Posted By: Ilan Levy-Mayer Vice President, Cannon Trading Futures Blog
1. Market Commentary
2. Futures Support and Resistance Levels – S&P, Nasdaq, Dow Jones, Russell 2000, Dollar Index
3. Commodities Support and Resistance Levels – Gold, Euro, Crude Oil, T-Bonds
4. Commodities Support and Resistance Levels – Corn, Wheat, Beans, Silver
5. Futures Economic Reports for Tuesday October 27, 2015
For 2015 I would like to wish all of you discipline and patience in your trading!
Oil prices declined more than 6% this week with WTI retreating back towards one month lows after looking poised to break out above the $50 earlier this month. The weekly API and DoE inventory surveys both reported another huge inventory build (+7.1 million and +8.0 million bbls, respectively), highlighting continued strong supply of crude in North America. The recent decline we have been seeing in the Baker Hughes rig count slowed dramatically this week as well.
North of the boarder, Canadians kicked off the week by voting the conservative party out of power for the first time in nearly a decade. Justin Trudeau and his Liberal Party won the national election in a landslide, obtaining an outright majority in the Parliament. The Canadian Dollar lost some ground following the news and leading into Wednesday’s BOC rate decision. As expected the BOC left rates unchanged, but also lowered their growth outlook for the remainder of this year, next year, and 2017. Gov Poloz attempted to keep things even-keeled at his press conference by highlighting the momentum build in the Canadian economy and indicating that it was withstanding the spillover effects of low oil prices. He also noted that at this point weakness in the Loonie has not been out of line with historical norms. By weeks end CAD appeared to have shrugged off the early week headlines and lower oil prices to resume an uptrend.
Third quarter earnings season kicked into high gear this week and there were some very notable bright spots. Dow components Dow Chemical, 3M, and McDonalds are all saw strong gains. McDonalds, in particular, delivered a standout report that included global sales comps growth that was more than twice the expected amount. Dow topped EPS estimates and sped up its share buybacks. 3M’s revenue missed expectations but eked out a 1.2% y/y gain, and the company launched a new restructuring effort. Tech behemoths Amazon, Microsoft, and Alphabet Inc (Google) opened up roughly 10% each on Friday post-results. Microsoft beat estimates on strength from its cloud and enterprise units. Alphabet disclosed strong aggregate paid click growth and Amazon surprised markets with a second quarter in a row of real profits and seemingly unstoppable growth in its North American cloud business.
On the other hand, American Express continued to disappoint. Shares languished after missing expectations and offering sub-par FY guidance. IBM revenue declined again and missed expectations and along with lowered guidance. Much loved Under Armor, Chipotle, and Skechers all got punished after quarterly results/guidance failed to live up to inflated expectations.
Ferrari successfully launched its IPO this week. Shares climbed as much as 17% on Wednesday after pricing the IPO $52, at the top end of the marketed range $48 to $52/share. The shares traded as high as $60.97. Coincidently on the same day General Motors offered up a strong earnings report led by a very robust North American auto market.
Despite the pretty broad based strength in stocks, the health care sector suffered another rough week. On Thursday hospital stocks got hammered after Community Health Systems cut guidance and shares crashed 35%. Several hospital and related staffing names traded down double digit percentage points on the day. Those declines came in the wake of the high drama around Valeant. On Wednesday the firm tied to the recent political concerns related to drug price gouging faced a new front when a short-selling blog claimed to have evidence that the company was potentially channel stuffing. VRX shares slid over 40% before the company and one of its high-profile investors came out and defended its business practices. Other firms tied to specialty pharmacy arrangements all came under pressure as traders shot first and asked questions later. Many were forced to put out releases clarifying that they did not use any of the types of specialty pharmacy distribution channels that raised eyebrows in the report on Valeant. Shares rebounded into week’s end after Valeant management announced a Monday morning conference call to address recent allegations.
M&A reached a frenzy in the semiconductor space. On Monday, Microsemi threw its hat into the ring to acquire PMC, offering a $2.4B cash-and-stock bid valued at $11.50, above Skyworks’ offer of $10.50/share. By Wednesday Western Digital confirmed previous press reports by announcing a deal to acquire flash memory giant SanDisk. It will pay $86.50/share almost entirely in cash, valuing Sandisk at around $19B. Western Digital will enter new debt facilities totaling $18.4 billion to fund the deal. Also on that day KLA Tencor agreed to be acquired by LAM Research in a $10.6B cash and stock deal.
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|Contract Dec. 2015||SP500||Nasdaq100||Dow Jones||Mini Russell||Dollar Index|
|Contract||Dec. Gold||Dec. Silver||Dec. Crude Oil||Dec. Bonds||Dec. Euro|
|Resistance 3||1175.7||16.18||45.85||159 8/32||1.1150|
|Resistance 2||1172.6||16.08||45.40||158 24/32||1.1113|
|Resistance 1||1168.1||15.97||44.56||158 11/32||1.1085|
|Support 1||1160.5||15.76||43.27||157 14/32||1.1020|
|Support 2||1157.4||15.66||42.82||156 30/32||1.0983|
|Support 3||1152.9||15.55||41.98||156 17/32||1.0955|
|Contract||Dec. Corn||Dec. Wheat||Nov Beans||Dec. SoyMeal||Nov. Nat Gas|
|TueOct 27||5:00am||EUR||M3 Money Supply y/y||5.0%||4.8%|
|EUR||Private Loans y/y||1.1%||1.0%|
|8:30am||USD||Core Durable Goods Orders m/m||0.0%||-0.2%|
|USD||Durable Goods Orders m/m||-1.1%||-2.3%|
|9:00am||USD||S&P/CS Composite-20 HPI y/y||5.1%||5.0%|
|9:45am||USD||Flash Services PMI||55.3||55.1|
|10:00am||USD||CB Consumer Confidence||102.5||103.0|
|USD||Richmond Manufacturing Index||-3||-5|
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