Daily Morning Report

Friday, January 24–Jim Wyckoff’s Morning Markets Report

Asian and European stock markets were mostly up overnight. U.S. stock indexes are pointed higher openings when the New York day session begins. European markets were boosted from some upbeat economic data Friday, as the composite purchasing managers index (PMI) came in at 50.9 in January, unchanged from December. The German manufacturing PMI for January came in at 45.2 and beat market expectations. The German manufacturing PMI was reported at 43.7 in December. A reading above 50.0 suggests expansion. European traders were encouraged that economic workhorse Germany is seeing its manufacturing sector improve.

The marketplace this week has waffled on the coronavirus illness that is impacting China and has now killed at least 26 of its citizens, with nearly 1,000 contracting the illness and several cities in China on lockdown. One day the markets are spooked by the matter and then next day they seem to ignore it. Reports Friday said the breakout of coronavirus could lop off over 1% of China’s annual GDP, especially as the main holiday in China, the Lunar New Year, starts this weekend. At least one case of the virus has been found in the U.S. and one has been reported in Singapore. The U.S. State Department on Thursday advised U.S. citizens to reconsider traveling to the impacted regions of China. It’s likely this situation will get worse before it gets better.

The key outside markets today see crude oil prices weaker and trading around $55.35 a barrel. Prices Thursday hit a two-month low as prices are in a steep near-term downtrend.
Meantime, the U.S. dollar index is higher and hit a seven-week high overnight, as the USDX is trending up.

U.S. economic data due for release Friday includes the U.S. flash services PMI and the manufacturing PMI.

–Jim

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Thursday, January 23–Jim Wyckoff’s Morning Markets Report

Asian and European stock markets were mostly down overnight. U.S. stock indexes are pointed toward weaker openings when the New York day session begins. There is some risk aversion creeping back into the world marketplace late this week. The coronavirus impacting China has now killed 17 citizens there as China has locked down the city of 10 million people, Wuhan, reports said. At least one case of the virus is in the U.S. President Trump’s trade threats against the European Union in an interview in Davos on Wednesday are also unsettling European traders.

The key European event today will be the regular monetary policy meeting of the European Central Bank, the results of which should be out soon, as of this writing. No change in ECB policy is expected but the press conference from ECB President Lagarde will be closely monitored.

The key outside markets today see crude oil prices down and trading around $56.00 a barrel. The U.S. dollar index is near steady early today.

U.S. economic data due for release Thursday includes the weekly jobless claims report, leading economic indicators, the weekly DOE liquid energy stocks report, and the Kansas City Fed manufacturing survey.

–Jim

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The corn and soybean bulls have faded recently but the wheat market bulls are strong, pushing futures prices to multi-month highs recently. The big question on wheat traders’ minds: Can wheat futures prices continue to rally at the same time corn and soybean prices trend sideways to lower? Veteran grain traders think this scenario cannot last long. However, at present, the price trend in wheat futures is up, and “the trend is your friend” in trading markets. Stay tuned!–Jim

Wednesday, January 22–Jim Wyckoff’s Morning Markets Report

Asian and European stock markets were mixed overnight. U.S. stock indexes are pointed toward firmer openings and new contract and record highs when the New York day session begins.

Focus at mid-week is on the World Economic Forum annual meeting in Davos, Switzerland. President Trump, in an interview with CNBC, said U.S. economic growth has been hamstrung by the Federal Reserve keeping interest rates too high, and by the grounded Boeing jetliner situation. Trump also threatened new trade tariffs on European countries that manufacture automobiles.

The global marketplace is keeping an eye on China health officials battling a coronavirus that has killed at least six with hundreds more afflicted, and is rapidly spreading. A case was reported in the Seattle, Washington area Tuesday.

The markets are so far paying very little attention to the impeachment of President Trump. The U.S. Senate this week is holding hold Trump’s trial.

The key outside markets today see crude oil prices down and trading around $58.00 a barrel. The U.S. dollar index is slightly up early today.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the weekly Goldman Sachs and Johnson Rebook retail sales reports, the Chicago Fed national activity index, the monthly house price index and existing home sales.

–Jim

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Tuesday, January 21–Jim Wyckoff’s Morning Markets Report

Asian and European stock markets were weaker overnight. U.S. stock indexes are pointed toward modestly lower openings when the New York day session begins.

There is keener risk aversion in the marketplace to start the U.S. trading week Tuesday, following the Martin Luther King holiday Monday. China is now battling a coronavirus that has killed at least four with hundreds more afflicted, and is rapidly spreading. The illness, which is apparently easily contracted, is being compared with the SARS virus killed hundreds 17 years ago. Would-be travelers in China and Asia are now likely to at least curtail their activities.

There is also focus on the World Economic Forum annual meeting in Davos, Switzerland. President Trump delivered an address to the group Tuesday, mostly touting U.S. economic growth during his administration’s tenure.

At the Davos confab, the International Monetary Fund released a report that forecast global economic growth at 3.3% in 2020 and 3.4% in 2021. Those figures compare with world economic growth of 2.9% in 2019.

In other news, the closely watched German ZEW economic expectations index came in at 26.7 in January versus 10.7 in December, and better than forecasts. The reading in January was the highest in 4.5 years.

The markets are so far paying very little attention to the impeachment process of President Trump. The U.S. Senate this week will debate Trump’s trial parameters, with the trial itself likely starting afterward.

The key outside markets today see crude oil prices down and trading around $58.00 a barrel. The U.S. dollar index is slightly down early today.

There is no major U.S. economic data due for release Tuesday.

–Jim

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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