Thursday, March 3–Jim Wyckoff’s Morning Markets Report
Global stocks markets were mixed overnight and the U.S. stock indexes are pointed toward weaker openings when the New York day session begins. Risk aversion remains elevated amid the Russia-Ukraine war that has intensified. Crude oil and grain prices are soaring and that’s also stoking inflation fears. In a stunning inflation report coming from the Euro zone, its January producer price index rose 30.6%, year-on-year, mostly due to rising energy prices.
Bloomberg in an email dispatch Thursday morning reported, “With traders continuing to avoid Russian oil supplies over sanctions uncertainty, OPEC-plus not hiking their scheduled quota increase Wednesday and Iran talks still not resolved, traders are paying the biggest premium in more than two years to bet on higher prices. Aluminum, nickel, zinc and wheat all continue to rise, putting the Bloomberg Commodity Spot Index on course for its biggest weekly gain since 1960.”
Fed Chairman Powell speaks again to U.S. lawmakers Thursday, after he on Wednesday signaled a 0.25% interest rate increase is coming in a couple weeks.
On Friday comes the February U.S. employment situation report from the Labor Department. The key non-farm payrolls number is seen coming in at up 440,000 after a gain of 467,000 in January.
The key outside markets today see Nymex crude oil prices posting more strong gains and trading around $114.00 a barrel after hitting an 13.5-year high of $116.57 overnight. The U.S. dollar index is higher again today. The benchmark U.S. 10-year Treasury note is presently yielding 1.854%.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, revised productivity and costs, the U.S. services PMI, the ISM report on business services, manufacturers’ shipments and inventories, monthly chain store sales and the global services PMI.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are slightly lower 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 neutral early today. The 4-day moving average is above the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Today, shorter-term technical resistance comes in at this week’s high of 4,391.00 and then at 4,450.00. Support for active traders is seen at this week’s low of 4,252.00 and then at 4,219.50. Wyckoff’s Intra-day Market Rating: 4.5
June Nasdaq index futures: Prices are weaker in early U.S. trading. Bears are still in firm control amid a price downtrend in place. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at this week’s high of 14,324.25 and then at 14,500.00. On the downside, shorter-term support is seen at this week’s low of 13,708.00 and then at 13,500.00. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are near steady in early U.S. trading amid this week’s higher volatility. 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 technical resistance is seen at the overnight high of 156 30/32 and then at 158 even. Shorter-term support lies at Wednesday’s low of 155 19/32 and then at this week’s low of 154 31/32. Wyckoff’s Intra-Day Market Rating: 5.0
June U.S. T-Notes: Prices are higher 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 127.20.5 and then at 128.00.0. Shorter-term technical support lies at Wednesday’s low of 127.00.0 and then at this week’s low of 126.23.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
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 1.1200 and then at Tuesday’s high of 1.1270. Shorter-term support is seen at this week’s low of 1.1098 and then at 1.1050. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
Nymex crude oil prices are a higher and hit an 13.5-year high of $116.57 in overnight U.S. trading. Bulls have the strong 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 bullish today. Look for buy stops to reside just above technical resistance at the overnight high of $116.57 and then at $118.00. Look for sell stops just below technical support at $110.00 and then at $107.50. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
U.S. grain futures prices were mostly higher in early U.S. pre-market trading, with wheat leading the way and hitting a multi-year high. Grain market bulls are still strong, but there are warning signs that, from a time perspective, the markets are close to topping out. Extreme price moves at higher levels many times produce “blow off tops.” The Russia-Ukraine war will keep grain futures prices elevated. Look for continued high daily price volatility in the near term. On tap Thursday is the weekly USDA export sales 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