Thursday, February 8–Jim Wyckoff’s morning markets report
Asian and European stock markets were mixed in overnight trading. U.S. stock index futures are set to open modestly down today, on mild corrective pullbacks following their record highs set Wednesday.
In overnight news, China, the world’s second-largest economy, reported its consumer price index fell a sharper-than-expected 0.8%, year-on-year, in January. That’s the fourth consecutive month of declines and the biggest contraction since 2009. China is facing “significant economic headwinds that could impact investors around the world,” said Nigel Green, the CEO of deVere Group. “Prolonged deflation in China poses a threat to its manufacturing and export sectors, key drivers of that nation’s economic growth and sectors often favored by international investors. The deflationary trend in China could also weigh heavily on commodities and industries dependent on natural resources.” Green said the cumulative effect of three years of economic downturn, “erasing a staggering $7 trillion of value, demands a departure from the smaller measures. It’s time for Beijing to adopt steps to reignite growth and restore confidence,” Green said.
China is getting ready for its Lunar New Year holiday that starts this weekend.
U.S. economic data due for release Thursday includes the weekly jobless claims report, monthly wholesale trade and monthly retail chain store sales. U.S. Treasury Secretary Yellen testifies before the Senate and Federal Reserve Bank of Richmond president Thomas Barkin speaks to the Economic Club of New York.
STOCK INDEXES
March S&P 500 e-mini futures: Prices are slightly down in early U.S. trading, after hitting a record high Wednesday. Bulls have the solid overall near-term technical advantage. Prices are in a three-month-old uptrend on the daily bar chart. 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 early today. Today, shorter-term technical resistance comes in at the contract and record high of 5,020.00 and then at 5,050.00. Support for active traders is seen at this week’s low of 4,937.75 and then at 4,900.00. Wyckoff’s Intra-day Market Rating: 5.0
March Nasdaq index futures: Prices are slightly lower in early U.S. trading after hitting a contract and record high Wednesday. Bulls 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 is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at the contract and record high of 17,875.50 and then at 17,900.00. On the downside, shorter-term support is seen at 17,700.00 and then at this week’s low of 17,554.25. Wyckoff’s Intra-Day Market Rating: 5.0.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are lower in early U.S. trading. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at this week’s high of 121 31/32 and then at 123 even. Shorter-term support lies at this week’s low of 119 30/32 and then at the January low of 119 even. Wyckoff’s Intra-Day Market Rating: 4.0
March U.S. T-Notes: Prices are lower in early U.S. trading. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at the overnight high of 111.07.5 and then at this week’s high of 111.21.5. Shorter-term technical support is seen at this week’s low of 110.22.5 and then at 110.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
EURO CURRENCY
The March Euro currency futures are slightly down in early U.S. trading. Bears have the near-term technical advantage. Prices are trending down on the daily bar chart. The shorter-term moving averages for the Euro are bearish early today, as the 4-day is below the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators for the Euro are neutral to bearish early today. The Euro currency finds shorter-term technical resistance at the overnight high of 1.0805 and then at 1.0850. Shorter-term support is seen at this week’s low of 1.0740 and then at 1.0700. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
March Nymex crude oil prices are firmer in early U.S. trading. The shorter-term moving averages are neutral early today as the 4-day is below the 9-day and 18-day. The 9-day is even with the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral to bullish early today. Look for buy stops to reside just above technical resistance at $75.00 and then at $76.00. Look for sell stops just below technical support at $73.00 and then at this week’s low of $71.41. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
Grain futures prices were lower overnight, on the downbeat China data. Traders are awaiting Thursday morning’s weekly USDA export sales report and the midday monthly USDA supply and demand report. Charts are still bearish for corn, wheat, soybeans, meal and bean oil. All the grain markets are trending down 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