Daily Morning Report

Monday, January 7–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

European stock markets were mostly weaker overnight, but Asian shares were mostly up. U.S. stock indexes are pointed toward slightly lower openings when the New York day session begins, on mild corrective pullbacks from strong gains posted Friday.

Trader and investor attitudes are generally upbeat to start the trading week, following the big gains on Wall Street Friday that followed a strong U.S. jobs report released Friday morning. Federal Reserve Chairman Jerome Powell also made comments on Friday that U.S. inflation levels are not problematic and that the Fed will be flexible in its monetary policy, which also assuaged the marketplace. The U.S. and China are holding face-to-face trade talks starting today, amid optimism the world’s two largest economies will make progress on their major trade dispute.

The U.S. government shutdown is into its third week now, but the matter is garnering less attention from the marketplace and is not a front-burner issue.

The key outside markets today see the U.S. dollar index lower. Meantime, Nymex crude oil prices are higher and trading just above $49.00 a barrel. There are early chart clues the oil market has bottomed out, but the bulls still have heavy lifting to do to suggest a price uptrend can be sustained.

U.S. economic data due for release Monday includes manufacturers’ shipments and inventories, the employment trends index, and the ISM non-manufacturing report on business.

–Jim

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The gold market is trending higher and has just poked above what was strong psychological resistance at the $1,300.00 level. Bulls are in technical control at present, to suggest more sideways-to-higher price action forthcoming. The gold market’s recent gains are giving raw commodity market bulls some confidence that 2019 will see the sector show general price gains. Still, keep a close eye on crude oil prices. Crude will have to bottom out (which it may already have, as longer-term chart support at the $42.00 area stopped the decline) for the raw commodity sector to have its markets sustain price uptrends. Stay tuned!

Friday, January 4–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

European and Asian stock markets were mostly higher overnight. U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins, following big losses Thursday. There are growing hopes the U.S. and China will resolve their major trade dispute in the coming weeks, which has put a bid back into world stock indexes today. China Friday confirmed a meeting between its trade officials and U.S. trade representatives will take place next week.

Traders are awaiting what is arguably the most important U.S. data point of the month: Friday morning’s employment situation report for December from the Labor Department. The key non-farm payrolls number is seen coming in at up 176,000.

The December ADP national employment report, released Thursday morning, came in at up 271,000, which was much higher than the consensus forecast of up 178,000. The December ADP number was the highest growth rate in 2018. This has some market watchers thinking today’s more important jobs number from the Labor Department will come in higher than expected.

In overnight news, China’s central bank eased its monetary policy by cutting the reserve requirement ratio for banks. The move is intended to jumpstart China’s declining economic growth rate.

In other overnight news, the Euro zone inflation rate fell sharply in December. Consumer prices were up 1.6%, year-on-year—down from a rate of up 1.9% in November. The drop in December was mainly due to falling energy prices. Meantime, the producer price index in the Euro zone was down 0.3% in December, month-on-month, and up 4.0%, year-on-year.

The key outside markets today see the U.S. dollar index weaker. Meantime, Nymex crude oil prices are higher and trading just above $48.00 a barrel.

Other U.S. economic data due for release Friday includes the U.S. services purchasing managers index (PMI) and the global services PMI. The weekly DOE liquid energy stocks report is also due for release today.

–Jim

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Thursday, January 3–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

European and Asian stock markets were mostly down overnight. U.S. stock indexes are again pointed toward solidly lower openings when the New York day session begins. A surprising warning from Apple about slowing sales, especially in China, helped to sink global stock indexes. The Apple news only added to worries about the major economies of the world seeing significantly slower growth rates in 2019.

Currency markets in Asia were roiled overnight, led by a big jump in the Japanese yen against the U.S. dollar. The British pound and the Canadian dollar slumped against the greenback. Other currencies also experienced higher volatility. Some market watchers blamed the downbeat Apple news, released after the U.S. stock market closed on Wednesday. Others blamed thin, post-holiday trading conditions for the currency gyrations, including Japan’s markets being closed for a holiday.

There are also lingering concerns about the U.S. government shutdown that is well into its second week.

A feature in the marketplace the first couple days of the new trading year is falling U.S. Treasury yields (rising prices). U.S. T-Bond and T-Note futures prices hit new contract highs overnight. In a surprising change of sentiment, the Fed funds futures market now shows a 90% chance the Federal Reserve will stand pat on interest rates in 2019, or even make a cut. Just a couple months ago the Fed funds futures were suggesting the marketplace reckoned by 90% odds that the Fed would raise interest rates in 2019.

The key outside markets today see the U.S. dollar index weaker on a corrective pullback from Wednesday’s solid gains. Meantime, Nymex crude oil prices are slightly lower and trading just above $46.00 a barrel, on a downside correction from good gains Wednesday.

It’s a very busy day for U.S. economic data Thursday, including the weekly MBA mortgage applications survey, the Challenger job-cuts report, the ADP national employment report, the weekly jobless claims report, the ISM New York report on business, the ISM manufacturing report on business, and domestic auto industry sales.

Traders are awaiting what is arguably the most important U.S. data point of the month: Friday morning’s employment situation report for December from the Labor Department. The key non-farm payrolls number is seen coming in at a up 176,000.

–Jim

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The major U.S. stock indexes last week produced big and technically bullish “key reversals” up on the daily bar charts, whereby that day’s low was lower and high was higher than the previous day’s trading range, including setting new lows (contract lows) for the move on that day. That’s a solid chart clue that market bottoms are in place for the stock indexes. However, the bulls still have a lot of work to do in the near term to suggest price uptrends can be sustained. More likely in the near term is choppy and sideways trading conditions, with higher daily price volatility like experienced recently. Stay tuned!

Wednesday, January 2–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

European and Asian stock markets were mostly down overnight. U.S. stock indexes are pointed toward solidly lower openings when the New York day session begins, starting off the new year in inauspicious fashion. For the year 2018, the U.S. stock indexes lost around 5%, which is the worst performance in 10 years.

Global equities are reacting negatively to more weak economic data coming out of China, the world’s second-largest economy. The Caixin manufacturing purchasing managers index (PMI) fell to 49.7 in December, showing contraction in the sector (below 50.0) for the first time in a year and a half.

There was also some weaker economic data coming out of the European Union, to also un-nerve traders and investors.

Lingering concerns about the U.S. government shutdown that is well into its second week, and about the monetary policy of the Federal Reserve in the coming months, are also weighing on trader and investor sentiment to start the year.

The key outside markets today see the U.S. dollar index firmer. Meantime, Nymex crude oil prices are lower and trading around $45.00 a barrel.

U.S. economic data due for release Wednesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the U.S. manufacturing purchasing managers index (PMI) and the global manufacturing PMI.

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