American Stock Index Futures Trading Gets Bullish On Monday

American stock index futures trading continued through Memorial Day. The holiday session began in the red despite the rally in Europe, as the chaos in Japan weighed heavily on the minds of futures traders.

As of 7:10 a.m. EDT, the Dow Jones Industrials future was down 0.14 percent at 15,286. The June 13 S&P 500 future dropped 0.21 percent to 1,647 (SPY). The June 13 Nasdaq 100 future fell 0.09 percent to 2,989. Nevertheless, twelve hours later – at 7:15 pm EDT – the Dow Jones Industrial Average index future (DIA) advanced 0.11 percent to 15,324. The S&P 500 (SPY) index future rose 0.14 percent to 1,652 and the Nasdaq 100 (QQQ) future climbed 0.27 percent to 3,003.

Those of us who were readers of Mad magazine might remember the old motto of Alfred E. Newman: “What, me worry?” European investors seemed to have adopted that motto for Monday’s trading session. European investors’ “animal spirits” remained strong despite the region’s ongoing recession, as the automotive sector led a strong rally across the Eurozone (VGK). The Euro STOXX 50 Index finished Monday’s trading session with a 1.11 percent jump to 2,795 – remaining above its 50-day moving average of 2,698. Its Relative Strength Index is 57.67 (FEZ).

On London’s ICE Futures Europe Exchange, July futures for Brent crude oil advanced by 5 cents (0.05 percent) to $102.67/bbl. (BNO).

June gold futures declined by $1.90 (0.14 percent) to $1,389.90 per ounce (GLD).

In Japan, the Nikkei 225 Stock Average took a 3.22 percent nosedive to 14,142 (EWJ). In the wake of last Thursday’s stock market disaster, many analysts are admitting that stocks are overbought and that a further correction can be expected. Meanwhile, a strengthening yen continues to undermine stock prices. A stronger yen results in less-competitive prices for Japanese exports in foreign markets (FXY).

In China, environmental protection companies led a modest stock market advance after President Xi Jinping emphasized the fact that economic growth does not necessitate a compromise in environmental quality. The Shanghai Composite Index advanced 0.22 percent to 2,293 (FXI). Hong Kong’s Hang Seng Index rose 0.30 percent to 22,686 (EWH).

Technical indicators revealed that after Friday’s trading session, the S&P 500 remained far above its 50-day moving average of 1,592 after closing at 1,649 – as bears got more evidence that we could be watching the formation of a head-and-shoulders pattern, which would signal a further decline. Its Relative Strength Index fell from 62.10 to 61.61. Although both the MACD and the signal line continue soaring above the zero line (suggesting the likelihood of a further advance) the MACD has assumed a downward trajectory and has now crossed below the signal line, suggesting the likelihood of a further decline.

Bottom line: American futures traders began to feel somewhat optimistic late on Monday after Japan’s stock market swoon started Monday’s American futures trading in the red, despite Monday’s bullish trading session in Europe.

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