Alan Bush. January 3, 2019 STOCK INDEX FUTURES

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1 Alan Bush January 3, 2019 STOCK INDEX FUTURES Financial Forecast Stock index futures fell sharply after a leading U.S. manufacturer of cell phones issued its first sales warning in over 10 years, which heightened fears of a slowdown in China s economy and its effect on corporate profits. Stock indexes partially recovered when the stronger than expected Automatic Data Processing employment change report was released. The December ADP national employment report came in up 271,000, which was much higher than the consensus forecast of a gain of 178,000. The December figure was the highest growth rate in Initial jobless claims increased 10,000 to 231,000 in the week ended December 29. Economists expected 220,000 new claims last week. The 9:00 central time December Institute for Supply Management manufacturing index is expected to be It may take a while, but downward pressure on interest rates globally, of course not from the Fed in the short term, will ultimately rescue this market. It is better to trade other markets where the fundamentals are more lined up in the same direction, as is the case for gold and the thirty year Treasury bond futures. CURRENCY FUTURES

2 The U.S. dollar is lower as interest rate differential expectations turn slightly against the greenback. The euro currency is higher on news that growth in euro zone bank lending to businesses and households picked up in November from October. Flight to quality buying caused the Japanese yen to surge as investors moved funds into the perceived safety of the Japanese currency as a result of increased concerns about a Chinese and global economic slowdown. INTEREST RATE MARKET FUTURES Futures are higher in response to lower stock index futures, with the thirty year Treasury bond futures hitting an eleven month high. In spite of the Federal Open Market Committee, at its December 19 policy meeting saying it plans to hike its fed funds rate two times in 2019, the financial futures markets believe the Fed may not be able to hike rates even one time in Financial futures markets are predicting there is a 12% probability of a 25 basis point rate hike from the FOMC in 2019 from the current rate of 2.25%-2.50% and a 16% chance of a reduction in the fed funds rate by 25 basis points to 2.00%-2.25%. Tomorrow, Federal Reserve Chairman Jerome Powell will participate in a panel on a tobe-announced topic in monetary policy and central banking at the American Economic Association meeting in Atlanta, Georgia. Longer term, I expect the interest rate futures market will likely trend higher, led by the thirty year Treasury bond futures. Continue to trade the interest rate futures from the long side.

3 Gold futures advanced to a new seven month high today. The yellow metal is now closing in on psychological resistance at the $1, level. Gold is likely to continue to advance in the longer term. March 19 S&P 500 Support Resistance March 19 U.S. Dollar Index Support Resistance March 19 Euro Currency Support Resistance March 19 Japanese Yen Support Resistance March 19 Canadian Dollar Support Resistance March 19 Australian Dollar Support.6811 Resistance.7007 March 19 Thirty Year Treasury Bonds Support 146^24 Resistance 148^0 February 19 Gold Support Resistance SUPPORT AND RESISTANCE

4 March 19 Copper Support Resistance Financial Forecast February 19 Crude Oil Support Resistance 47.68

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