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Alan has been a commodity analyst since 1976, focusing on the fundamental and technical aspects of precious metals, stock index, interest rate and foreign currency markets. He has authored several articles for Futures magazine and Stocks Futures and Options magazine. Alan served on the faculty of Oakton College as instructor of a course entitled “Principles of Technical Analysis.” He has been interviewed on many national television programs, appearing on the Nightly Business Report, CNBC, CNN Moneyline, Reuters Television and Web FN. In addition, he has been quoted in The Wall Street Journal, USA Today, The Bond Buyer and the Chicago Tribune and has been regularly interviewed on Chicago’s WMAQ radio business reports. Alan is currently the Senior Financial Economist with ADM Investor Services, Inc.
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STOCK INDEX FUTURES
U.S. stock index futures are higher and substantially above the overnight lows.
Researchers have begun the first study in the U.S. of an experimental drug aimed at treating the coronavirus, according to the National Institutes of Health.
The NIH is also expected by the end of April to begin testing on healthy volunteers an experimental coronavirus vaccine. A vaccine could prevent new infections, but it would not treat confirmed cases.
Mortgage applications in the U.S. increased 1.5% in the week ended February 21 from the prior week, which was down 6.4%.
The 9:00 central time January new home sales report is expected to show 710,000.
There was one encouraging sign that stock index futures may be trying to make a bottom soon. In yesterday’s trade, not all of the flight to quality vehicles were higher. In fact, the U.S. dollar and gold were lower when they normally would be expected to be higher in light of falling stock index futures. Unexplained movements in flight to quality vehicles and in spreads can often occur at extremes in market moves.
The U.S. dollar is a little higher, while the euro currency is lower.
Longer term, higher prices are likely for the U.S. dollar and lower prices are likely for the euro currency.
The next upside objective for the U.S. dollar index is 100.000.
Higher prices longer term for the greenback are likely on the belief that the Federal Reserve will be less aggressive in adding more accommodation to the banking system than other major central banks.
INTEREST RATE MARKET FUTURES
Futures are lower today in light of a partial recovery in stock index futures.
Federal Reserve speakers today are Robert Kaplan at 8:25 and Neel Kashkari at 1:00.
The Treasury will auction five notes today.
Yesterday, Federal Reserve Bank of Dallas President Robert Kaplan said events are still too fluid around the coronavirus outbreak to say that the U.S. central bank needs to lower short term interest rates.
However, financial futures markets are saying something different. Based on financial futures, currently there is 79% probability that the Federal Open Market Committee will lower its fed funds rate at its June 10, 2020 policy meeting. Yesterday the probability was 75%.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by Archer Daniels Midland Company. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.
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