Daily Morning Report

Friday, March 8–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

Asian and European stock markets were mostly lower overnight. U.S. stock indexes are also pointed toward lower openings when the New York day session begins. Chinese stocks had their worst daily performance in five months Friday following a bearish report on exports. In February, Chinese exports dropped a shocking 20.7% from the same period a year ago. Imports in the period were down 5.2%. The data underscored the damage inflicted on the world’s second-largest economy from the trade war with the U.S. Possibly somewhat mitigating those dour numbers is the fact that long Chinese public holidays in the period can distort the numbers.

Also overhanging the marketplace is the surprising announcement by the European Central Bank on Thursday that it is providing additional liquidity to the Euro zone banking system to try to stimulate the listing Euro zone economy. The ECB also significantly reduced its forecast for Euro zone GDP to just 1.1% growth in 2019, from a forecast of a 1.7% gain it made in December.

Not surprisingly, what just a few days ago seemed like a “done deal” on a U.S.-China trade agreement, there are now reports that some Trump administration officials say an agreement is not a certainty.

Focus of the marketplace today is also on the U.S. March jobs report from the Labor Department, due out Friday morning. That’s arguably the most important U.S. economic data point of the month. The key non-farm payrolls number is forecast to come in at up 180,000. The ADP national employment report for February, released on Wednesday, showed a rise of 183,000, which was close to market expectations for a rise of 185,000.

The key outside markets today see the U.S. dollar index weaker on a corrective pullback after hitting a new high for the year on Thursday. Nymex crude oil prices are lower and trading just below $56.00 a barrel.

The other U.S. economic report due for release Friday is new residential construction.

–Jim

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See on the daily bar chart for the June S&P e-mini stock index futures that prices are still in an uptrend, but that uptrend could be “rolling over” and dying. See at the bottom of the chart that the Moving Average Convergence Divergence (MACD) index has recently produced a bearish line crossover signal for the first time since December. U.S. stock index bulls need to step up and show some power very soon or the price uptred will be negated. Stay tuned!

Thursday, March 7–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

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

On the U.S.-China trade dispute front, some downbeat comments from a U.S. trade official regarding the ability of the world’s two largest economies to come to an agreement has somewhat dented worldwide trader and investor risk appetite.

In overnight news, the Euro zone fourth-quarter gross domestic product was reported at up 0.2% from the third quarter and up 1.1%, year-on-year. Those figures were mostly in line with market expectations but show an anemic Euro zone economy.

Traders are awaiting the outcome of today’s European Central Bank regular monetary policy meeting. The ECB is not expected to change its interest rates at this meeting, but ECB President Mario Draghi is expected at his press conference after the meeting to make reference to a more accommodative ECB money policy in the coming months, in order to stimulate the Euro zone economy.

The U.S. March jobs report from the Labor Department is due out Friday morning. That’s arguably the most important U.S. economic data point of the month. The key non-farm payrolls number is forecast to come in at up 180,000. The ADP national employment report for February, released on Wednesday, showed a rise of 183,000, which was close to market expectations for a rise of 185,000.

The key outside markets today see the U.S. dollar index near steady. The greenback bulls have gained technical strength recently. Nymex crude oil prices are firmer and trading around $56.50 a barrel.

U.S. economic reports due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, revised productivity and costs, monthly chain store sales, and consumer credit.

–Jim

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Wednesday, March 6–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

Asian and European stock markets were narrowly mixed overnight. U.S. stock indexes are pointed toward slightly lower openings when the New York day session begins. The world marketplace remains in a generally “risk-on” mood.

Traders and investors are awaiting U.S. trade data due to be released shortly, as it could provide clues on the impact on the U.S. economy from the U.S.-China trade war. The consensus forecast for the U.S. trade deficit in December is $57 billion, overall.

In overnight news, the Paris-based OECD think tank released a report saying a finalized U.S.-China trade deal is not likely to give the world economy a significant boost. The report said even if a deal is reached between the world’s two largest economies, there will remain uncertainty over matters that the trade deal is not likely to address, such as China’s rules for U.S. companies doing business in China. The OECD also reduced its growth projections for most of the major world’s economies for this year and in 2020. The report predicts overall world economic growth at 3.3% this year, which is down from the OECD’s last projection in November of 3.5% growth for 2019.

Attention of the marketplace is turning to the European Central Bank’s regular monetary policy meeting on Thursday. The ECB is expected to loosen its purse strings and provide more low-interest financing to Euro zone banks in order to stimulate an anemic Euro zone economy.

The U.S. March jobs report from the Labor Department is due out Friday morning. That’s arguably the most important U.S. economic data point of the month. The key non-farm payrolls number is forecast to come in at up 180,000.

The key outside markets today see the U.S. dollar index slightly firmer. The greenback bulls have regained technical strength recently. Nymex crude oil prices are lower and trading around $56.00 a barrel.

U.S. economic reports due for release Wednesday include the weekly MBA mortgage applications survey, the ADP national employment report, the international trade in goods and services report, the Federal Reserve’s beige book, and the weekly DOE liquid energy stocks report.

–Jim

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Many years ago I used to work on the trading floor of the Chicago Board of Trade, and the veteran grain traders would tell me to keep a close eye on soybean meal futures, as it many times will lead soybeans in trending price moves, including trend reversals. The price action on the daily chart for May soybean meal futures the past couple days shows a potential selling “exhaustion tail,” whereby the bears just run out of gas and the downtrend stops. However, a downtrend line is still in place on the daily chart for May meal. This week’s price action in soybean meal futures will be extra important for soybean futures. If meal can close out the week in strong fashion, including negating the downtrend line on the chart, then such would be a solid technical clue that the soybean meal and soybean markets have put in bottoms and can at least trend sideways, if not sideways to higher, in the coming weeks and few months. Stay tuned!

Tuesday, March 5–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

Asian and European stock markets were mixed overnight. U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins. U.S. stock indexes are at multi-month highs and enjoying price uptrends on the daily bar charts.

In overnight news, the unofficial China purchasing managers’ index (PMI) for February came in at its lowest level since October. China also on Tuesday lowered its projected gross domestic product growth for the year. The National People’s Congress lowered its 2019 GDP growth estimate to a rate of 6.0% to 6.5%, from 6.5%. Chinese economic officials also pledged to continue to support the manufacturing sector and emerging businesses, including new deficit spending and tax cuts. The trade war with the U.S. the past year has dented the Chinese economy, which in turn has likely made Chinese leadership keen to end its trade war with the U.S. China is holding its National People’s Congress annual conference this week.

Attention of the marketplace later this week will be on the European Central Bank’s regular monetary policy meeting on Thursday. The ECB is expected to loosen its purse strings and provide more low-interest financing to Euro zone banks in order to stimulate an anemic Euro zone economy.

The U.S. March jobs report from the Labor Department is due out Friday morning. That’s arguably the most important U.S. economic data point of the month. The key non-farm payrolls number is forecast to come in at up 180,000.

The key outside markets today see the U.S. dollar index slightly firmer. The greenback bulls have regained some technical strength recently. Nymex crude oil prices are slightly down and trading around $56.50 a barrel.

U.S. economic reports due for release Tuesday include the weekly Goldmand Sachs and Johnson Redbook retail sales reports, new residential sales, the U.S. services purchasing managers’ index (PMI), the global PMI, the IDB/TIPP economic optimism index, the ISM non-manufacturing survey, and the monthly Treasury budget statement.

–Jim

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