Monday, February 28–Jim Wyckoff’s Morning Markets Report
Marketplace anxiety is very high to start the trading week, following the weekend news that Russian President Putin put is military on high nuclear alert after the U.S. and Europe slapped severe sanctions on Russia for its invasion of Ukraine, including the West’s removal of various Russian banks from the important SWIFT financial system. This could further disrupt the flow of commodity trade worldwide. Both SocGen SA and Credit Suisse AG have stopped financing commodities trading from Russia. Russian and Ukrainian officials are meeting today for talks aimed at ending the four-day-old war. Ukrainian President Zelensky said he did not believe much would come out of the meeting.
Global stocks markets were lower overnight and the U.S. stock indexes are pointed toward sharply lower openings when the New York day session begins. A Barrons headline Monday reads, “Tougher sanctions spark Russian market mayhem; it’s threatening to spread.”
Gold prices are sharply higher on safe-haven demand. The Bank of Russia said it will start buying gold on the domestic precious metals market. Russia announced an end to its two-year gold-buying hiatus, as the Russian ruble sank to a record low versus the U.S. dollar. Russia’s central bank had to raise its main interest rate to 20%, from 9.5%. Russia is the fifth-largest sovereign gold owner and gold accounts for 20% of world reserves.
The marketplace wonders what Putin will do next. It appears Ukraine’s military is putting up stiffer resistance than Putin thought. And the strong economic sanctions from the West are quickly crippling the Russian economy. Russian cyberattacks on the West seem likely soon. With Putin having seemingly painted himself into a corner, the world is also now thinking about the unthinkable: a nuclear exchange between the Russia and the U.S.
The key outside markets today see Nymex crude oil prices posting sharp gains and trading around $96.00 a barrel. The U.S. dollar index is higher. The benchmark U.S. 10-year Treasury note is presently yielding 1.922%. U.S. Treasuries are also seeing safe-haven buying interest.
U.S. economic data due for release Monday includes advance economic indicators, the Chicago ISM business survey, and the Texas manufacturing survey.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are solidly down in early U.S. trading. Prices are trending lower on the daily bar chart and the bears are in firm technical control. The shorter-term moving averages (4-, 9- and 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at Friday’s high of 4,376.00 and then at 4,400.00. Support for active traders is seen at the overnight low of 4,252.00 and then at Friday’s low of 4,219.50. Wyckoff’s Intra-day Market Rating: 3.5
June Nasdaq index futures: Prices are lower in early U.S. trading. Bears are in firm control amid a price downtrend in place. Shorter-term moving averages (4- 9-and 18-day) are bearish early today. The 4-day moving below the 9-day and 18-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at last Friday’s high of 14,197.75 and then at 14,350.00. On the downside, shorter-term support is seen at the overnight low of 13,708.00 and then at 13,500.00. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are higher in early U.S. trading but well down from the overnight high. 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 156 even and then at the overnight high of 156 28/32. Shorter-term support lies at 154 even and then at last week’s low of 153 10/32. Wyckoff’s Intra-Day Market Rating: 6.0
June U.S. T-Notes: Prices are higher but well down from the overnight high 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 the 127.00.0 and then at the overnight high of 127.12.5. Shorter-term technical support lies at 126.20.0 and then at last week’s low of 126.11.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
EURO CURRENCY
The June Euro currency futures are lower in early U.S. trading. Bears have the solid overall near-term technical advantage. The shorter-term moving averages for the Euro are 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 bearish early today. The Euro currency finds shorter-term technical resistance at the overnight high of 1.1276 and then at 1.1300. Shorter-term support is seen at 1.1200 and then at last week’s low of 1.1147. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
Nymex crude oil prices are a solidly higher but well off the overnight high in early U.S. trading. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages 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 (RSI and slow stochastics) are neutral to bullish today. Look for buy stops to reside just above technical resistance at the overnight high of $99.10 and then at last week’s high of $100.54. Look for sell stops just below technical support at the overnight low of $94.82 and then at $92.50. Wyckoff’s Intra-Day Market Rating: 7.0
GRAINS
U.S. grain futures are posting strong gains in early U.S. pre-market trading, on worries the global commodity supply chain will be seriously disrupted by the Russia-Ukraine war and the sanctions slapped on Russia by the West. Look for continued high daily price volatility in the near term. On tap today is the weekly USDA grain export inspections report.
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