Daily Morning Report

Monday, January 28–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

European and Asian stock markets were mostly weaker overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins. There is some risk aversion in the marketplace to start the trading week.

The U.S. government is open after being partially shut down for a month. However, the government could shut down again in mid-February if President Trump and the Democrats can’t reach a deal on the U.S. budget. Traders and investors are glad to be able to scrutinize some more fresh U.S. economic data to help the drive markets prices.

The U.S.-China trade war that has been playing out for months this week finds high-level officials from both countries meeting in Washington, D.C. There is no consensus on any progress that may or may not be made at this week’s talks. Comments from U.S. and Chinese officials have been all over the map recently.

The political situation in Venezuela is very fluid at present, with the potential for civil violence. The country is a major oil producer.

This week finds the Federal Reserve’s Open Market Committee (FOMC) meeting on Tuesday and Wednesday, with a statement on monetary policy on Wednesday afternoon. Markets could become active and volatile following the results of the meeting.

The U.K. parliament votes on the “Plan B” Brexit initiative from Prime Minister Theresa May on Tuesday.

The outside markets today see the U.S. dollar index trading near steady. Meantime, Nymex crude oil prices are lower and trading just below $53.00 a barrel.

U.S. economic reports due for release Monday includes the Chicago Fed national activity index and the Texas manufacturing outlook survey.

–Jim

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Friday, January 25–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

European and Asian stock markets were mostly firmer overnight. U.S. stock indexes are pointed toward higher openings when the New York day session begins. There are several new elements in the marketplace today that could provide some more volatility during U.S. trading hours.

The marketplace is so far taking in stride the news just out that another close friend and aide of President Donald Trump was arrested in Florida, in connection with the Russian election tampering investigation.

In other overnight news, a Dow Jones Newswires report said the Federal Reserve will likely end its unwinding of its massive U.S. securities portfolio sooner than expected. That, in effect, is another sign the Fed is backing off on tightening its monetary policy and further suggests the Fed will not raise U.S. interest rates this year.

There was more downbeat economic news coming out of the European Union today. The European Central Bank’s “Survey of Professional Forecasters” saw them lower Euro zone economic growth to 1.5% this year and in 2020. The last forecast from the group saw growth in 2019 at 1.8% and in 2020 at 1.6%. Meantime, the German Ifo business sentiment index dropped to a three-year low in January. This news comes as the Euro currency slumped to 1.5-year low against the U.S. dollar on Thursday.

The outside markets today see the U.S. dollar index trading lower on a corrective pullback from good gains Thursday that pushed prices to a three-week high. Meantime, Nymex crude oil prices are slightly higher and trading just above $53.00 a barrel.

There were several key U.S. economic reports due for release Friday, but the ongoing government shutdown has cancelled them. Traders continue to deal with a lack of fresh U.S. economic data to help them drive the markets.

–Jim

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The Nymex crude oil market is still trending up from the multi-year low scored a few weeks ago. The price uptrend on the daily chart suggests the market has put in a major low. A move in prices above solid chart resistance at $55.00 a barrel would give the bulls fresh technical power to suggest a fresh leg up in prices in the near term. It’s my bias, however, the oil prices will trade between $45.00 to $55.00 a barrel for much of 2019–barring an unexpected, major geopolitical event that could significantly impact oil prices. Stay tuned!

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

OVERNIGHT DEVELOPMENTS

European and Asian stock markets were mixed but mostly higher overnight. U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins. Traders and investors pointed to generally upbeat U.S. corporate earnings reports as supporting buying interest in equities, which has pushed the U.S. indexes to four-week highs this week. The U.S. indexes remain in near-term price uptrends on the daily bar charts.

Traders are looking ahead to the European Central Bank’s regular monetary policy meeting that will be ending soon, including ECB President Mario Draghi’s press conference after the meeting. No changes in ECB monetary policy are expected.

In other overnight news, the Euro zone Markit purchasing managers index (PMI) showed a composite reading of 50.7 in January from 51.1 in December. That’s yet another sign of a gradually slowing Euro zone economy. The January PMI reading was the lowest in five years.

Reports overnight said the Microsoft search engine “Bing” has disappeared from China’s internet users’ screens. China heavily censors the internet. This won’t help U.S.-China trade relations when the two sides hold high-level trade talks in Washington, D.C., next week.

The partial U.S. government shutdown drags on, along with the lack of U.S. economic data to drive many markets. A top Trump administration economic advisor on Wednesday said the shutdown could prompt zero growth in the U.S. economy in the first quarter of 2019.

The outside markets today see the U.S. dollar index trading higher. Meantime, Nymex crude oil prices are slightly lower and trading around $52.50 a barrel. Political turmoil in Venezuela, including the U.S. recognizing the opposition leader as leader of the country, is a potentially bullish element for the oil market. The U.S. may sanction Venezuelan oil exports.

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

–Jim

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

OVERNIGHT DEVELOPMENTS

European and Asian stock markets were mixed overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. U.S. and world stock markets were hit hard Tuesday on worries about slowing global economic growth and the ongoing trade war between the U.S. and China—the world’s two largest economies. Media reports on Tuesday that the U.S. cancelled a planned mid-level trade officials’ meeting set for this week were denied by the White House, which did allow the U.S. stock indexes to move off of their daily lows.

In overnight news, the Bank of Japan left its interest rates unchanged at its regular monetary policy meeting. However, the BOJ did lower its inflation expectations for the next two years, which continues a worldwide theme of lessening worries about problematic inflationary pressures.

Traders are looking ahead to the European Central Bank’s regular monetary policy meeting on Thursday, including ECB President Mario Draghi’s press conference.

News reports out of the annual World Economic Forum in Davos, Switzerland suggest a somewhat gloomy picture that the elite bigwigs attending are painting, and on several fronts. The U.S., Britain and China governments are not in attendance this year.

The U.S. government remains in partial shut-down mode with no agreement between the Democrats and President Trump to reopen it imminent. This is starting to drag on the U.S. economy, including the lack of fresh economic news to help drive many markets. Many of those markets are seeing some selling pressure due to the uncertainty created by the lack of fresh economic news.

The outside markets today see the U.S. dollar index trading slightly lower. Meantime, Nymex crude oil prices are firmer and trading around $53.50 a barrel.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the Johnson Redbook and Goldman Sachs weekly retail sales reports, the monthly house price index, and the Richmond Fed business survey.

–Jim

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The Euro currency bears still have the overall near-term technical advantage, but prices have been trapped in a very choppy trading range at lower levels for the past 2.5 months. The next trending price move (up or down) will occur when prices break out above the resistance line or below the support line. Otherwise, look for more choppy and sideways trading until the breakout occurs. Stay tuned!