In this week’s coverage, we analyze the pullback in 10-year note futures, and the bullish reversal in E-mini Dow Jones Index futures. We also examine the economic reports and earnings announcements expected next week.
Commentary and charts reflect data at the time of writing (Friday, August 16 at 2 PM ET), and market conditions may change by the publication of this analysis.
September E-Mini Dow Jones Index Futures Weekly Chart
September E-mini Dow Jones Index futures rallied last week, finding support at the upward-sloping trendline that began in April this year, which is trading near the 26-week moving average. The Dow closed near the resistance area identified in March and tested in May. These two trends form an ascending triangle that traditionally is a bullish pattern. The MACD has been tangled up with its signal line for over a month; will this cross above signal a bullish trend? RSI is showing possible divergence, as every time the Dow got into the 40,700 territory, RSI made lower highs. This could indicate that upside momentum is weakening, and a bearish trend is possible. If the Dow breaks above its ascending triangle, a measured move suggests an upside target of 44,100 is possible. A break below the triangle might find support at recent lows of ~38,500 and at the top of the Ichimoku cloud (~38,000).
September E-mini Dow Jones Index futures weekly chart
September 10-Year Note Futures Weekly Chart
September 10-year note futures closed slightly higher last week, though sellers pushed this market back below the upper Bollinger band (using a 2 standard deviation band on a 26-week moving average). Look for the widening of the bands (which began four weeks ago) to suggest that an uptrend is in place if this market trades back outside the upper band. The 10-year pressed back to the top of the Ichimoku cloud, which is anticipated to be flat through November. While the MACD and its histogram have been positive for four and 10 weeks, respectively, the signal line just crossed above zero, reinforcing the recent bullish trend. With RSI at 60, the bullish trend has yet to be considered overbought and has room to continue. If the bullish trend continues, look for resistance at the 38% Fibonacci retracement level of the downtrend that began two years ago (113’29). This also coincides with an area of resistance that occurred in December last year. Further resistance might be found at the 50% Fib level (116’05). If 10-year notes turn bearish, look for support at the 23% Fib level, which coincides with the bottom of the Ichimoku cloud (111’03).
September 10-year note futures weekly chart
Companies Reporting Earnings August 19 – 23
This is a light week for companies reporting earnings as earnings season winds down in the United States (with the exception of a couple of big names reporting later in the month). On Tuesday, the housing market is informed by reports from Lowe’s in the morning and Toll Brothers after market close–hot on the heels of last Friday’s disappointing housing starts and permits information. Retail giants Target and Macy’s could shake things up Wednesday morning, and more retailers report Thursday morning (Baidu, BJ’s, and Advance Auto Parts). TD Bank also reports Thursday morning, which begins Canada’s earnings season.
| Date | Companies Earnings |
|---|---|
| Monday, August 19 | N/A |
| Tuesday, August 20 | Lowe’s Companies, Inc. (LOW): $3.96 EPS Estimate, $23.95B Revenue Estimate (BMO) Toll Brothers, Inc. (TOL): $3.28 EPS Estimate, $2.70B Revenue Estimate (AMC) |
| Wednesday, August 21 | Target Corp. (TGT): $2.17 EPS Estimate, $25.25B Revenue Estimate (BMO) Macy’s, Inc. (M): $0.31 EPS Estimate, $5.04B Revenue Estimate (BMO) Agilent Technologies, Inc. (A): $1.25 EPS Estimate, $1.60B Revenue Estimate (AMC) |
| Thursday, August 22 | Baidu, Inc. (BIDU): $2.24 EPS Estimate, $4.74B Revenue Estimate (BMO) BJ’s Wholesale Club, Inc. (BJ): $0.99 EPS Estimate, $5.16B Revenue Estimate (BMO) Advance Auto Parts Inc. (AAP): $1.00 EPS Estimate, $2.68B Revenue Estimate (BMO) TD Bank Group (TD): $1.51 EPS Estimate, $10.15B Revenue Estimate (BMO) |
| Friday, August 23 | N/A |
* indicates that this company is in the Dow Jones Index
Economic Reports for the week of August 19 - 23
This week’s most impactful event may not be an economic news report, but it might come from Jackson Hole, Wyoming, as monetary policymakers attend the Kansas City Fed’s annual event. This is especially noteworthy as it precedes what could be the highly anticipated first rate cut by the Fed since March 2020.
The Jackson Hole meeting begins Thursday and goes into the weekend. Chair Powell is slated to speak Friday morning at 10 AM ET. The Conference Board produces the Leading Indicators report on Monday, which is forecast to trend down slightly by 0.3%. The minutes from the last FOMC meeting arrive on Wednesday afternoon, which may contain insight into the different Fed Bank presidents’ opinion on monetary policy.
In addition to the weekly Jobless Claims report (forecast to be 230k, which is slightly higher than last week’s 227k), PMI Composite Flash on Thursday morning is expected to be slightly lower in both Services and Manufacturing when compared to the previous month’s report. New Homes Sales on Friday morning could have an impact on stock index futures–though it is forecast to be ticking up to 630k new homes (from 617k previously).
Be aware that Fed speakers might turn up outside this schedule, especially after the monetary policy meeting at Jackson Hole begins Thursday.
| Date | Economic Reports |
|---|---|
| Monday, August 19 | 9:15 PM ET: Fed Governor Christopher Waller Speaks 10:00 AM ET: E-Commerce Retail Sales 10:00 AM ET: Leading Indicators * 11:00 AM ET: Export Inspections 4:00 PM ET: Crop Progress |
| Tuesday, August 20 | 11:00 AM ET: Treasury Buyback Announcement 1:35 PM ET: Atlanta Fed Bank President Raphael Bostic Speaks 4:30 PM ET: API Weekly Oil Stocks |
| Wednesday, August 21 | 7:00 AM ET: MBA Mortgage Applications 10:00 AM ET: Quarterly Services Survey 10:00 AM ET: Atlanta Fed Business Inflation Expectations 10:30 AM ET: EIA Petroleum Status Report * 1:00 PM ET: 20-Year Bond Auction 2:00 PM ET: FOMC Minutes * |
| Thursday, August 22 | 8:00 AM ET: Jackson Hole Economic Symposium Begins 8:30 AM ET: Jobless Claims *** 8:30 AM ET: Chicago Fed National Activity Index 8:30 AM ET: Export Sales 9:45 AM ET: PMI Composite Flash *** 10:00 AM ET: Existing Home Sales * 10:30 AM ET: EIA Natural Gas Report * 11:00 AM ET: Kansas City Fed Manufacturing Index 4:30 PM ET: Fed Balance Sheet |
| Friday, August 23 | 10:00 AM ET: New Home Sales * 10:00 AM ET: Federal Reserve Chair Powell Speaks 1:00 PM ET: Baker Hughes Rig Count 3:00 PM ET: Cold Storage 3:00 PM ET: Cattle On Feed |
*** Market Moving Indicators
* Merit Extra Attention
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