Thursday, December 5–Jim Wyckoff’s Morning Markets Report
Asian and European stock indexes were mostly up overnight. The U.S. stock indexes are pointed toward higher openings when the New York day session begins.
Amid a continued lack of other major, markets-moving news in the global marketplace, traders and investors remain fixated on the U.S. and China trade war and the negotiations to end it. December 15 looms as the next inflection point for the trade talks between the world’s two largest economies. Chinese officials said Thursday there will retaliation if the U.S. imposes more tariffs on Chinese imports into the U.S. at that time. The marketplace late this week remains mostly upbeat on prospects for a partial trade deal, but if recent history repeats itself the prospects will soon dim.
In other overnight news, the Euro zone reported its third-quarter gross domestic product up 0.2% from the second quarter and up 1.2%, year-on-year, which was right in line with market expectations but still paints a picture of a lukewarm-at-best Euro zone economy. Germany’s manufacturing orders were on Thursday reported down 0.4% in October and down 5.5% annually. Germany is the economic workhorse for the Euro zone.
Traders are awaiting the U.S. economic data point of the week: Friday’s employment situation report from the Labor Department. The key non-farm payroll number is expected to come in at up around 185,000 jobs. Wednesday’s ADP national employment report for November came in at up just 67,000 jobs, which is a big miss to the downside from market expectations for a rise of 150,000 and has many thinking Friday’s job’s number will be a downside miss, too.
The key “outside markets” today see the U.S. dollar index weaker. The USDX hit a four-week low Wednesday and the greenback bulls are fading. Meantime, Nymex crude oil prices are slightly higher and trading around $58.50 a barrel. The OPEC oil cartel is meeting today and is expected to continue to keep production quotas in place to try to keep oil prices propped up.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, monthly chain store sales, and manufacturers’ orders and shipments.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are firmer in early U.S. trading. While bulls still have the overall near-term technical advantage, early-week price action produced a significantly bearish “key reversal” down on the daily bar chart, which is one technical clue that a near-term market top is in place. However, gains to end the week would negate that pattern and put the bulls back in solid control. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is above 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 3,145.00 and then at the contract high of 3,159.75. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 3,108.75 and then at Wednesday’s low of 3,083.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
March Nasdaq index futures: Prices are higher in early U.S. trading. Bulls have the solid near-term technical advantage. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at 8,400.00 and then at the contract high of 8,479.25. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 8,306.00 and then at Wednesday’s low of 8,242.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are lower in early U.S. trading, on a corrective pullback from big gains scored Tuesday. Bulls and bears are on a level overall near-term technical playing field. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 159 5/32 and then at 160 even. Buy stops likely reside just above those levels. Shorter-term support lies at 158 even and then at this week’s low of 157 6/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
March U.S. T-Notes: Prices are steady in early U.S. trading. Bulls and bears are on a level overall near-term technical playing field. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term support lies at 129.08.0 and then at 129.00.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 129.20.0 and then at 129.28.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 5.0
U.S. DOLLAR INDEX
The March U.S. dollar index is weaker in early U.S. trading. Bulls still have the overall near-term technical advantage but are fading as prices hit a four-week low Wednesday. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is below the 9-day and 18-day. The 9-day is even with the 18-day moving average. Short-term oscillators for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at Wednesday’s high of 97.315 and then at 97.500. Shorter-term support is seen at this week’s low of 96.950 and then at 96.750. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
January Nymex crude oil prices are modestly higher in early U.S. trading. Bulls have the near-term technical advantage and are keeping in place a nine-week-old uptrend on the daily bar chart. The shorter-term moving averages are neutral early today as the 4-day is below the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are bullish early today. Look for buy stops to reside just above technical resistance at the November high of $58.74 and then at $59.00. Look for sell stops just below technical support at $58.00 and then at $57.50. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
US grain futures prices were mixed overnight. Corn was down 1/2 cent, soybeans around 2 cents up and wheat 1 cent higher to 1 cent lower. Traders are awaiting USDA’s weekly export sales report on Thursday morning, especially looking for stepped-up purchases from China. Traders anticipate US wheat sales of 300,000 to 700,000 metric tons (MT), US corn 500,000 to 900,000 MT and US soybeans sales at 700,000 to 1,300,000, MT. Grain traders are also awaiting the December 10 monthly USDA supply and demand report, although no updates on the size of the US corn and soybean crops will be made in this report. Those figures will come in the January report. Grain traders remain tuned into the U.S. and China trade war and the negotiations to end it. December 15 looms as the next inflection point for the trade talks between the world’s two largest economies. Chinese officials said Thursday there will retaliation if the U.S. imposes more tariffs on Chinese imports into the U.S. at that time. The marketplace late this week remains mostly upbeat on prospects for a partial trade deal, but if recent history repeats itself the prospects will soon dim. Grain traders are also looking at weather patterns in South American growing regions. There are no major problems at this time, but there are some dry pockets in Brazil and Argentina early in the growing season.
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