The U.S. stock index bulls are on a roll, as new record highs continue to be set. Prices are trending higher and there are no “strong” technical clues that market tops are close at hand. However, there are some “secondary” technical indicators that are flashing warning signals. See on the daily bar chart for the March e-mini S&P futures that prices are in a strong uptrend. However, at the bottom of the chart the Slow Stochastics indicator has moved to its highest level in the life of the contract, at the 96.00 area. Any reading above 80.00 is indicative that a market is overdone on the upside. Here are some better clues that the U.S. stock indexes would be topping out: a bearish weekly low close on a Friday; two big down days in a row; and a big increase in daily price volatility at higher levels. Keep reading my reports and you will get those early clues on price trend changes in all markets! Stay tuned!–Jim
Daily Morning Report
Friday, January 17–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mixed to firmer overnight. U.S. stock indexes are pointed toward higher openings and at record highs again when the New York day session begins. Trader and investor risk appetite remains robust amid a quieter geopolitical front. Given the low interest rate environment at present, and no signs of inflation becoming problematic any time soon, many investors reckon the only game in town is and will be buying shares.
In overnight news China, the world’s second-largest economy, had its worst annual GDP growth pace in 29 years in 2019, at 6.1%. China’s industrial production was up 6.9% in December, year-on-year, which did beat expectations. All in all, the marketplace deemed the data as more upbeat because China’s economy is picking up speed from what was seen a few months ago.
Meantime, the Euro zone consumer price index was reported up 0.3% in December from November and up 1.3%, year-on-year. Those numbers were in line with expectations but still underscore the very low inflationary environment in the major economies.
The markets are so far paying very little attention to the impeachment process of President Trump. The U.S. Senate is set for Trump’s trial, likely starting in the next couple weeks.
The key outside markets today see crude oil prices slightly up and trading around $58.75 a barrel. The U.S. dollar index is higher early today.
U.S. economic data due for release Friday includes new residential construction, industrial production and capacity utilization and the University of Michigan consumer sentiment survey.
Thursday, January 16–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mixed in uneventful dealings overnight. U.S. stock indexes are pointed toward higher openings and at or near record highs when the New York day session begins. With the U.S.-China partial trade deal signed and the geopolitical front quieter this week, focus among stock market traders is on earnings reports, which have been generally upbeat. The Dow Jones Industrial average, arguably the most closely watched stock index among the general public, closed above 29,000 for the fist time ever on Wednesday. This writer remembers working on the trading floor of the Chicago Mercantile Exchange in Chicago in the spring of 1985, and the Dow at that time pushed above 1,300.00 for the first time ever.
The key U.S. data point of the day Thursday will be the retail sales report for December, as traders and investors will get a better read on the holiday shopping season. Retail sales are seen up 0.3% from November.
The key outside markets today see crude oil prices slightly up and trading around $58.00 a barrel. The U.S. dollar index is modestly down early today.
Other U.S. economic data due for release Thursday includes the weekly jobless claims report, the Philadelphia Fed business survey, import and export prices, manufacturing and trade inventories and Treasury international capital data.
The Nymex crude oil futures market has backed well down from the early-January spike high, suggesting the bulls ran out of gas and that the market has put in a near-term top. See, too, on the daily chart for February futures that a downtrend line has been penetrated on the downside and negated. Oil traders should now expect sideways-at-best price action in the near term. Stay tuned!–Jim
Wednesday, January 15–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mixed to weaker overnight. U.S. stock indexes are pointed toward slightly lower openings when the New York day session begins. The U.S. stock market bulls are pausing today after the indexes hit record highs Tuesday.
The marketplace at mid-week is focused on the U.S.-China partial trade agreement that is scheduled to be signed Wednesday in Washington, D.C. China has pledge to buy $200 billion in U.S. goods over the next two years. Specifics on what amounts spent on what products are not likely to be revealed at the signing. There is some concern in the marketplace that the trade deal will not have the U.S. lifting its trade tariffs on China imports until later this year, which has put some mild pressure on global stock markets. However, those who have followed the trade negotiations more closely say the timing of lifting of U.S. tariffs has been known by the Chinese and others for quite some time. The U.S.-China partial trade deal is expected to boost global economic growth in 2020. Still, don’t expect U.S.-China trade and other political differences to just completely disappear after the signing today.
In other overnight news, economic growth in the European Union’s workhorse country, Germany, fell to a six-year low in 2019, at only 0.6% annual expansion. Meantime, Euro zone industrial growth was up 0.2% in November but down 1.5%, year-on-year, it was reported today.
The key outside markets today see crude oil prices weaker and trading around $58.00 a barrel. The U.S. dollar index is modestly down early today.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the Empire State manufacturing survey, the producer price index, and the weekly DOE liquid energy stocks report.
Tuesday, January 14–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mixed to weaker overnight. U.S. stock indexes are pointed toward modestly lower openings when the New York day session begins. Corrective pullbacks are in order on this “turnaround Tuesday,” following recent gains that put U.S. stock indexes at record highs overnight. Trader and investor risk appetite remains robust as the geopolitical scene has quieted down markedly the past few days.
The marketplace this week is focused on the U.S.-China partial trade agreement that is scheduled to be signed Wednesday in Washington, D.C. The trade deal is expected to boost global economic growth in 2020. China Tuesday reported its exports grew by just 0.5% in 2019, compared to 10% growth in 2018, as evidence of the trade war with the U.S. damaging China’s economy. China’s imports were reported down 2.8% in 2019 compared to rising 16% in 2018.
In overnight news, the Chinese yuan appreciated to its highest level against the U.S. dollar since last summer, after the U.S. on Monday announced China was no longer on its list of currency manipulators.
The key outside markets today see crude oil prices firmer and trading around $58.50 a barrel. The U.S. dollar index is modestly up early today.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the NFIB small business optimism index, the consumer price index, real earnings and the IDB/TIPP economic optimism index.