Friday, December 13–Jim Wyckoff’s Morning Markets Report
Asian and European stock indexes were higher overnight. The U.S. stock indexes are pointed toward higher openings and new record highs when the New York day session begins. Risk is back on the table for traders and investors following reports the U.S. and China are very close to a partial trade deal, as was reported at midday Thursday, including a tweet from President Trump that implied a deal was imminent. However, the marketplace is now wondering why there is “radio silence” coming from Chinese officials Friday. Some media outlets in China were saying any deal that is agreed upon must be fair. Reports said the apparent partial trade deal involves China purchasing $50 billion of U.S. goods—mostly agricultural products—in 2020, in exchange for the U.S. not imposing new tariffs on Chinese imports into the U.S., and cutting in half the current tariffs in place.
The general election in the U.K. Thursday saw Prime Minister Boris Johnson and conservative policies score a solid victory. Johnson then proclaimed the U.K. will exit the European Union (Brexit) by the end of January. This has taken the Brexit uncertainty off the table, after such had been lingering for quite some time. U.K. stocks surged on the news, as did the British pound.
One feature in the markets late this week is rising global bond yields, as assets have moved from the safer-haven fixed income sector into stock markets.
The key “outside markets” today see the U.S. dollar solidly lower and hitting a nearly five-month low. Meantime, Nymex crude oil prices are higher and trading around $60.00 a barrel.
U.S. economic data due for release Friday includes retail sales, import and export prices, and manufacturing and trade inventories.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are higher and hit a new contract and record high in early U.S. trading. Bulls have the solid overall near-term technical advantage. 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 bullish early today. Today, shorter-term technical resistance comes in at the overnight contract high of 3,188.25 and then at 3,200.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 3,150.00 and then at 3,140.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.5
March Nasdaq index futures: Prices are up and hit a contract and record high in early U.S. trading. Bulls have the solid 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 bullish early today. Shorter-term technical resistance is seen at the overnight contract high of 8,549.00 and then at 8,600.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 8,508.00 and then at 8,450.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are slightly weaker in early U.S. trading after hitting a four-week low overnight. Bulls and bears are on a level overall near-term technical playing field amid recent choppy trading. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at 157 even and then at 157 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at 156 even and then at the overnight low of 155 23/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
March U.S. T-Notes: Prices are steady in early U.S. trading after sinking to a 4.5-month low overnight. Bears have gained the overall near-term technical advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term support lies at 128.00.0 and then at the overnight low of 127.29.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at 128.16.0 and then at 128.24.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 4.5
U.S. DOLLAR INDEX
The March U.S. dollar index is solidly down and hit a nearly five-month low overnight. Bears have the overall near-term technical advantage. The shorter-term moving averages for the dollar index 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 dollar index are bearish early today. The dollar index finds shorter-term technical resistance at 96.600 and then at 97.000. Shorter-term support is seen at the overnight low of 96.295 and then at 96.000. Wyckoff’s Intra Day Market Rating: 3.5
NYMEX CRUDE OIL
January Nymex crude oil prices are higher and hit a three-month high of $60.00 in early U.S. trading. Bulls have the near-term technical advantage and are keeping in place a 10-week-old uptrend on the daily bar chart. 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 early today. Look for buy stops to reside just above technical resistance at $61.00 and then at $62.00. Look for sell stops just below technical support at the overnight low of $59.30 and then at this week’s low of $58.11. Wyckoff’s Intra-Day Market Rating: 6.5
GRAINS
US grain futures prices were higher overnight. Corn was up around 5 cents, soybeans 12 cents higher and wheat up 2 to 4 cents. Grain traders are a bit bulled up late this week following reports the U.S. and China are very close to a partial trade deal, as was reported at midday Thursday, including a tweet from President Trump that implied a deal was imminent. However, the marketplace is now wondering why there is “radio silence” coming from Chinese officials Friday. Some media outlets in China were saying any deal that is agreed upon must be fair. Reports said the apparent partial trade deal involves China purchasing $50 billion of U.S. goods—mostly agricultural products—in 2020, in exchange for the U.S. not imposing new tariffs on Chinese imports into the U.S., and cutting in half the current tariffs in place. Don’t be surprised if there another twist over the weekend in this ongoing drama. The decisive election victory by the UK’s Boris Johnson also took away the global uncertainty regarding Brexit, which is also lifting grain traders’ spirits late this week. Grain traders are also pleased with mostly upbeat U.S. grain export sales activity that was reported Thursday. Grain traders are looking more closely at weather in South American crop-growing regions. While there are no major problems at present, there are some dry pockets traders are monitoring to see if the dryness persists.
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