Daily Morning Report

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

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.

–Jim

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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.

–Jim

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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