SUMMARY OF UPCOMING DATA 10/14/09
- 8:30 AM US RETAILS SALES (-2.1%, EX AUTO 0.3%)
- 10:00 AM US BUSINESS INVENTORIES (-0.9%)
- 2:00 PM FOMC MINUTES
DATA RESULTS 10/13/09
- INTEL EARNINGS SURPASS FORCAST (4TH Q $9.7B TO 10.5 B, 3RD Q NI $1.86 B, (33 CENTS PER SHARE)
US DEBT REVIEW AND OUTLOOK
U.S. TREASURIES continue to climb quietly unimpeded amid growing sentiment that U.S. interest rates will likely remain at near zero levels well into 2010. Continued support for this notion may find further support from the September FOMC meeting minutes, scheduled for release on Wednesday. Overall, the environment this week has been supportive for secure fixed income, as a lack of high supply reminders (no auctions), uncertain earnings forecasts (particularly in the financial complex), and the underlying support of potential Fed buying of Treasuries, which though coming to an end this month, could remain supportive due to efforts to keep yields down during this last major period of adjustable mortgage resets.
Even the specter of returning record Treasury auctions may be met in the near term by the weakness in the U.S. dollar, which offers foreign buyers an extra premium for purchasing long term debt. This could be a reason why there has been little defense of the dollar’s fall to yearly lows. The gains appear to be set on a shaky foundation due to vulnerability from the longer term supply issues and uncertain future for the U.S. dollar, particularly if the focus turns from the bargain buying premium to concerns regarding dwindling returns. Traders need to stay nimble and see out the markets play themselves out during these periods of opposing market forces shifting sentiment back and forth.
Technically, December U.S. Treasury Futures are poised to hit significant resistance at 121-04, which represents a key Fibonacci level. If this level offers significant resistance, it should signal a potential downturn back down to the 119-10 range. Look for the next level of upside resistance at 122-11.
US EQUITY REVIEW AND OUTLOOK
U.S. EQUITIES failed to find anything to be inspired about during Tuesday’s session. The market took its cues primarily from negative sentiment on the financial sector. The catalyst for this was an analyst downgrade of Goldman Sachs which spilled over into the entire financial sector. The weakness was offset somewhat by strength in the energy complex. Uncertainty regarding the earnings outlook for the week is continuing to drive market sentiment to take results on a case by case basis, particularly on days with light numbers of key releases.
Case in point, today Johnson & Johnson reported poor results, which dragged on the Dow Jones Index. However Intel in the aftermarket offered a better than expected forecast for 4th quarter revenues, even as the 3rd quarter numbers failed to inspire. Aftermarket trading took the positive road, with all of the major indices up significantly. Whether this holds through Wednesday’s session in the wake of reports on US retail sales and the FOMC meeting minutes will be the question.
Technically, December S&P futures may on the strength of the positive sentiment from Intel try to test their initial resistance level at 1082.00. A close above this level could lead to another move higher to 1087.00. If the 1082.00 holds, look for a pullback to 1072.00 initially, with 1066.00 and 1062.25 setting up as significant support levels. Overall, we are looking for a longer term correction that tests the 1038.00 in the December contract.
|
US DEBT FUTURES |
OPEN |
HIGH |
LOW |
CLOSE |
CHANGE |
|
US Z9 (US 30 YRS) |
120-06 |
121-04 |
120-03 |
120-29 |
+25/32nds |
|
SP Z9 (S&P 500) |
1069.00 |
1072.50 |
1063.10 |
1068.80 |
-2.70 |
Prepared by Rich Roscelli & Paul Brittain.
PLEASE EMAIL QUESTIONS OR COMMENTS TO RICH@BINVSTGRP.COM
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