Daily Morning Report

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!

Thursday, December 13–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

European stock markets were mostly weaker overnight. Asian stock indexes were mostly firmer. U.S. stock indexes are pointed toward higher openings when the New York day session begins. World equity markets have been assuaged this week by the perceived progress between the U.S. and China in their trade talks. Reports say China is making somewhat significant changes to come into line with U.S. demands.

The marketplace will be watching the conclusion of the meeting of the European Central Bank, which is presently in progress. The ECB is expected to today announce the end of its quantitative easing of monetary policy. As always, the markets will closely scrutinize ECB President Mario Draghi’s press conference after the meeting, to see if he tips his hand on future ECB policy direction.

Brexit turmoil was kicked up a notch earlier this week, but U.K. Prime Minister Theresa May survived a no-confidence vote from members of Parliament late Wednesday, to ease just a bit the uncertainty on the matter. Most global markets are not being significantly impacted by the political turmoil in the U.K. surrounding Brexit.

The key outside markets early today find the U.S. dollar index slightly lower on a corrective pullback from recent solid gains that pushed the index to a new for-the-move high Tuesday. Meantime, Nymex crude oil prices are slightly down and trading around $51.00 a barrel.

U.S. economic data due for release Thursday is light and includes the weekly jobless claims report, and import and export prices.

–Jim

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Wednesday, December 12–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

World stock markets were mostly higher overnight as global traders and investors chose to focus on improving prospects for a U.S.-China trade deal, instead of the uncertainty of leadership of the United Kingdom. U.S. stock indexes are pointed toward higher openings when the New York day session begins. Trading in the U.S. stock indexes has been volatile this week, with many stock market experts saying to expect this to be the norm for at least a while.

The present U.S.-China trade negotiations are so far producing tangible results, according to reports coming from both nations. Officials from both sides appear to be upbeat on the progress. The marketplace reckons that if the world’s two largest economies come to terms on trade, the spillover effect would be positive for most world economies.

Brexit turmoil has been kicked up a notch at mid-week, as U.K. Prime Minister Theresa May will face a no-confidence vote from members of Parliament today. May on Monday called off a vote on her Brexit plan, which most reckoned would be defeated anyway. She has quickly lost popularity in the U.K. public eye and among members of Parliament. However, most global markets are not being significantly impacted by the political turmoil in the U.K.

The key U.S. economic data point of the week, the consumer price index for November, is due out shortly. CPI is forecast at unchanged from October. Recent U.S. inflation reports have shown very tame inflation, after data released earlier this year raised some concern regarding rising inflation becoming problematic.

The key outside markets early today find the U.S. dollar index slightly lower on a corrective pullback from recent solid gains that pushed the index to a new for-the-move high Tuesday. Meantime, Nymex crude oil prices are higher on a corrective bounce. There are still no early technical clues the crude oil market is close to a bottom.

Other U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, real earnings, the monthly Treasury budget statement and the weekly DOE liquid energy stocks report.

–Jim

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The gold market has seen its technical posture improve markedly recently, as prices this week hit a nearly five-month high. See on the daily bar chart that prices are in a choppy uptrend. The bulls have the near-term technical advantage, which means the path of least resistance for prices will remain sideways to higher. Stay tuned!