Friday, January 15–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed overnight. U.S. stock indexes are also pointed toward weaker openings when the New York day session begins. Selling pressure in the stock markets is being mitigated by news that President-Elect Biden will implement a $1.9 trillion stimulus plan for Americans hit by the pandemic that includes bigger stimulus payments. However, the marketplace also realizes that higher personal and corporate taxes are very likely under the Biden administration. That and lingering uncertainty ahead of the U.S. change of presidential power next week is keeping the marketplace tentative.
A feature in the markets on Thursday was Federal Reserve Chairman Jerome Powell’s speech and question-and-answer session at Princeton University. Powell said he expects a strong U.S. economic recovery beginning later in 2021, and added that inflation levels could rise. The “inflation trade” has been in the spotlight early this year, as evidenced by rallying commodity markets like the grains, crude oil, copper and others.
The key “outside markets” today see the U.S. dollar index higher. Meantime, Nymex crude oil futures prices are lower and are trading around $52.75 a barrel. The yield on the benchmark 10-year U.S. Treasury note stands at 1.107%.
It’s a busy day for U.S. economic data releases Friday, including the Empire State manufacturing survey, retail sales, the producer price index, industrial production and capacity utilization and the University of Michigan consumer sentiment survey.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are weaker in early U.S. trading and not far below last week’s record high. Some routine profit taking is featured. Bulls have the solid overall near-term technical advantage. A near-term price uptrend is in place on the daily bar chart. 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 bearish early today. Today, shorter-term technical resistance comes in at 3,800.00 and then at the record high of 3,824.50. Buy stops likely reside just above those levels. Downside support for active traders is seen at the overnight low of 3,765.25 and then at 3,750.00. Wyckoff’s Intra-day Market Rating: 4.5
March Nasdaq index futures: Prices are slightly down in early U.S. trading. Bulls have the solid overall 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 bearish early today. Shorter-term technical resistance is seen at the overnight high of 12,928.00 and then at 13,000.00. On the downside, shorter-term support is seen at the overnight low of 12,830.00 and then at this week’s low of 12,767.25. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are higher in early U.S. trading on short covering. Bears have the solid overall near-term technical advantage amid a price downtrend in place on the daily chart. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at this week’s high of 169 22/32 and then at 170 even. Shorter-term support lies at the overnight low of 168 3/32 and then at the contract low of 167 11/32. Wyckoff’s Intra-Day Market Rating: 6.0
March U.S. T-Notes: Prices are higher in early U.S. trading on short covering. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at this week’s high of 136.28.0 and then at 137.00.0. Shorter-term technical support lies at the overnight low of 136.16.5 and then at 136.08.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
EURO CURRENCY
The March Euro currency futures lower in early U.S. trading. Bulls have faded recently. 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 the overnight high of 1.2178 and then at this week’s high of 1.2239. Shorter-term support is seen at this week’s low of 1.2125 and then at 1.2100. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
February Nymex crude oil prices are lower in early U.S. trading on profit taking after hitting a 10-month high Wednesday. Bulls have the solid overall near-term technical advantage amid a price uptrend in place on the daily 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 bearish early today. Look for buy stops to reside just above technical resistance at this week’s high of $53.93 and then at $54.50. Look for sell stops just below technical support at $52.00 and then at $51.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
US grain futures are mixed in early U.S. pre-market trading. The grain markets bulls still have the strong overall near-term technical advantage and are showing resilience. The grain futures are in major bull runs that could see still-higher prices, as speculators continue to show interest on the long side of the markets. However, expect much higher daily price volatility in the near term.
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