a test of this level, but if this area is penetrated, it may be indicating the start of a possible retracement of the entire rally to 936.10.
By FuturesHound.com the portal for Analysis, Education and exclusive timely market Gann Analysis.
Disclaimer: Trading Futures on the margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore should not invest money that you cannot afford to lose.