Friday, January 12–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
World stock markets were mostly higher overnight. News that the German lawmakers have formed a coalition government worked to lift the Euro currency to a four-year high against the U.S. dollar, and also boosted the European stock markets. U.S. stock indexes are pointed toward firmer openings and new record highs when the New York day session begins.
Gold prices hit a four-month high overnight, on technical buying and on currency moves that included a rallying Euro and a weakening U.S. dollar.
The key outside markets on Friday morning see the U.S. dollar index solidly lower and at a 3.5-month low. The greenback bears have the solid overall near-term technical advantage, to suggest more pressure in the near term.
Meantime, Nymex crude oil prices are weaker on some profit taking after hitting a three-year high of $64.77 a barrel on Thursday. The U.S. government is expected to rule on Friday whether it extends or waives economic sanctions against Iran. The recent rally in oil prices has been a positive development for the raw commodity sector.
In overnight news, China reported a record trade surplus with the U.S. in 2017, at $276 billion. China’s total December imports were up 4.5%, year-on-year, while its exports were up 10.9% in the same period.
It’s a busy day for U.S. economic data due for release Friday, including the consumer price index, real earnings, retail sales, manufacturing and trade inventories, and the IBD/TIPP economic optimism index.
–Jim
U.S. STOCK INDEXES
March S&P 500 December e-mini futures: Prices are higher and hit a record high in early U.S. trading. 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 bullish early today. Today, shorter-term technical resistance comes in at the contract and record high of 2,776.75 and then at 2,785.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 2,750.00 and then at this week’s low of 2,736.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
March Nasdaq index December futures: Prices are slightly higher and hit a new record high in early U.S. trading. The bulls have the solid overall near-term technical advantage. However, the market is still short-term overbought and due for more of a downside correction. 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 6,744.50 and then at 6,750.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 6,700.00 and then at 6,650.00. 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 weaker in early U.S. trading. 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 bearish early today. Shorter-term technical resistance is seen at the overnight high of 150 12/32 and then at 150 20/32. Buy stops likely reside just above those levels. Shorter-term support lies at 150 even and then at Thursday’s low of 149 17/32. 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. 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 neutral early today. Shorter-term resistance lies at 123.05.0 and then at 123.10.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 122.27.5 and then at the contract low of 122.22.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The March U.S. dollar index is solidly lower and hit a 3.5-month low in early U.S. trading. Bears have the solid overall near-term technical advantage. The shorter-term moving averages for the dollar index are neutral as the 4-day is even with the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 91.630 and then at 92.000. Shorter-term support is seen at the overnight low of 91.075 and then at the September low of 90.680. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
February Nymex crude oil prices are weaker in early U.S. trading, on a corrective pullback after hitting a three-year high on Thursday. Bulls still have the solid overall near-term technical advantage. However, the market is short-term overbought and due for a decent downside correction. Look for buy stops to reside just above technical resistance at $64.00 and then at this week’s high of 64.77. Look for sell stops just below technical support at $63.00 and then at $62.50. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
Grain futures were slightly higher overnight. Grain market bears remain in firm overall near-term technical control. Traders are looking ahead to this morning’s USDA quarterly grain stocks and supply and demand report. Look for higher price volatility in the grains, in the immediate aftermath of the 11:00 a.m. CST report.