Tuesday, February 23–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed overnight, with Asian shares mostly up and European shares mostly down. U.S. stock indexes are pointed toward weaker openings when the New York day session begins. The marketplace is looking forward to Federal Reserve Chairman Jay Powell’s testimony on U.S. monetary policy to the Senate Banking Committee on Tuesday morning. The marketplace will be especially keen to hear what Powell has to say about rising U.S. Treasury yields and the prospects for rising inflation. The stock market has turned wobbly early this week due in part to worries about rising bond yields starting to pull away investor money from the stock market. A Barron’s story today was headlined, “The Reflation Trade is Well Underway. How Long Can Investors Keep Smiling?” Still, the U.S. stock indexes are not that far down from their recent record highs and trader and investor attitudes are still generally upbeat.
In other overnight news, the price of Bitcoin is getting hammered early this week and has dropped close to 15% from the record high seen over the weekend. If the declines in Bitcoin continue it could put a floor under the competing asset class, gold and silver markets.
The key “outside markets” today sees Nymex crude oil futures prices up and trading around $62.25 a barrel. The U.S. dollar index is weaker firmer early today but the bulls have faded recently. The yield on the U.S. 10-year Treasury note is presently fetching 1.37%.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the monthly house price index, the S&P Core-Logic home indexes, the Richmond Fed business survey, and the consumer confidence index.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are lower and hit a two-week low in early U.S. trading. Bulls still have the solid overall near-term technical advantage but have faded a bit early this week. The 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 moving average. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 3,896.00 and then at this week’s high of 3,914.50. Buy stops likely reside just above those levels. Downside support for active traders is seen at the overnight low of 3,840.00 and then at 3,820.00. Wyckoff’s Intra-day Market Rating: 4.0
March Nasdaq index futures: Prices are lower and hit a three-week low in early U.S. trading. Bulls still have the overall near-term technical advantage, but are fading. 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 13,150.00 and then at the overnight high of 13,335.75. On the downside, shorter-term support is seen at the overnight low of 12,946.50 and then at 12,825.00. Wyckoff’s Intra-Day Market Rating: 3.0.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are weaker and hit another contract low 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 and 18-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 this week’s high of 163 13/32 and then at 164 even. Shorter-term support lies at the overnight contract low of 161 31/32 and then at 161 16/32. Wyckoff’s Intra-Day Market Rating: 4.0
March U.S. T-Notes: Prices are near steady in early U.S. trading after hitting a contract low on Monday. 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 this week’s high of 135.19.0 and then at 135.24.0. Shorter-term technical support lies at the overnight low of 135.07.5 and then at the contract low of 135.01.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
EURO CURRENCY
The March Euro currency futures are weaker in early U.S. trading after hitting a four-week high overnight. Bulls have the overall near-term technical advantage but trading has been choppy. The shorter-term moving averages for the Euro 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 Euro are neutral early today. The Euro currency finds shorter-term technical resistance at the overnight high of 1.2186 and then at 1.2200. Shorter-term support is seen at this week’s low of 1.2096 and then at 1.2050. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
April Nymex crude oil prices are higher and hit a 13-month high in early U.S. trading. Bulls have the solid overall near-term technical advantage amid a price uptrend firmly in place on the daily chart. 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 the overnight high of $63.00 and then at $64.00. Look for sell stops just below technical support at the overnight low of $61.52 and then at $61.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
U.S. grain futures are mixed but mostly higher in early U.S. pre-market trading. The bulls have the firm overall near-term technical advantage as prices mostly trending up—both on a near-term and longer-term basis. Overall supply and demand fundamentals remain bullish for the grains. The “reflation trade” is gaining steam at present, and that is also bullish for the grains.
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