Thursday, February 1–Jim Wyckoff’s morning markets report
Asian and European stock markets were mixed to weaker in overnight trading. U.S. stock index futures are set to open firmer when the New York day session begins.
The marketplace has mostly digested the Open Market Committee meeting of the Federal Reserve that concluded Wednesday afternoon. The FOMC left interest rates unchanged, as expected, but the statement said any rate cuts will not come until the Fed has “greater confidence” annual inflation is moving toward 2%. The statement also said the U.S. economy is expanding at a “solid” pace. Traders deemed the statement as leaning a bit hawkish.
Traders are now focusing on Friday morning’s monthly U.S. jobs report from the Labor Department. The January non-farm payrolls component of the report is expected to show a rise of 175,000, compared to a gain of 216,000 in the December report.
In overnight news, the Eurozone consumer price index for January came in at up 2.8%, year-on-year versus the December reading of up 2.9% and forecasts for up 2.7%. Reads a Dow Jones Newswire headline today: “Eurozone inflation falls less than expected, pushing back ECB rate-cut prospects.”
The Eurozone January manufacturing purchasing managers index (PMI) came in at 46.6 versus 44.4 in the December report. A reading below 50.0 suggests contraction in the sector.
Sweden’s central bank, the Riksbank, held its main interest rate steady at 4.0% and said contractionary monetary policy is still needed to stabilize inflation closer to its target rate.
The key outside markets today see the U.S. dollar index higher. Nymex crude oil prices are firmer and trading around $76.50 a barrel. Meantime, the yield on the benchmark U.S. Treasury 10-year note is presently fetching 3.942%.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, preliminary productivity and costs, the U.S. manufacturing PMI, the ISM report on business manufacturing, construction spending, the global manufacturing PMI, and domestic auto industry sales.
STOCK INDEXES
March S&P 500 e-mini futures: Prices are firmer in early U.S. trading. 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 4,900.00 and then at Wednesday’s high of 4,938.00. Support for active traders is seen at this week’s low of 4,872.50 and then at 4,841.50. Wyckoff’s Intra-day Market Rating: 6.0
March Nasdaq index futures: Prices are higher in early U.S. trading. Bulls have the solid overall near-term technical advantage. 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 is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at Wednesday’s high of 17,484.00 and then at 17,600.00. On the downside, shorter-term support is seen at this week’s low of 17,221.50. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are firmer 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 neutral early today. Shorter-term technical resistance is seen at this week’s high of 123 4/32 and then at 123 15/32. Shorter-term support lies at Wednesday’s low of 121 13/32 and then at 121 even. Wyckoff’s Intra-Day Market Rating: 6.0
March U.S. T-Notes: Prices are firmer 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. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at this week’s high of 112.20.5 and then at 113.00.0. Shorter-term technical support is seen at 112.00.0 and then at Wednesday’s low of 111.23.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
EURO CURRENCY
The March Euro currency futures are lower and hit a six-week low in early U.S. trading. 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 this week’s high of 1.0908 and then at 1.0950. Shorter-term support is seen at the overnight low of 1.0799 and then at 1.0650. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
March Nymex crude oil prices are higher in early U.S. trading. The shorter-term moving averages 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 (RSI and slow stochastics) are neutral early today. Look for buy stops to reside just above technical resistance at Wednesday’s high of $78.11 and then at this week’s high of $79.29. Look for sell stops just below technical support at the overnight low of $75.44 and then at $75.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
Grain futures prices were lower overnight. On tap today is the weekly USDA export sales report. Not much new. Charts are still fully bearish for corn and wheat. Technicals are also bearish for soybeans, meal and soybean oil. All the grain markets are trending down on the daily bar charts. That means the path of least resistance for their prices remains sideways to lower.
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