Thursday, January 25–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
World stock markets were mixed to weaker overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. Big moves in the currency markets Wednesday have thrown a bit of uncertainty at equities traders late this week.
The U.S. Dollar Index is weaker and hit another 3.5-year low overnight. The greenback slump is a bullish element for the raw commodity sector. Most major commodities are priced in U.S. dollars on the world market. The depreciating dollar makes those commodities cheaper to purchase in non-U.S. currency. The Euro currency rose to a more-than-two-year high overnight.
Meantime, Nymex crude oil prices are slightly higher, above $66.00 a barrel hit a more-than-three-year high overnight. The rally in the oil market is also an underlying bullish factor for the commodity markets.
Gold and silver prices also scored new multi-month highs overnight.
The European Central Bank holds its regular monetary policy meeting Thursday. No change in policy is expected.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the leading economic indicators report, new residential sales, and the Kansas City Fed manufacturing survey.
–Jim
U.S. STOCK INDEXES
March S&P 500 December e-mini futures: Prices are firmer in early U.S. trading and not far below Wednesday’s contract and record high. Bulls have the solid overall near-term technical advantage. However, the market is still short-term overbought and due for a decent downside correction. The 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 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 2,855.25 and then at 2,865.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Wednesday’s low of 2,825.50 and then at 2,815.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
March Nasdaq index December futures: Prices are higher in early U.S. trading and not far below the contract and record high set Wednesday. The bulls have the solid overall near-term technical advantage. However, the market is still short-term overbought and due for a decent downside correction soon. 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 bullish early today. Shorter-term technical resistance is seen at the overnight contract high of 7,004.25 and then at 7,025.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 6,921.50 and then at 6,900.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES
March U.S. T-Bonds: Prices are firmer in early U.S. trading, on short covering after hitting a contract low on Wednesday. Bears have the solid overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day is below 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 149 2/32 and then at 149 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 148 17/32 and then at the contract low of 148 7/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
March U.S. T-Notes: Prices are higher in early U.S. trading, on short covering. Bears still have the solid overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at this week’s high of 122.17.5 and then at 122.24.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 122.06.5 and then at the contract low of 122.01.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The March U.S. dollar index is lower in early U.S. trading and hit a more-than-three-year low overnight. Bears have the solid overall near-term technical advantage. The shorter-term moving averages for the dollar index are bearish as the 4-day is below the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators for the dollar index are neutral to bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 89.110 and then at 89.500. Shorter-term support is seen at the overnight low of 88.615 and then at 88.500. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
March Nymex crude oil prices are higher in early U.S. trading and hit a more-than-three-year high overnight. Bulls have the solid overall near-term technical advantage. Look for buy stops to reside just above technical resistance at the overnight high of $66.44 and then at $67.00. Look for sell stops just below technical support at $65.50 and then at $65.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
Grain futures were higher overnight. The rally in crude oil and slumping U.S. dollar are bullish for the grains and are helping to suggest major lows have been put in and that prices can move sideways to higher in the coming months. Traders will closely examine this morning’s weekly USDA export sales report.