Tuesday, January 31–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly lower overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins. The U.S. stock indexes are still in price uptrends on the daily bar charts and the stock index bulls have the overall near-term technical advantage.
The U.S. data point of the week is the Federal Reserve Open Market Committee (FOMC) meeting that begins Tuesday morning and ends Wednesday afternoon with a statement. Most believe the Fed will raise the key U.S. interest rate by 0.25%, following the recent 0.5% rate hikes. Trading in stock and financial markets may be more muted just ahead of the FOMC statement and press conference by Fed Chairman Jerome Powell Wednesday afternoon.
In overnight news, China got some upbeat economic data Tuesday. Official readings on manufacturing and services improved sharply. The services purchasing managers’ index (PMI) rose to 54.0 in January from 39.4 in December. The manufacturing PMI rose to 54.4 from 41.6 in December. Readings above 50.0 suggest growth in the sector.
Meantime, the Euro zone economy has avoided recession, but just barely. The fourth-quarter GDP for the zone came in at up 0.1% from the third quarter and up 1.9%, year-on-year. Those number were slightly better than market expectations.
The key outside markets today see the U.S. dollar index firmer. Nymex crude oil futures prices are down and trading around $77.00 a barrel. Oil traders are awaiting an OPEC-plus cartel meeting Wednesday. Meantime, the yield on the benchmark U.S. 10-year Treasury note is presently fetching 3.538%.
U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and chain store retail indexes, the employment cost index, the U.S. monthly house price index, the S&P-Case Shiller-CoreLogic house indexes and the Chicago ISM business survey.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are modestly lower in early U.S. trading, on a corrective pullback after hitting a six-week high last Friday. Prices are in an 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 bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 4,044.00 and then at this week’s high of 4,086.00. Support for active traders is seen at 4,000.00 and then at last week’s low of 3,963.25. Wyckoff’s Intra-day Market Rating: 4.0
March Nasdaq index futures: Prices are slightly lower in early U.S. trading on a corrective pullback after hitting a six-week high last Friday. Prices are in an uptrend on the daily bar chart. 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 bearish early today. Shorter-term technical resistance is seen at the overnight high of 12,004.50 and then at this week’s high of 12,252.00. On the downside, shorter-term support is seen at 11,800.00 and then at last week’s low of 11,604.50. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are slightly up in early U.S. trading. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at this week’s high of 130 16/32 and then at 131 even. Shorter-term support lies at last week’s low of 129 10/32 and then at 129 even. Wyckoff’s Intra-Day Market Rating: 5.0
March U.S. T-Notes: Prices are firmer and in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term resistance lies at this week’s high of 114.25.0 and then at 115.00.0. Shorter-term technical support lies at Monday’s low of 114.05.5 and then at 114.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
EURO CURRENCY
The March Euro currency futures are weaker in early U.S. trading. Bulls 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 bearish early today. The Euro currency finds shorter-term technical resistance at the January high of 1.0962 and then at 1.1000. Shorter-term support is seen at the overnight low of 1.0830 and then at 1.0800. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
March Nymex crude oil prices are lower and hit a three-week low in early U.S. trading. The shorter-term moving averages 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 (RSI and slow stochastics) are bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $78.14 and then at $80.00. Look for sell stops just below technical support at the overnight low of $76.55 and then at $75.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
Prices were lower overnight. Not much new recently. Corn and soybean market bulls have the overall near-term technical advantage. Wheat futures bears have the solid chart advantage. Grain market traders are focusing on the outside markets for their daily price direction.
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