Daily Morning Report

Wednesday, February 7–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

World stock markets posted solid rebounds overnight, following the lead of the U.S. stock indexes Tuesday. However, U.S. stock indexes are under solid selling pressure Wednesday morning, ahead of the U.S. day session. Serious near-term technical damage has been inflicted on the U.S. stock indexes recently, to suggest more selling pressure in the near term. Volatility is back in the stock and financial markets, after a long period of quieter daily trading.

Stalwart stock market bulls are blaming algorithmic traders for the steep sell-off, and pointing to solid economic fundamentals in place around the world as indicating this is just a downside correction in a still-bullish equities market. However, the fact of the matter is that traders/investors who entered the equities markets just a few months ago (and there are many) are now under water, or close to it. How much pain are these weak longs willing to suffer before they bail out on fear, or get washed out due to margin calls? Any analyst can pontificate about sound market fundamentals at present, but the traders and investors with skin in the game are more worried about losing their money than they are market fundamentals. In other words, trading markets is still a money game.

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Tuesday, February 6–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

World stock markets tumbled sharply overnight, following the strong losses in the U.S. stock indexes Monday. The Dow Jones Industrial Average saw its largest point decline ever, at one point in afternoon trading Monday. However, percentage-wise, the drop did not come close to the 1987 crash. U.S. stock indexes are pointed toward solidly lower openings again, when the New York day session begins. Worries about rising interest rates and inflation worldwide have really spooked the global equities markets.

Somewhat ironically, world bond markets yields are falling Tuesday on some safe-haven demand from the steep downdraft in world stock markets. Still, don’t look for the world bond markets to make a sustainable recovery in prices.

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The U.S. Treasury bond and Treasury note futures markets have hit new contract lows in prices (rising yields) as worries about rising inflation and interest rates are gripping the world marketplace. The T-Bond and T-Note bears are in strong technical command, which suggests still more downside price pressure is coming in the near term, or longer. The big downdraft in the bond market is also suggesting the world stock markets are headed for some serious trouble, too. The beneficiaries of the big sell offs in stock and bond markets: hard assets like raw commodities. Stay tuned!–Jim

Monday, February 5–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

World stock markets were mostly lower overnight. U.S. stock indexes are pointed toward solidly lower openings when the New York day session begins. The U.S. stock indexes have become very wobbly. Bearish weekly low closes in the indexes on Friday were a technical clue that near-term market tops are in place. Worries about rising interest rates and inflation worldwide, as evidenced by rising world bond yields, have spooked the global equities markets.

The key “outside markets” on Monday morning see the U.S. dollar index near steady. Meantime, Nymex crude oil prices are weaker and trading above $65.00 a barrel.

The new Federal Reserve chairman, Jerome Powell, will be sworn in today.

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Friday, February 2–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

World stock markets were mostly lower overnight. U.S. stock indexes are pointed toward solidly lower openings when the New York day session begins. The U.S. stock indexes have become wobbly this week. Bearish weekly low closes in the indexes on Friday would be a technical clue that near-term market tops are in place.

In overnight news, the Euro zone December producer price index was reported up 0.2% from November and up 2.2%, year-on-year. Those numbers were in line with market expectations.

Traders and investors are awaiting Friday morning’s monthly U.S. employment situation report from the Labor Department. This is arguably the most important U.S. data point of the month. The key non-farm payrolls number consensus forecast comes in at up 177,000. A miss from the forecasts on this number is likely to prompt markets volatility in the immediate aftermath of the 7:30 a.m. CST jobs report.

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The grains have endured a long bear market, but it finally appears to have run its course. Just the past few weeks the corn, soybean and wheat futures markets have shown price strength, including fledgling uptrends being in place on the daily charts. It’s my bias that 2018 will be a good year for the grain market bulls, including experiencing those summertime weather markets that can quickly goose prices. Stay tuned!–Jim