Friday, March 8–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Asian and European stock markets were mostly lower overnight. U.S. stock indexes are also pointed toward lower openings when the New York day session begins. Chinese stocks had their worst daily performance in five months Friday following a bearish report on exports. In February, Chinese exports dropped a shocking 20.7% from the same period a year ago. Imports in the period were down 5.2%. The data underscored the damage inflicted on the world’s second-largest economy from the trade war with the U.S. Possibly somewhat mitigating those dour numbers is the fact that long Chinese public holidays in the period can distort the numbers.
Also overhanging the marketplace is the surprising announcement by the European Central Bank on Thursday that it is providing additional liquidity to the Euro zone banking system to try to stimulate the listing Euro zone economy. The ECB also significantly reduced its forecast for Euro zone GDP to just 1.1% growth in 2019, from a forecast of a 1.7% gain it made in December.
Not surprisingly, what just a few days ago seemed like a “done deal” on a U.S.-China trade agreement, there are now reports that some Trump administration officials say an agreement is not a certainty.
Focus of the marketplace today is also on the U.S. March jobs report from the Labor Department, due out Friday morning. That’s arguably the most important U.S. economic data point of the month. The key non-farm payrolls number is forecast to come in at up 180,000. The ADP national employment report for February, released on Wednesday, showed a rise of 183,000, which was close to market expectations for a rise of 185,000.
The key outside markets today see the U.S. dollar index weaker on a corrective pullback after hitting a new high for the year on Thursday. Nymex crude oil prices are lower and trading just below $56.00 a barrel.
The other U.S. economic report due for release Friday is new residential construction.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are lower and hit a three-week low in early U.S. trading. The price uptrend on the daily bar chart has “rolled over” to suggest a near-term market top is in place. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at Thursday’s high of 2,781.75 and then at 2,800.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 2,725.00 and then at 2,700.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.0
June Nasdaq index futures: Prices are lower and hit a three-week low in early U.S. trading. A price uptrend on the daily bar chart has been negated to suggest a near-term market top is in place. 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 bearish early today. Shorter-term technical resistance is seen at the overnight high of 7,062.50 and then at 7,100.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 7,000.00 and then at 6,950.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are slightly lower in early U.S. trading today, on a mild downside correction from this week’s good gains. Bulls have regained some upside momentum this week. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above 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 145 31/32 and then at 146 17/32. Buy stops likely reside just above those levels. Shorter-term support lies at 145 16/32 and then at 145 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
June U.S. T-Notes: Prices are near steady in early U.S. trading. 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 below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at the overnight high of 122.24.0 and then at 122.28.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 122.16.0 and then at 122.10.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
U.S. DOLLAR INDEX
The June U.S. dollar index is weaker in early U.S. trading, on a corrective pullback after hitting a new high for the year on Thursday. Bulls still have the firm 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 bullish early today. The dollar index finds shorter-term technical resistance at Thursday’s high of 97.160 and then at 97.500. Shorter-term support is at 96.685 and then at 96.500. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
April Nymex crude oil prices are lower in early U.S. trading. Trading has been choppy and sideways recently. The shorter-term moving averages are neutral early today as the 4-day is even with the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $56.51 and then at $57.00. Look for sell stops just below technical support at this week’s low of $55.42 and then at $55.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
Grain futures were firmer overnight on short covering. Traders are awaiting this morning’s monthly supply and demand report from USDA. Grain market bears have the overall near-term technical advantage.
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