Thursday, December 31–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed overnight. Asian shares were mostly up but European shares were pressured by new business restrictions imposed by the U.K. in an effort to thwart still-rising Covid-19 cases. U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins. Look for a quieter marketplace Thursday, on this last trading day of the week, of the month, of the quarter and of the year. Markets are closed for the New Year holiday on Friday.
The highlight of the U.S. trading session will likely be the release of the weekly U.S. jobless claims data, likely to show new claims just north of 800,000.
In overnight news, China’s saw a tenth month in a row of expanding manufacturing growth. The official manufacturing purchasing managers index (PMI) rose to 51.9 in December versus 52.1 in November. China’s non-manufacturing PMI for December came in at 55.7 from 56.4 in November. A reading above 50.0 suggests expansion in the sector.
The U.S. dollar index is lower and hit another 2.5-year low in early U.S. trading. The other important outside market sees February Nymex crude oil futures prices weaker and trading around $48.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note futures is currently around 0.923%.
U.S. economic data due for release Thursday is light and includes the weekly jobless claims report.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are slightly higher in early U.S. trading. A near-term price uptrend is 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 neutral early today. Today, shorter-term technical resistance comes in at the record high of 3,747.75 and then at 3,775.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at 3,700.00 and then at this week’s low of 3,676.00. Wyckoff’s Intra-day Market Rating: 5.5
March Nasdaq index futures: Prices are slightly higher in early U.S. trading. Bulls 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 early today. Shorter-term technical resistance is seen at the record high of 12,918.25 and then at 13,000.00. On the downside, shorter-term support is seen at 12,750.00 and then at this week’s low of 12,655.25. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are slightly lower in early U.S. trading. Bears have the firm overall near-term technical advantage. 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 neutral early today. Shorter-term technical resistance is seen at this week’s high of 172 30/32 and then at 173 14/32. Shorter-term support lies at 172 10/32 and then at 172 even. Wyckoff’s Intra-Day Market Rating: 4.5
March U.S. T-Notes: Prices are slightly lower in early U.S. trading. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at the overnight high of 138.00.0 and then at 138.03.0. Shorter-term technical support lies at last week’s low of 137.20.0 and then at 137.15.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
EURO CURRENCY
The March Euro currency futures are weaker on profit taking after hitting a two-year high on Wednesday. Bulls are in solid technical control. The shorter-term moving averages for the Euro are bullish early today, as the 4-day is above the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators for the Euro are neutral early today. The Euro currency finds shorter-term technical resistance at this week’s high of 1.2330 and then at 1.2350. Shorter-term support is seen at Wednesday’s low of 1.2271 and then at 1.2233. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
February Nymex crude oil prices are weaker in early U.S. trading. 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 this week’s high of $48.96 and then at the December high of $49.43. Look for sell stops just below technical support at this week’s low of $47.50 and then at $47.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
US grain futures are mixed to higher in early U.S. pre-market trading, with corn soybeans and wheat futures hitting new contract and multi-year highs. The grain markets bulls have the solid overall near-term technical advantage amid price uptrends in place on the daily charts. This bull run in the grains is a major run and one that only occurs once or twice in a decade. The supply and demand fundamentals in the grains continue to favor the bulls, especially a huge appetite from China. Dry weather in South American growing regions is also bullish for corn and soybeans. The corn and soybean markets are still over-extended on a short-term technical basis and are due for more corrective pullbacks in their uptrends.
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