Daily Morning Report

Wednesday, December 19–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

European stock markets were mostly firmer overnight, while Asian shares were mostly weaker. U.S. stock indexes are pointed toward higher openings when the New York day session begins, on a rebound after the indexes fell to new low closes for the year on Tuesday. Gold, the U.S. dollar and U.S. Treasuries have been supported recently by the wobbly and volatile U.S. stock market.

Focus today is squarely on the U.S. Federal Reserve’s Open Market Committee (FOMC) meeting that began Tuesday morning and ends Wednesday afternoon with a statement. Many still expect the FOMC to raise interest rates by 0.25% this afternoon. However, the likelihood for a rate hike today has come into question after proclamations from President Trump, his closes economic advisors and noted market analysts and traders that the Fed should leave interest rates alone. Fed Chairman Jerome Powell holds a press conference after the FOMC statement. Look for active markets this afternoon, after the FOMC announcement.

Chinese economic and political officials are holding key meetings 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 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 lower on a further corrective pullback after hitting a nearly two-year high last week. Meantime, raw commodity sector leader Nymex crude oil prices are firmer on tepid short covering after careening to a 15-month low of $45.79 a barrel on Tuesday. There are still no early chart clues the crude oil market is near a bottom.

A heavy slate of U.S. economic data is also due out later this week, including the first estimate of third-quarter gross domestic product on Friday morning.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, international transactions and the current account, existing home sales, and the weekly DOE liquid energy stocks report.

–Jim

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Tuesday, December 18–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

European and Asian stock markets were mostly weaker overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins, on a tepid rebound after the indexes fell to new lows for the year on Monday. The small-cap Russell 2000 index is now in bear market territory—down 20% from its high.

In overnight news, China’s President Xi Jinping gave a hawkish speech on national television Tuesday, suggesting to some that China could take a harder line with the U.S. on trade and intellectual property issues that have the world’s two largest economies at loggerheads. Others think the Xi speech as just rhetoric aimed at shoring up his own reputation among the Chinese people.

The U.S. Federal Reserve’s Open Market Committee (FOMC) meets Tuesday and Wednesday to discuss monetary policy, while the U.S. government could be shut down at the end of the week if Congress and President Trump cannot agree on a budget plan. Most expect the FOMC to raise interest rates by 0.25% on Wednesday afternoon, at the conclusion of their meeting. The expectations for a rate hike are despite proclamations from President Trump, his closes economic advisors and noted market analysts and traders that the Fed should leave interest rates alone.

A heavy slate of U.S. economic data is also due out later this week, including the first estimate of third-quarter gross domestic product.

The key outside markets today see the U.S. dollar index weaker on a further corrective pullback after hitting a nearly two-year high last Friday. Meantime, Nymex crude oil prices are lower and hit a 15-month low of $47.84 a barrel overnight. There are still no early chart clues the crude oil market is near a bottom.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, new residential construction, and the FOMC meeting begins.

–Jim

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The U.S. dollar index is a basket of six major world currencies stacked up against the U.S. dollar. See on the daily bar chart that the USDX last week hit a two-year high amid a solid price uptrend. The greenback bulls are in solid technical control and there are no early technical clues the dollar index is about to top out. Thus, the path of least resistance heading into the new year is sideways to higher. Stay tuned!

Monday, December 17–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

European and Asian stock markets were mixed overnight. U.S. stock indexes are pointed steady to mixed openings when the New York day session begins.

An eventful trading week lies ahead. The U.S. Federal Reserve’s Open Market Committee (FOMC) meets Tuesday and Wednesday to discuss monetary policy, while the U.S. government could be shut down at the end of the week if Congress and President Trump cannot agree on a budget plan. Most expected the FOMC to raise interest rates by 0.25% on Wednesday afternoon, at the conclusion of their meeting. Also, the Chinese government could announce major new economic initiatives to stimulate the world’s second-largest economy. China’s central bank made an unexpected injection of money into its financial system on Monday.

In overnight news, the Euro zone got some more very tame inflation news, as its consumer price index for November fell 0.2% from October and was up 1.9%, year-on-year. This continues a string of world inflation data that is not considered close to being problematic.

The key outside markets today see the U.S. dollar index weaker on a corrective pullback after hitting a nearly two-year high on Friday. Meantime, Nymex crude oil prices are firmer and trading around $51.50 a barrel.

U.S. economic data due for release Monday includes the Empire State manufacturing survey, the NAHB housing market index, and Treasury international capital data.

–Jim

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Friday, December 14–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

European and Asian stock markets were mostly lower overnight, following some dour economic news out of China. U.S. stock indexes are pointed toward solidly lower openings when the New York day session begins. The S&P 500 is poised to close at a new for-the-move low close today.

It appears the U.S. trade tariffs slapped on Chinese imports are significantly hurting China’s economy. November readings on industrial production were weaker than expected, while retail sales were down to the lowest level in 15 years. China’s industrial output rose 5.4% in November, year-on-year, after a rising at a rate of 5.9% in October. Retail sales were up 8.1% in November, year-on-year, following a rise of 8.6% in October.

However, there continues to be upbeat news coming from the U.S. and China, regarding their talks on resolving their trade dispute. Reports said China has lifted tariffs on U.S. auto imports.

There was also weak economic data coming out of the European Union today. The Euro zone composite purchasing managers index (PMI) came in at 51.3 in December versus 52.7 in November. A December reading of 52.7 was expected. The weak data put pressure on the Euro currency, which in turn supported the U.S. dollar.

In other overnight news, the Russian ruble gained after Russia’s central bank slightly raised its interest rates.

The key outside markets early today find the U.S. dollar index solidly higher and hitting a nearly two-year high, on some safe-haven buying heading into the weekend. Meantime, Nymex crude oil prices are slightly down and trading around $52.50 a barrel.

U.S. economic data due for release Friday includes retail sales, industrial production and capacity utilization, manufacturing and trade inventories, and the U.S. flash and services purchasing managers indexes.

–Jim

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The Nymex crude oil market has now seen choppy and sideways trading at lower price levels. This pause in the existing downtrend is not bullish. The bears are still in solid near-term technical control to suggest still more downside price pressure is coming. If prices drop below strong chart support at the recent low of $49.41, then the door would be open to a move into the low $40s per barrel. Stay tuned!