Daily Morning Report

Monday, December 31–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

European and Asian stock markets were mostly higher overnight. Some world stock markets were closed today, including China, Japan and Germany bourses. U.S. stock indexes are pointed toward higher openings when the New York day session begins. Traders and investors are in upbeat moods on this last day of 2018, following a tweet from U.S. President Trump that he and Chinese President Xi Jinping had a good telephone conversation and made “big progress” regarding their trade dispute.

There was some more downbeat economic data coming out of China today. The official manufacturers’ purchasing managers index (PMI) for December fell to 49.4 versus 50.0 in November. A reading below 50.0 suggests contraction in the sector.

The key outside markets today see the U.S. dollar index modestly lower. Meantime, Nymex crude oil prices are firmer. February crude is trading just below $46.00 a barrel.

The U.S. government has entered its second week of being partially closed. That means some U.S. economic data is being delayed amid the shutdown.

U.S. economic data due for release Monday includes the Texas manufacturing outlook survey.

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Thursday, December 27–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

European and Asian stock markets were mixed overnight, following the big gains on Wall Street Wednesday. U.S. stock indexes are pointed toward solidly lower openings when the New York day session begins, on a corrective pullback from record-setting one-day price gains seen on Wednesday. The U.S. stock indexes posted big “key reversals” up on the daily bar charts, which is a technical clue that market bottoms have been put in place. However, strong selling pressure to end this week would negate that early, bullish chart clue that market lows are in place. Price action in the U.S. stock indexes today and Friday will now be extra important from a near-term technical perspective.

Reasons given for Wednesday’s big rally in the U.S. stock market include a sharp daily rally in the crude oil market, some upbeat reports on U.S. Christmas retail sales, notions that President Trump will not fire Federal Reserve Chairman Jerome Powell, despite his public ridicule of the Fed for raising interest rates too fast, and the stock indexes just being technically oversold and being due for a corrective bounce.

Despite the big gains in the U.S. stock market Wednesday, there is still some marketplace unease over the U.S. government’s partial shutdown that shows no signs of ending any time soon. This matter is likely to contribute to an already volatile stock market that shows no signs of calming down.

The key outside markets today see the U.S. dollar index lower. Meantime, Nymex crude oil prices are weaker on a corrective pullback from solid gains scored Wednesday. February crude is trading around $45.50 a barrel after hitting a 17-month low of $42.36 a barrel on Monday.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the monthly house price index, new residential sales, and the consumer confidence index.

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I said in October that I believed major market tops were in place for the U.S. stock indexes, and that notion has been bolstered heading into the end of the year. See on the monthly continuation chart for nearby S&P 500 futures that prices are still in a longer-term uptrend, but just barely, with trend-line support coming in at the 2,300.00 area. The Stay tuned!

Wednesday, December 26–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

European and Asian stock markets were mostly lower overnight. U.S. stock indexes are pointed toward modestly higher openings when the New York day session begins, on tepid corrective bounces following more strong losses on Monday. Markets were closed Tuesday for Christmas. Some European markets remain closed Wednesday for the Christmas holiday season.

There is still some marketplace unease over the U.S. government’s partial shutdown that shows no signs of ending any time soon. President Trump said Tuesday he will keep the government shut until he gets funding for his wall. He also took a press opportunity to again criticize the Federal Reserve for raising interest rates too fast.

The key outside markets today see the U.S. dollar index higher. Meantime, Nymex crude oil prices are higher on short covering after hitting a 17-month low of $42.36 a barrel on Monday.

U.S. economic data due for release Wednesday is light and includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the Richmond Fed business survey,a nd the S&P Case-Shiller home price index.–Jim

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Monday, December 24–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

European and Asian stock markets were mostly lower overnight. U.S. stock indexes are pointed toward modestly higher openings when the New York day session begins. Look for a quieter trading session in North American markets today. U.S. stock and financial markets close early today for the Christmas holiday. Most world markets are closed on Tuesday for Christmas Day.

There is some marketplace unease over the U.S. government’s partial shutdown that could last a while. U.S. Treasury Secretary Steve Mnuchin contacted large U.S. banks over the weekend, which confirmed to Mnuchin they have liquidity, following large losses in the U.S. stock market that pushed stock indexes to new lows for the year overnight.

The markets are also a bit concerned about turmoil in the Trump administration that has seen the president’s top staff resign, including his defense secretary.

The key outside markets today see the U.S. dollar index weaker. Meantime, Nymex crude oil prices are slightly lower after hitting a 17-month low of $45.13 a barrel on Friday.

U.S. economic data due for release Monday is light and includes the Chicago Fed national activity index.

–Jim

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The Nymex crude oil market fell to a 17-month low late this week, as the steep price downtrend continues. In the past two months oil prices have dropped around 35%. There are no strong, early, near-term chart clues that a market bottom is close at hand in the crude oil market. However, there is some longer-term chart support at the $42.00 area that could put in a market bottom. But a move into the $30s per barrel cannot be ruled out. Stay tuned!