Daily Morning Report

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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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!