What to watch in the market this week (3/3/2014)
By Chuck Miao
Last Friday (2/28) S&P 500 Index (SPX) made another record high: SPX traded as high as 1867.92 by midday Friday (2/28), but closed at 1859.45 at the end of the day. Nevertheless, it was still a record closing high for SPX.
For the whole week (2/24 – 2/28), S&P 500 Index (SPX) was up 1.3%; Dow Jones Industrial Average (DJIA) was up 1.4%; Nasdaq composite index was up 1.0%, according to the Briefing.com.
Some economic data reported last week might have contributed to the rally in U.S. markets: U.S. fourth quarter GDP was revised down to 2.4% from 3.2%. Although this looked like a bad news, some market participants might view this as a good excuse for the Fed to keep stimulating the economy in the near term, according the Briefing.com report.
However, the escalation of tension in Ukraine over the weekend introduced fresh volatility into the global market places as Russia sent more troops into Ukraine. On Monday (3/3) SPX came down to 1830 levels from its record closing high last Friday (2/28). The volatility index (VIX) also jumped to 16 to 17 levels from 13 to 14 levels on Friday (2/28).
ISM manufacturing index reported on Monday (3/3) increased to 53.2 in February from 51.3 in January. I think the market participants may watch closely on what economic data will likely tell us in the next few days. Some of the important ones include: ISM service index that will be released on Wednesday (3/5), and February non-farm payrolls number that will be reported on Friday (3/7).
Technically, SPX traded above its 20- and 50-day moving average lines over the last few weeks. It may be possible if we see some shallow correction in the near term. I may not be surprised to see SPX coming down to test its 20-day moving average line near 1820 levels in the near term. However, I think it may be very difficult for SPX to fall below 1800 levels in the near term. We may probably see SPX challenge 1900 levels soon if the situation in Ukraine may potentially ease and the upcoming economic data may likely be better than expected.
April WTI crude oil futures (CLJ4) also broke upwards toward 105 levels on Monday (3/3) as another storm hit U.S. east coast on Monday and the tension in Ukraine increased over the weekend. However, since the 20-day moving average line for CLJ4 is still near 100 levels, I think it may be likely for the oil price to come down as the weather gets warmer and if the situation in Ukraine gets better in the next few weeks.
April gold futures contracts (GCJ4) reached 1355 on Monday (3/3), possibly due to the political uncertainty in Ukraine. If GCJ4 can successfully break its resistance at 1360 to 1370 levels, I think it may potentially challenge 1400 levels soon.
Please keep in mind that trading futures and options involves substantial risk of loss and is not suitable for all investors. There are no guarantees of profit no matter who is managing your money. Past performance is not necessarily indicative of future results. There is unlimited risk of loss in selling options. An investor must read and understand the commodity trading advisor’s current disclosure document before investing. This matter is intended as a solicitation to invest in Futures and Managed Futures.
Have a great trading week and a great 2014!
Trading futures and options involves substantial risk of loss and is not suitable for all investors. There are no guarantees of profit no matter who is managing your money. Past performance is not necessarily indicative of future results. There is unlimited risk of loss in selling options. An investor must read and understand the commodity trading advisor’s current disclosure document before investing.
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