FOMC decision on deck Wed. p.m.

Wednesday, January 31–Jim Wyckoff’s morning markets report

Asian stock markets were mixed in overnight trading. U.S. stock index futures are set to open lower when the New York day session begins. Risk aversion remains elevated at mid-week after an Iran-backed Houthi drone strike against U.S. troops in Jordan last weekend killed three U.S. soldiers. President Biden said Tuesday he has decided on a plan for retaliation, which he said will be strong and in stages.

The U.S. economic data point of the week is the Open Market Committee meeting of the Federal Reserve that began Tuesday morning and ends Wednesday afternoon with a statement and press conference from Fed Chairman Jerome Powell. The FOMC is not expected to change U.S. monetary policy at this meeting but will likely give fresh guidance on futures policy plans. Many market watchers believe that the Fed won’t cut interest rates until at least June.

In overnight news, China’s business activity picked up in January, led by the services sector with manufacturing remaining in contraction. The official purchasing managers index (PMI) data showed the manufacturing PMI at 49.2 in January versus 49.0 December and 49.3 forecast. The services PMI was 50.7 in January compared to 50.4 December and 50.6 forecast. The January composite PMI was 50.9 versus 50.3 December. A reading above 50.0 suggests expansion, while a reading below 50.0 signals contraction.

If the central bankers of the world are really the “smart money” in the global marketplace, gold must be an asset for investors to own. The World Gold Council reports global central banks continued to snatch up gold in 2023 and will continue to do so in 2024. Central banks’ collective purchases in 2023 were 1,037 tons, the WGC said. China’s central bank was the biggest buyer.

The key outside markets today see the U.S. dollar index a bit firmer. Nymex crude oil prices are weaker and trading around $77.00 a barrel. Meantime, the yield on the benchmark U.S. Treasury 10-year note is presently fetching 4.032%.

Other U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the ADP national employment report, the employment cost index, the Chicago ISM business survey, and the weekly DOE liquid energy stocks report.

STOCK INDEXES

March S&P 500 e-mini futures: Prices are in overnight 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 to bearish early today. Today, shorter-term technical resistance comes in at Tuesday’s record high of 4,957.25 and then at 5,000.00. Support for active traders is seen at this week’s low of 4,901.75 and then at 4,875.00. Wyckoff’s Intra-day Market Rating: 4.0

March Nasdaq index futures: Prices are down in early U.S. trading. Bulls still 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 even with the 9-day. The 9-day is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at 17,500.00 and then at 17,600.00. On the downside, shorter-term support is seen at 17,300.00 and then at 17,200.00. Wyckoff’s Intra-Day Market Rating: 4.0.

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 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 to bullish early today. Shorter-term technical resistance is seen at the overnight high of 122 5/32 and then at 123 even. Shorter-term support lies at Tuesday’s low of 120 19/32 and then at this week’s low of 119 23/32. Wyckoff’s Intra-Day Market Rating: 6.0

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 above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term resistance lies at the overnight high of 112.02.0 and then at 112.12.0. Shorter-term technical support is seen at Tuesday’s low of 111.11.0 and then at this week’s low of 111.05.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0

EURO CURRENCY

The March Euro currency futures are slightly lower 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 early today. The Euro currency finds shorter-term technical resistance at 1.0900 and then at 1.0950. Shorter-term support is seen at this week’s low of 1.0817 and then at the December low of 1.0770. Wyckoff’s Intra Day Market Rating: 5.5

NYMEX CRUDE OIL

March Nymex crude oil prices are lower 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 bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $78.11 and then at this week’s high of $79.29. Look for sell stops just below technical support at this week’s low of $75.85 and then at $75.00. Wyckoff’s Intra-Day Market Rating: 4.0

GRAINS

Grain futures prices were weaker overnight on corrective pullbacks after Tuesday’s gains. 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