Thursday, February 13–Jim Wyckoff’s Morning Markets Report
Asian and European shares were mostly down overnight. U.S. stock indexes are also pointed toward lower openings when the New York day session begins. Risk aversion has returned to the global marketplace late this week, which is benefitting safe-haven assets like gold and U.S. Treasuries.
New cases of coronavirus increased markedly Thursday in China’s Hubei province. There were over 14,800 new cases were reported Thursday in contrast to around 2,000 new cases reported Wednesday. Reports said there were around 240 new deaths in the region. Chinese health officials also widened their definition used to confirm cases. More than 1,300 people have died from the epidemic and the total number of afflicted in the Hubei province stands at over 48,200. The World Health Organization warned the recent reports about the slowdown in the spread of the virus should be treated with “extreme caution.” “This outbreak could still go in any direction,” the WHO said, regarding the status of the outbreak.
China’s businesses are being seriously impacted. There are reports of impending steel shortages and other supply chain disruptions. Auto sales in China are reported down around 20%. Global crude oil demand in the first quarter of this year is forecast to hit the slowest rate of growth in 10 years amid the coronavirus outbreak, according to the International Energy Agency. The IEA said “there is already a major slowdown in oil consumption and the wider economy in China.”
The ebb and flow of this matter as it relates to the marketplace continues—shifting between the front burner and the back burner of the marketplace on any given trading day.
The key outside markets today see crude oil prices weaker and trading around $50.75 a barrel. Meantime, the U.S. dollar index is slightly down in early U.S. trading and not far below this week’s multi-month high.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the consumer price index, and real earnings.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are lower in early U.S. trading, on profit taking from recent gains and after hitting a new record high overnight. The bulls still have the solid technical advantage. There are no early chart clues to suggest a market top is close at hand. The shorter-term moving averages (4-, 9- and 18-day) are bullish early today. The 4-day moving average is above 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 bearish early today. Today, shorter-term technical resistance comes in at the overnight contract high of 3,382.50 and then at 3,400.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at the overnight low of 3,348.50 and then at 3,325.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.0
March Nasdaq index futures: Prices are lower in early U.S. trading, on profit taking. Bulls still have the solid overall near-term technical advantage. Shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at the contract high of 9,628.25 and then at 9,650.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 9,500.00 and then at 9,450.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are solidly higher in early U.S. trading. Bulls have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at the overnight high of 162 26/32 and then at 163 even. Buy stops likely reside just above those levels. Shorter-term support lies at 162 even and then at the overnight low of 161 20/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5
March U.S. T-Notes: Prices are higher in early U.S. trading. Bulls have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is even with the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at the overnight high of 131.05.5 and then at this week’s high of 131.12.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at this week’s low of 130.19.5 and then at 130.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The March U.S. dollar index is slightly weaker in early U.S. trading but not far below the contract high scored earlier this week. Bulls have the solid 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 early today. The dollar index finds shorter-term technical resistance at the contract high of 98.925 and then at 99.000. Shorter-term support is seen at the overnight low of 98.745 and then at this week’s low of 98.490. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
March Nymex crude oil prices are slightly lower in early U.S. trading. A price downtrend is in place on the daily bar chart. The shorter-term moving averages are neutral early today as the 4-day is even with the 9-day. The 9-day is below 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 the overnight high of $51.96 and then at $52.50. Look for sell stops just below technical support at $50.00 and then at the February low of $49.31. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
US grain futures are lower in early US pre-market trading Thursday. Corn is down around 2 cents, soybeans off around 3 cents and wheat is 2 to 3 cents down. Risk aversion has returned to the global marketplace late this week, which is bearish for the grains. New cases of coronavirus increased markedly Thursday in China’s Hubei province. There were over 14,800 new cases were reported Thursday in contrast to around 2,000 new cases reported Wednesday. Reports said there were around 240 new deaths in the region. Chinese health officials also widened their definition used to confirm cases. More than 1,300 people have died from the epidemic and the total number of afflicted in the Hubei province stands at over 48,200. The World Health Organization warned the recent reports about the slowdown in the spread of the virus should be treated with “extreme caution.” “This outbreak could still go in any direction,” the WHO said, regarding the status of the outbreak. China’s businesses are being seriously impacted. There are reports of impending steel shortages and other supply chain disruptions. Auto sales in China are reported down around 20%. Global crude oil demand in the first quarter of this year is forecast to hit the slowest rate of growth in 10 years amid the coronavirus outbreak, according to the International Energy Agency. The IEA said “there is already a major slowdown in oil consumption and the wider economy in China.” All of the above are spooking grain traders. “When in doubt, get out” is at work in the grain futures markets Thursday. The wheat markets have faltered this week and technical damage has been inflicted to suggest the wheat markets have put in a least near-term tops. Soybean charts are still overall bearish as prices are trending lower, while corn bears also have the near-term chart advantage amid sideways and choppy trading at lower levels. Another negative element for US grain markets is the strength of the US dollar on the foreign exchange markets. The US dollar index this week hit a multi-month high, thus making US grains more expensive to purchase on the world market in non-US currency. Traders Thursday will closely examine the weekly USDA export sales report.
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