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 September 15, 2015
For 2015 I would like to wish all of you discipline and patience in your trading!
TradeTheNews.com Weekly Market Update: Markets Stabilize Ahead of FOMC Decision
Fri, 11 Sep 2015 16:07 PM ESTThe volatility seen over the last month in global markets gave way to relative calm this week. US markets were subdued thanks to the Labor Day weekend holiday and a schedule light on major data releases. There was a notable increase in corporate debt issues as companies tried to get ahead of Fed hikes later this year, although the jury remains out on the feasibility of policy tightening at next week’s FOMC meeting. Other highlights included the excellent JOLTs job openings report, Apple’s product refresh, and various investor conferences where management teams largely indicated that prior guidance (or the low end) remains achievable despite the recent uptick in global growth concerns. Shanghai reopened for trade after a two-day holiday to another weak Chinese trade report, which inspired equity gains on hopes for more stimulus spending. US Treasury yields backed up modestly, as prices were pressured by supply from both corporate and government sales. For the week, the S&P and DJIA each gained 2% and the Nasdaq added 3%.Job openings in America hit another record high in July. The latest Job Openings and Labor Turnover Survey (JOLTS) – one of Fed Chair Yellen’s favorite gauges of labor market health – showed that job openings jumped to 5.75 million in July, the highest since the series began in December 2000. With openings at record highs, robust employment should be accompanied by a sustained pickup in wages, just another data point that suggests the Fed needs to tighten sooner rather than later. On Sunday, Fed watcher Hilsenrath wrote that dovish voter Williams told him he was anticipating liftoff this year if risks diminish, but that personally he remained on the fence regarding hikes. “All of the data that we have had up until now has been, I think, encouraging. It has been about as good, or better, than I was expecting, in terms of the U.S. economy. But there are some pretty significant headwinds that have developed,” said Williams.Chinese markets cooled off this week and volatility flattened out to a degree. On Tuesday, the August China trade surplus topped consensus but the decline in both exports and imports raised concerns. Exports fell 5.5% y/y, better than the 8.3% decline in July, while imports fell double the anticipated rate (-13.8% y/y v -6%e). The two-month slide in exports is causing extreme discomfort in Beijing, and the Shanghai Composite gained more than 5% on Tuesday and Wednesday on hope the ugly data would prompt yet another round of government stimulus. The August CPI and PPI data would complicate any PBoC action, as CPI inflation hit a one-year high of 2%, driven by surging food prices, while PPI inflation declined 5.9%. With costs higher and manufacturing prices lower, the outlook is only getting murkier.
In Japan, the Nikkei index gained 2.7% this week, snapping a four-week losing streak. Prime Minister Abe consolidated his power by winning a new mandate as leader of his party, and he urged companies to boost capital expenditures now that the Abenomics program is in full swing. Abe also announced that he wants to lower the corporate tax by at least another 3.3% in 2016 in support of his plans to get the corporate tax rate below 30%. An upward revision in the final Q2 GDP to -0.3% from the -0.4% preliminary reading eased some concerns about Japan heading toward yet another recession.
As expected, the Bank of England kept its key interest rate unchanged at 0.5% on Thursday, shrugging off recent market turmoil emanating from China. Last week’s manufacturing and services PMI readings indicated some slowing in the UK economy, although the MPC agreed that signs of a slowdown in China and turbulence in global financial markets haven’t as yet altered the outlook. McCafferty voted to raise the rate to 0.75% for the second meeting in a row. GBP/USD pushed out to two-week highs around 1.5450 after the decision. The Bank of Canada also held pat on rates and confirmed that Canada’s resource sector continues to adjust to lower prices for oil and other commodities, with some spillover to the rest of the economy.
Emerging market currencies and stocks took heat after Standard & Poor’s junked Brazil’s rating. S&P lowered Brazil’s sovereign rating to BB+ as the country’s government struggles to shore up its fiscal accounts amid a faltering economy. In August, Brazil forecasted a fiscal deficit in 2016 of 0.5% of GDP, compared with a targeted surplus of 2% at the beginning of 2015. USD/BRL rose to around 3.8593, only a few pips from the Oct 2002 high of 4.00, and shares of Petrobras sank to levels last seen in 2002. Analysts were forecasting possible downgrades for Russia, South Africa, Turkey and Colombia, all of which face similar challenges as Brazil. Credit default swaps for Brazil and South Africa hit highs last seen during the financial crisis, while currencies in Turkey, South Africa and Malaysia plunged to the weakest levels in many years against the dollar.
A widely discussed Goldman Sachs note asserted that in a bear case scenario WTI could drop to as low as $20 before rebounding. Goldman cited the huge surplus from buoyant supply and weaker demand, and claims the market is even more oversupplied than expected with the surplus likely to persist in 2016 on further OPEC production growth, resilient non-OPEC supply and slowing demand growth. WTI crude traded in a narrow range from $44 to $46 for most of the week, while Brent bounced around between $47.50 and $49.50. Gold chief commodities analyst Currie said he sees a less than 50% chance of the $20 bear case coming to fruition.
Recent market chaos had shut down new issuance in corporate bond and IPO markets, though the bond market drought appears to be easing as market turmoil subsides. In August there were 13 consecutive sessions without a single investment-grade bond issued, the longest dry spell since the financial crisis. Meanwhile, it has been nearly a month since markets have seen an IPO open for trade, the longest such period since August of 2013. Wednesday saw the busiest day for corporate issuance YTD, with around $27 billion from 17 issuers in a total of 33 tranches coming to market. Analysts said up to $100 billion in investment-grade bonds were expected to be sold in the month of September as companies look to lock in low rates ahead of Fed tightening.
Corporate news was highlighted by the refresh of Apple’s product line on Wednesday, as it updated its iPhone, iPad, and Apple TV devices. Among the new developments was the launch of a larger format iPad Pro, taking on Microsoft’s Surface Pro for professionals and featuring the Apple Pencil stylus (a peripheral device that Steve Jobs famously railed against). Apple also announced that it would, for the first time, provide its own financing option for iPhones, putting new margin pressure on wireless carriers.
In deal news this week, Strategic Hotels & Resorts agreed to be acquired by Blackstone Group for $14.25/share in cash, for a total transaction valued at $6.0 billion. Media General reached a deal to acquire Meredith Corp in a $3.1B cash and stock deal. Also, after the close last Friday Teco Energy agreed to a buyout by Emera Inc. valued at $6.5 billion in cash. Trucking and logistics name XPO Logistics reached a deal to acquire rival Con-Way in an all-cash deal valued at $2.72 billion.
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|Contract Dec. 2015||SP500||Nasdaq100||Dow Jones||Mini Russell||Dollar Index|
|Contract||Dec. Gold||Dec. Silver||Oct. Crude Oil||Dec. Bonds||Dec. Euro|
|Resistance 3||1118.2||14.84||46.20||156 10/32||1.1476|
|Resistance 2||1114.0||14.71||45.59||155 29/32||1.1434|
|Resistance 1||1111.0||14.56||44.82||155 11/32||1.1387|
|Support 1||1103.8||14.28||43.44||154 12/32||1.1298|
|Support 2||1099.6||14.15||42.83||153 31/32||1.1256|
|Support 3||1096.6||14.00||42.06||153 13/32||1.1209|
|Contract||Dec. Corn||Dec. Wheat||Nov Beans||Dec. SoyMeal||Oct. Nat Gas|
|TueSep 15||2:45am||EUR||French CPI m/m||0.4%||-0.4%|
|5:00am||EUR||German ZEW Economic Sentiment||18.3||25.0|
|EUR||ZEW Economic Sentiment||42.1||47.6|
|EUR||Employment Change q/q||0.1%||0.1%|
|8:30am||USD||Core Retail Sales m/m||0.2%||0.4%|
|USD||Retail Sales m/m||0.3%||0.6%|
|USD||Empire State Manufacturing Index||-0.5||-14.9|
|9:15am||USD||Capacity Utilization Rate||77.9%||78.0%|
|USD||Industrial Production m/m||-0.1%||0.6%|
|10:00am||USD||Business Inventories m/m||-0.2%||0.8%|
This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts here in contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgment in trading.