Friday, January 22–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly lower overnight. U.S. stock indexes are pointed toward lower openings and are seeing routine profit taking heading into the weekend, after hitting new record highs on Thursday. It could be that trader and investor enthusiasm was dented by the new Biden administration’s focus on the still-raging pandemic in the U.S. and other parts of the world. President Biden said Thursday that in the coming weeks the U.S. death toll could surpass half a million. The government’s chief virus expert, Dr. Anthony Fauci, said at a White House press conference on Thursday that the U.S. could begin to get back to normal by the fall, which reminded the marketplace that despite vaccines rolling out there will still be some rocky months ahead, both on a human and economic toll basis.
In overnight news, the Euro zone got some downbeat economic news, as the Markit composite purchasing managers’ index (PMI)fell to 47.5 in January from 49.1 in December. A reading below 50.0 suggests contraction in the sector. A similar report coming out of Japan also dented bullish attitudes in Asia overnight. “A double-dip” recession in the Euro zone is looking increasingly inevitable, said one European market analyst.
The key “outside markets” today see the U.S. dollar index slightly higher. Meantime, Nymex crude oil futures prices are solidly lower and trading around $51.75 a barrel. The yield on the benchmark 10-year U.S. Treasury note stands at 1.10%.
U.S. economic data due for release Friday includes the U.S. flash manufacturing PMI, the services PMI, existing home sales and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are lower in early U.S. trading, on profit taking after hitting a record high Thursday. Bulls still have the solid overall near-term technical advantage. A near-term price uptrend is firmly in place on the daily bar chart. The shorter-term moving averages (4-, 9- and 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 3,849.00 and then at the record high of 3,859.75. Buy stops likely reside just above those levels. Downside support for active traders is seen at 3,800.00 and then at 3,788.50. Wyckoff’s Intra-day Market Rating: 4.0
March Nasdaq index futures: Prices are lower in early U.S. trading on routine profit taking after hitting a record high on Thursday. Bulls still have the solid overall near-term technical advantage. Shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at record high of 13,423.50 and then at 13,500.00. On the downside, shorter-term support is seen at 13,200.00 and then at 13,100.00. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are higher in early U.S. trading, on short covering. Bears have the solid overall near-term technical advantage amid a price downtrend in place on the daily chart. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at this week’s high of 169 12/32 and then at 169 22/32. Shorter-term support lies at this week’s low of 168 6/32 and then at 168 even. Wyckoff’s Intra-Day Market Rating: 5.5
March U.S. T-Notes: Prices are slightly up in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at this week’s high of 137.02.0 and then at 137.08.0. Shorter-term technical support lies at 136.25.5 and then at this week’s low of 136.21.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
EURO CURRENCY
The March Euro currency futures are firmer in early U.S. trading. Bulls have stabilized the market this week. The shorter-term moving averages for the Euro are still bearish early today, as the 4-day is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators for the Euro are bullish early today. The Euro currency finds shorter-term technical resistance at the overnight high of 1.2203 and then at last week’s high of 1.2239. Shorter-term support is seen at the overnight low of 1.2164 and then at 1.2121. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
March Nymex crude oil prices are solidly lower in early U.S. trading, on profit taking from recent gains. Bulls still have the solid overall near-term technical advantage amid a price uptrend in place on the daily chart. The shorter-term moving averages are neutral early today as the 4-day is even with the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $53.16 and then at the January high of $53.94. Look for sell stops just below technical support at the overnight low of $51.60 and then at $51.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
U.S. grain futures are sharply lower in early U.S. pre-market trading, on heavy profit taking from recent gains. The grain markets bulls still have the solid overall near-term technical advantage. How prices close on Friday—nearer the weekly highs or weekly lows—would be a good clue on the likely direction of the near-term price trends. Right now it strongly appears the grains are headed for bearish weekly low closes on a Friday, which would be a clue that near-term market tops are in place.
IMPORTANT NOTE: I am not a futures broker and do not manage any trading accounts other than my own personal account. It is my goal to point out to you potential trading opportunities. However, it is up to you to: (1) decide when and if you want to initiate any traders and (2) determine the size of any trades you may initiate. Any trades I discuss are hypothetical in nature.
Here is what the Commodity Futures Trading Commission
(CFTC) has said about futures trading (and I agree 100%):
1. Trading commodity futures and options is not for everyone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS. Before you invest any money in futures or options contracts, you should consider your financial experience, goals and financial resources, and know how much you can afford to lose above and beyond your initial payment to a broker. You should understand commodity futures and options contracts and your obligations in entering into those contracts. You should understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you.
Jim Wyckoff
