Monday, November 25–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mostly firmer overnight and the U.S. stock indexes are pointed toward higher openings when the New York day session begins.
Trader and investor risk appetite is more upbeat to start the trading week on news that China says it will step up its efforts to protect intellectual property rights. That is a key element the U.S. wants China to reform in order to reach a trade deal. It could be that the U.S.’s hard-line approach on the trade deal with China is putting pressure on China to get a deal completed soon.
In other overnight news, Goldman Sachs issued a report that said raw commodity prices will rise in 2020 and for the next decade due to a worldwide move to “decarbonize” the planet, including less investment in carbon-based industries. That scenario would lead to supply shortages of some key commodities, the report said.
Reuters has reported gold worth billions of dollars is being smuggled out of Africa via the United Arab Emirates. The report said the UAE imported just over $15 billion in gold from Africa in 2016. Reuters compared total imports from the UAE with the exports declared by African states which showed that gold was entering the UAE through unknown sources. Furthermore, industrial mining firms in Africa told Reuters they did not send their gold to the UAE. From 2006 to 2016, African gold in UAE’s gold imports increased from 18% to 50%, despite no big industrial firm saying they send their gold there.
The key “outside markets” today see the U.S. dollar index slightly higher. Nymex crude oil prices are near steady and trading around $57.75 a barrel.
U.S. economic data due for release Monday includes the Chicago Fed national activity index and the Texas manufacturing outlook survey.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are firmer in early U.S. trading. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is even with the 9-day and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Today, shorter-term technical resistance comes in at the contract high of 3,132.50 and then at 3,150.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at last week’s low of 3,091.25 and then at 3,075.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
December Nasdaq index futures: Prices are higher in early U.S. trading. Bulls have the solid near-term technical advantage. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is below the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at 8,348.00 and then at the contract high of 8,379.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at last week’s low of 8,231.00 and then at 8,200.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are weaker in early U.S. trading. Bulls and bears are on a level overall near-term technical playing field. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is even with the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at the overnight high of 159 2/32 and then at Friday’s high of 159 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at 158 16/32 and then at 158 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
March U.S. T-Notes: Prices are lower in early U.S. trading. Bulls and bears are on a level overall near-term technical playing field. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is even with the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term support lies at 129.08.0 and then at 129.00.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 129.17.0 and then at Friday’s high of 129.24.5. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The March U.S. dollar index is near steady in early U.S. trading. Bulls still have the overall near-term technical advantage. The shorter-term moving averages for the dollar index are bullish early today, as the 4-day is above the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators for the dollar index are neutral to bullish early today. The dollar index finds shorter-term technical resistance at the November high of 97.870 and then at 98.000. Shorter-term support is seen at 97.500 and then at 97.250. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
January Nymex crude oil prices are near steady in early U.S. trading. Bulls have the near-term technical advantage. The shorter-term moving averages are bullish early today as the 4-day is above the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral early today. Look for buy stops to reside just above technical resistance at last week’s high of $58.74 and then at $59.00. Look for sell stops just below technical support at $57.00 and then at $56.60. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
US grain futures prices were firmer overnight, with corn up around 2 cents, soybeans up around 3 cents and wheat up 5 to 7 cents. Grain trader attitudes are more upbeat to start the trading week on news that China says it will step up its efforts to protect intellectual property rights. That is a key element the U.S. wants China to reform in order to reach a trade deal. It could be that the U.S.’s hard-line approach on the trade deal with China is putting pressure on China to get a deal completed soon. US Midwest weather is becoming less of a market factor as harvest is finally winding down. Weather focus is turning to South American corn and soybean regions as corn and soybean crops are being sowed. Traders will closely examine today’s weekly USDA export inspections report. The near-term technical chart postures for all three grain markets continue to favor the bears as all three grains are in near-term price downtrends on the daily bar charts.
IMPORTANT NOTE: I am not a futures broker and do not manage any trading accounts other than my own personal account. It is my goal to point out to you potential trading opportunities. However, it is up to you to: (1) decide when and if you want to initiate any traders and (2) determine the size of any trades you may initiate. Any trades I discuss are hypothetical in nature.
Here is what the Commodity Futures Trading Commission
(CFTC) has said about futures trading (and I agree 100%):
1. Trading commodity futures and options is not for everyone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS.
Before you invest any money in futures or options contracts, you should consider your financial experience, goals and financial resources, and know how much you can afford to lose above and beyond your initial payment to a broker. You should understand commodity futures and options contracts and your obligations in entering into those contracts. You should understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you.
Jim Wyckoff