U.S. Cash Open: Factory Orders In Focus

Posted Tuesday, September 5, 2017 by
Shain Vernier • 2 min read

Fresh off of the Labor Day weekend, the U.S. equities trade is in full swing. Today’s session ought to be an interesting one impacted by several extraordinary issues. North Korea is dominating headlines, as is the potential for another category four hurricane to make landfall on the East Coast of the United States.

When taken together, these news items are likely to increase participation in U.S. equities and commodities. Volatility creates opportunity and increases risk, so there is definitely an extra emphasis on money management for the coming sessions.


Economic Data

We have a few economic data releases out this morning:

Event                                                                Previous            Projected           Actual

ISM NY Index-Business Conditions (Aug)           62.8                   NA                      56.6

Factory Orders (MoM, July)                                 3.2%                  -3.3%                -3.3%

Factory Orders is the most important of these metrics. It came in as projected, but runs counter-intuitive to last week’s positive GDP numbers.

These stats are more fuel for today’s sell off in the DJIA. During the first hour of trading, the DJIA is down 100 points and the S&P 500 is largely rotational.


September E-Mini S&P 500 Futures


E-Mini S&P Daily ChartSeptember E-mini S&P 500 Futures-Daily Chart


The E-mini S&P futures are stuck in no man’s land right now. The open yesterday was gap down after the nuclear tests from North Korea over the weekend. Today we are simply filling in the gap.

A few key technicals:

  • August’s high of 2488.50 will be crucial to this market

  • The 38% retracement of the current 5 session winning streak at 2457.50

  • Bolling MP/SMA crossover shows a change in intermediate term sentiment

Bottom line: I expect this market to trade sideways between the 38% level and August’s high for the near future. This is likely to give us a rotational trade setup.

Technically, U.S equities remain in a bullish state. However, given the current news cycle, this market is capable of anything. For now, I am watching the news wires closely. In the event that the U.S. retaliates against North Korea, there will be a pronounced sell off in the S&P 500 and a run to safe-havens.

In my opinion, it is best to let this market settle a bit before engaging fully.

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