Daily Morning Report

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!

Friday, December 21–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

European and Asian stock markets were mostly lower overnight, following the solid losses in the U.S. stock market Thursday that drove the indexes to new lows for the year. U.S. stock indexes are pointed toward mixed openings when the New York day session begins. Recently, on big sell off days in the U.S. stock market, trading starts out calmer and then gets more volatile and skittish as the sessions progress. Today could offer the same.

It’s still a very keen risk-off mentality in the world marketplace heading into the weekend and into the Christmas holiday next week. Worries about slowing world economies, slumping crude oil prices, a potential U.S. government shutdown later today, and a U.S. Federal Reserve that many say is out of touch with the markets are all combining to make traders and investors very squeamish. “When in doubt, get out,” is the mantra of many stock market traders at present. On the other hand, U.S. Treasury and gold market bulls are licking their chops amid the stock market meltdown.

Gold and U.S. Treasury prices today have pulled back a bit from their highs this week, on normal downside corrections in price uptrends.

In focus today is the U.S. Congress and President Trump in a stare-down on the federal budget. Trump wants funding for a border wall with Mexico, while the Democrat-controlled U.S. House does not. The U.S. government will see a partial shutdown at midnight tonight if there is no budget agreement reached by that time. This is not the major issue for the markets, but it is “piling on” in an already-shaky situation.

The key outside markets today see the U.S. dollar index higher on a corrective bounce from solid losses Thursday that pushed prices to a four-week low. The greenback has been hit by the more dovish Federal Reserve and easing tensions in the European Union regarding Italy’s finances, which have supported the Euro currency.

Meantime, Nymex crude oil prices are modestly lower and hit a 17-month low of $45.32 a barrel overnight. There are still no early chart clues the crude oil market is near a bottom, but there is some strong longer-term chart support at the $42 area that may halt the slide.

Traders are awaiting Friday morning’s third estimate of U.S. GDP report for the third quarter, which is expected to show a rise of 3.5%, year-on-year, which is the same as the second estimate.

Other U.S. economic data due for release Friday includes the durable goods report, the University of Michigan consumer sentiment survey, personal income and outlays and the Kansas City Fed manufacturing survey.

–Jim

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Thursday, December 20–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

European stock markets were mostly lower overnight, following the solid losses in the U.S. stock market Wednesday that drove the indexes to new lows for the year. U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins. However, the U.S. stock market is very wobbly and traders are leery of another big drop.

The world marketplace is still digesting the U.S. FOMC interest rate cut on Wednesday afternoon and the comments from Fed Chairman Jerome Powell. Traders and investors deemed the Fed’s new stance as more dovish than previously, but not dovish enough to stave off what many believe is an impending global economic slowdown.

Chinese economic and political officials are holding key meetings late this week, at which major economic initiatives are being discussed and could be announced. China’s economy has been pinched this year by tariffs imposed by the U.S. on China’s imports.

It now appears less likely, but still not out of the question, the U.S. government will shut down Friday, as reports say the Trump administration is likely to come to an agreement with Congress on a budget.

The key outside markets today see the U.S. dollar index solidly lower and hitting a four-week low overnight. The greenback is being hit by the more dovish Federal Reserve and easing tensions in the European Union regarding Italy’s finances, which have supported the Euro currency.

Meantime, Nymex crude oil prices are lower and hit another 15-month low of $45.82 a barrel overnight. There are still no early chart clues the crude oil market is near a bottom, but there is some strong longer-term chart support at the $42 area that may halt the slide.

Traders are awaiting Friday morning’s U.S. GDP report for the third quarter, which is expected to show a rise of 3.5%, year-on-year.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the Philadelphia Fed business survey, and leading economic indicators.

–Jim

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The U.S. stock indexes this week have hit new lows for the year as serious near-term technical damage has been inflicted, to suggest still more selling pressure to come. There are no early technical clues to suggest the U.S. stock indexes are close to bottoming out. So much for the seasonal “Santa Claus” rally in equities! Keep reading my daily reports. It was in those reports that you were warned in October that the U.S. stock indexes had put in major market tops and the more selling pressure was likely. Stay tuned!