Wednesday, January 15–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mixed to weaker overnight. U.S. stock indexes are pointed toward slightly lower openings when the New York day session begins. The U.S. stock market bulls are pausing today after the indexes hit record highs Tuesday.
The marketplace at mid-week is focused on the U.S.-China partial trade agreement that is scheduled to be signed Wednesday in Washington, D.C. China has pledge to buy $200 billion in U.S. goods over the next two years. Specifics on what amounts spent on what products are not likely to be revealed at the signing. There is some concern in the marketplace that the trade deal will not have the U.S. lifting its trade tariffs on China imports until later this year, which has put some mild pressure on global stock markets. However, those who have followed the trade negotiations more closely say the timing of lifting of U.S. tariffs has been known by the Chinese and others for quite some time. The U.S.-China partial trade deal is expected to boost global economic growth in 2020. Still, don’t expect U.S.-China trade and other political differences to just completely disappear after the signing today.
In other overnight news, economic growth in the European Union’s workhorse country, Germany, fell to a six-year low in 2019, at only 0.6% annual expansion. Meantime, Euro zone industrial growth was up 0.2% in November but down 1.5%, year-on-year, it was reported today.
The key outside markets today see crude oil prices weaker and trading around $58.00 a barrel. The U.S. dollar index is modestly down early today.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the Empire State manufacturing survey, the producer price index, and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are slightly lower in early U.S. trading after hitting a contract and record high Tuesday. Bulls still have the solid near-term technical advantage and there are no early close to suggest a market top is close at hand. 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 to bearish early today. Today, shorter-term technical resistance comes in at the contract high of 3,296.75 and then at 3,315.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at this week’s low of 3,265.50 and then at 3,250.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
March Nasdaq index futures: Prices are slightly weaker in early U.S. trading, after hitting a contract and record high Tuesday. Bulls still have the solid near-term technical advantage to suggest more upside. 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 bearish early today. Shorter-term technical resistance is seen at the contract high of 9,114.75 and then at 9,150.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 9,025.75 and then at 9,000.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are higher in early U.S. trading. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at 159 even and then at the January high of 159 19/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 157 27/32 and then at 157 10/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5
March U.S. T-Notes: Prices are higher in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is even with the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term resistance lies at 129.16.0 and then at 129.20.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 129.04.0 and then at 129.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5
U.S. DOLLAR INDEX
The March U.S. dollar index is slightly lower in early U.S. trading. Bulls and bears are on a level overall near-term technical playing field. The shorter-term moving averages for the dollar index are bullish early today, as the 4-day is above the 9-day and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at the overnight high of 97.180 and then at last week’s high of 97.300. Shorter-term support is seen at the overnight low of 96.955 and then at 96.750. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
February Nymex crude oil prices are near steady after hitting a four-week low Tuesday. Bulls and fading and recent price action suggests a near-term market top is in place. The shorter-term moving averages are bearish early today as the 4-day is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral to bearish early today. Look for buy stops to reside just above technical resistance at $59.00 and then at this week’s high of $59.27. Look for sell stops just below technical support at this week’s low of $57.72 and then at $57.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
US grain futures are mixed again in early US pre-market trading. Corn is near steady, while soybeans are around 1/2 cent lower and wheat is around 3 cents higher. The grain markets at mid-week are focused on the US-China partial trade agreement that is scheduled to be signed Wednesday in Washington, D.C. China has pledged to buy $200 billion in US goods over the next two years. Specifics on what amounts spent on what products are not likely to be revealed at the signing. There is some concern in the marketplace that the trade deal will not have the US lifting its trade tariffs on China imports until later this year, which likely put some mild pressure on grain markets Tuesday. However, those who have followed the trade negotiations more closely say the timing of lifting of US tariffs has been known by the Chinese and others for quite some time. The US-China partial trade deal is expected to boost global economic growth in 2020. Still, don’t expect US-China trade and other political differences to just completely disappear after the signing today. Grain traders will also examine Wednesday’s monthly National Oilseed Processors Association (NOPA) crush report. Forecasts call for members crushing 171.5 million bushels of US soybeans in December. Weather in South American corn and soybean regions is mostly benign at present, but some dry pockets are likely to develop in the coming weeks.
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