Wednesday, January 30–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
European and Asian stock markets were again narrowly mixed overnight, ahead of key news events to play out this week. U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins. A negative earnings report from Apple, released late Tuesday, has U.S. investors in a tentative mood today.
The economic highlight at mid-week is the Federal Reserve’s Open Market Committee (FOMC) meeting that began on Tuesday morning and ends Wednesday afternoon with a statement on monetary policy. No change in monetary policy is expected. However, traders want to know if the Fed today will tip its hand regarding the course of monetary policy in 2019. Markets could become active and volatile following the results of the meeting, which includes a press conference by Fed Chairman Jerome Powell after the FOMC statement. Powell is getting a reputation for putting his foot in his mouth while making comments to the press or at speeches.
The U.K. parliament on Tuesday evening backed the “Plan B” Brexit initiative from Prime Minister Theresa May. The Parliament had rejected May’s initial Brexit plan. The British pound was not significantly impacted by the news.
U.S. and China high-level trade officials are meeting in Washington, D.C, on Wednesday and Thursday. There is no consensus at all on any progress that may or may not be made at this week’s talks. The U.S. government this week filed new charges against the high-tech company from China, Huawei. President Trump also plans to speak to the Chinese delegation that is in Washington this week.
The political situation in Venezuela is still very fluid at present, with the potential for civil violence. The U.S. on Monday slapped economic sanctions on the country, which is a major oil producer.
Gold prices hit an eight-month high today, partly on notions of an easier Fed monetary policy in the coming months, and also on some safe-haven demand.
The outside markets today see the U.S. dollar index trading near steady. Meantime, Nymex crude oil prices are firmer and trading around $53.50 a barrel.
U.S. economic reports due for release Wednesday include the weekly MBA mortgage applications survey, the ADP national employment report, the Treasury’s quarterly refunding announcement, pending home sales and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are slightly up in early U.S. trading. Prices are still in an uptrend on the daily bar chart. But trading action has been sideways for several sessions. The shorter-term moving averages (4-, 9- and 18-day) are still 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 neutral to bearish early today. Today, shorter-term technical resistance comes in at this week’s high of 2,663.50 and then at the January high of 2,677.75. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 2,622.25 and then at 2,600.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
March Nasdaq index December futures: Prices are firmer in early U.S. trading. Prices are still in an uptrend on the daily bar chart, but trading has been sideways for two weeks. 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 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 6,750.00 and then at 6,800.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at this week’s low of 6,616.75 and then at last week’s low of 6,592.25. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are slightly down in early U.S. trading today. Trading has been choppy recently. Bulls have the overall near-term technical advantage. 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 last week’s high of 145 30/32 and then at 146 11/32. Buy stops likely reside just above those levels. Shorter-term support lies at this week’s low of 144 28/32 and then at the January low of 144 9/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
March U.S. T-Notes: Prices are weaker in early U.S. trading. Bulls have the overall chart advantage. 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 early today. Shorter-term resistance lies at this week’s high of 121.26.0 and then at 122.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at Tuesday’s low of 121.14.5 and then at this week’s low of 121.08.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
U.S. DOLLAR INDEX
The March U.S. dollar index is near steady in early U.S. trading. The shorter-term moving averages for the dollar index 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 dollar index are neutral to bearish early today. The dollar index finds shorter-term technical resistance at this week’s high of 95.595 and then at 96.000. Shorter-term support is seen at this week’s low of 95.305 and then at 95.000. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
March Nymex crude oil prices are firmer in early U.S. trading. Trading has turned choppy. The shorter-term moving averages are neutral early today as the 4-day is even with the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral to bullish early today. Look for buy stops to reside just above technical resistance at the January high of $54.51 and then at $55.00. Look for sell stops just below technical support at $53.00 and then at $52.50. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
Grain futures were firmer overnight on short covering. Corn and wheat bears have the near-term technical advantage, while the soybean market is in a neutral near-term technical posture. The next significant economic data for the grain markets to digest will be Thursday’s weekly USDA export sales report.
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