Thursday, December 21–Jim Wyckoff’s morning markets report
The sell off in the U.S. stock market Wednesday afternoon may have been due in part to worries about rising inflation as major shipping companies are now re-routing their vessels around one major shipping route—the Red Sea—due to Houthi attacks on ships. The new routes are much longer and will likely raise the cost of consumer goods. Reads a Dow Jones Newswire headline today: “Higher costs due to Red Sea disruptions expected to weigh on consumers.” There are also worries that a major U.S. military presence in the Middle East, including the Red Sea, could find the U.S. in a direct military conflict with Iran, which backs the Houthis.
In other news, China’s media has reported China’s central bank is set to cut deposit rates for its state-owned banks on Friday.
The key outside markets today see the U.S. dollar index lower. Nymex crude oil prices are slightly lower and trading around $74.00 a barrel. The yield on the benchmark U.S. Treasury 10-year note is presently fetching 3.888%.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Philadelphia Fed business survey, the final estimate of third-quarter GDP, including the inflation indexes, leading economic indicators, and the Kansas City Fed manufacturing survey.
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are higher in early U.S. trading after hitting a contract high and yearly high on Wednesday. Prices Wednesday scored a bearish “key reversal” down, which is one clue that a market top is in place. The shorter-term moving averages (4-, 9- and 18-day) are still 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 4,800.00 and then at the contract high of 4,830.75. Support for active traders is seen at this week’s low of 4,743.25 and then at 4,700.00. Wyckoff’s Intra-day Market Rating: 5.5
March Nasdaq index futures: Prices are higher in early U.S. trading. Prices Wednesday scored a bearish “key reversal” down, which is one clue that a market top is in place. Shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at 17,000.00 and then at Wednesday’s contract high of 17,073.50. On the downside, shorter-term support is seen at this week’s low of 16,758.50 and then at 16,600. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are weaker in early U.S. trading, on a corrective pullback after hitting a four-month high Wednesday. 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 to bearish early today. Shorter-term technical resistance is seen at this week’s high of 124 24/32 and then at 125 even. Shorter-term support lies at this week’s low of 123 even and then at 122 even. Wyckoff’s Intra-Day Market Rating: 4.5
March U.S. T-Notes: Prices are weaker in early U.S. trading after hitting a four-month high Wednesday. 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 to bearish early today. Shorter-term resistance lies at this week’s high of 112.31.5 and then at 113.10.0. Shorter-term technical support is seen at this week’s low of 112.06.0 and then at 112.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
EURO CURRENCY
The March Euro currency futures are firmer in early U.S. trading. Bulls have the overall near-term technical advantage. The shorter-term moving averages for the Euro are bullish early today, as the 4-day is above the 9-day and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators for the Euro are bullish early today. The Euro currency finds shorter-term technical resistance at the December high of 1.1053 and then at the November high of 1.1070. Shorter-term support is seen at this week’s low of 1.0935 and then at 1.0900. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
February Nymex crude oil prices are slightly lower in early U.S. trading. The shorter-term moving averages are neutral early today as the 4-day is above the 9-day and 18-day. The 9-day is below 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 this week’s high of $75.37 and then at $77.00. Look for sell stops just below technical support at $73.00 and then at this week’s low of $70.99. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
Grain futures prices were mixed but mostly weaker overnight. On tap today is the weekly USDA export sales report. Look for quieter pre-holiday trading the rest of this week. Charts remain overall bearish for corn and wheat, but the recent rallies in wheat markets suggest price bottoms are in place. Technicals are slightly bearish for soybeans and fully bearish for meal as those markets are trending down on the daily bar charts.
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