Wednesday, December 15–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed in overnight trading. U.S. stock indexes are also pointed toward narrowly mixed openings when the New York day session begins. The markets are pausing at mid-week, as all of the major central banks hold monetary policy meetings yet this week. The highly anticipated Federal Reserve FOMC meeting that began Tuesday morning ends Wednesday afternoon with a statement and press conference from Fed Chairman Jerome Powell. The FOMC is expected to announce the acceleration of asset purchases tapering, so the Fed can raise interest rates sooner, as the U.S. now has the hottest inflation in nearly 40 years. Specifically, the FOMC is expected to announce it will accelerate tapering asset purchases to $30 billion a month to wind the program down by March. Many analysts and economists believe two U.S. interest rate hikes will occur in 2022.
In other overnight news there was a stark assessment of the Covid virus and resulting supply chain disruptions heading into the new year. Broker SP Angel in an email dispatch today warned that “we expect the highly transmissible Omicron virus to significantly disrupt supply chains through Q1 next year. Each new dominant variant passes faster and more effectively than the last by their very definition, with Omicron as the latest and most complex variant to take over. While Omicron may prove to be a milder and less deadly virus it is still making people sick and it still takes time / weeks to recover. …We expect ongoing mine disruption to further hit metals production, exacerbating supply / demand deficits and lowering already low LME and SHFE warehouse stock levels.” Other major industries may suffer the same fate in the coming months.
The key “outside markets” today see Nymex crude oil prices lower and trading around $69.50 a barrel. The U.S. dollar index is a bit weaker early today. Meantime, the yield on the U.S. Treasury 10-year note is presently fetching 1.429%.
Other U.S. economic data due for release on a busy Wednesday includes the weekly MBA mortgage applications survey, the Empire State manufacturing survey, retail sales, import and export prices, manufacturing and trade inventories, the NAHB housing market index, Treasury international capital data and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are slightly weaker in early U.S. trading. The shorter-term moving averages (4-, 9- and 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-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 4,650.00 and then at Tuesday’s high of 4,676.75. Buy stops likely reside just above those levels. Downside support for active traders is seen at this week’s low of 4,596.25 and then at 4,550.00. Sell stops likely reside below those levels. Wyckoff’s Intra-day Market Rating: 4.5
March Nasdaq index futures: Prices are a bit lower in early U.S. trading. Shorter-term moving averages (4- 9-and 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at 16,000.00 and then at Tuesday’s high of 16,132.75. Buy stops likely reside just above those levels. On the downside, shorter-term support is seen at this week’s low of 15,734.00 and then at the December low of 15,547.25. Sell stops likely reside 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 slightly lower 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 bearish early today. Shorter-term technical resistance is seen at this week’s high of 162 23/32 and then at 163 even. Buy stops likely reside just above those levels. Shorter-term support lies at Tuesday’s low of 161 16/32 and then at this week’s low of 160 30/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
March U.S. T-Notes: Prices are slightly lower 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 bearish early today. Shorter-term resistance is seen at this week’s high of 130.30.5 and then at 131.05.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at this week’s low of 130.07.5 and then at 130.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
EURO CURRENCY
The March Euro currency futures are slightly higher in early U.S. trading. Bears still have the solid overall near-term technical advantage. The shorter-term moving averages for the Euro are neutral early today, as the 4-day is below 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 this week’s high of 1.1351 and then at 1.1382. Buy stops likely reside just above those levels. Shorter-term support is seen at the December low of 1.1257 and then at the November low of 1.1221. Sell stops likely reside just below those levels. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
Nymex crude oil prices are lower in early U.S. trading. The shorter-term moving averages are neutral early today as the 4-day is above the 9-day. The 9-day is below 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 Tuesday’s high of $72.03 and then at last week’s high of $73.34. Look for sell stops just below technical support at $70.00 and then at $69.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
U.S. grain futures were mixed to lower in overnight trading. Not much new in subdued, pre-holiday trading in the grains. The wheat and corn market bulls have the near-term technical advantage, while the soybean bears have the slight edge. However, meal futures prices are in a solid rally mode and that strongly suggests soybeans do not have any significant downside potential.
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