Tuesday, January 25–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed overnight, with Asian shares mostly down and European shares mostly up. U.S. stock indexes are pointed toward lower openings when the New York day session begins. The major U.S. indexes hit seven-month lows on Monday. Serious near-term technical damage has been inflicted upon the U.S. stock indexes, to suggest they have at put in near-term market tops. However, the big rebounds from Monday’s strong losses in the U.S. indexes and the closes nearer the daily highs does suggest the stock market bears are now exhausted.
Risk aversion remains elevated early this week. Russia appears poised to invade Ukraine. NATO allies are responding by sending arms to Ukraine and putting NATO troops on higher alert, including some U.S. troops. The situation appears to be getting graver by the day.
The U.S. data point of the week will be the Federal Reserve’s Open Market Committee (FOMC) meeting that begins Tuesday morning and ends Wednesday afternoon with a statement and press conference from Fed Chairman Jerome Powell. It’s expected the Fed will raise U.S. interest rates at its March FOMC meeting. The marketplace appears to be getting more anxious regarding how the Fed is going to deal with rising and even problematic price inflation. Most believe at this FOMC meeting the Fed and Chairman Powell will better lay the groundwork for four U.S. interest rate increases this year.
The key outside markets today see crude oil prices firmer and trading around $84.00 a barrel. The U.S. dollar index is higher early today. The U.S. Treasury 10-year note yield is presently fetching 1.778%.
U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and chain store retail sales reports, the monthly house price index, the S&P Core-Logic housing indexes, the Richmond Fed business survey, and the consumer confidence index.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are solidly lower in early U.S. trading. Prices Monday hit a seven-month low. Prices are trending lower on the daily chart, to suggest a market top is in place. The shorter-term moving averages (4-, 9- and 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Today, shorter-term technical support comes in at 4,300.00 and then at 4,252.75. Sell stops likely reside just below those levels. Resistance for active traders is seen at this week’s high of 4,427.50 and then at 4,750.00. Buy stops likely reside just above those levels. Wyckoff’s Intra-day Market Rating: 3.5
March Nasdaq index futures: Prices are solidly lower in early U.S. trading. Prices Monday hit a seven-month low. Prices are trending lower on the daily chart to suggest a market top is in place. Shorter-term moving averages (4- 9-and 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at this week’s high of 14,582.00 and then at last Friday’s high of 14,858.50. On the downside, shorter-term support is seen at the overnight low of 14,151.25 and then at 14,000.00. Wyckoff’s Intra-Day Market Rating: 3.0.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are lower in early U.S. trading. Bears have the solid overall near-term technical advantage. Prices have been trending lower for seven weeks. 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 below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at the overnight high of 155 24/32 and then at 156 even. Shorter-term support lies at the overnight low of 154 27/32 and then at 154 16/32. Wyckoff’s Intra-Day Market Rating: 4.0
March U.S. T-Notes: Prices are lower 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 128.12.0 and then at this week’s high of 128.22.5. Shorter-term technical support lies at this week’s low of 127.31.5 and then at 127.24.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
EURO CURRENCY
The March Euro currency futures are lower and hit a five-week low in early U.S. trading. Bears 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 and 18-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 overnight high of 1.1341 and then at 1.1381. Shorter-term support is seen at the November low of 1.1221 and then at 1.1200. Wyckoff’s Intra Day Market Rating: 3.0
NYMEX CRUDE OIL
March Nymex crude oil prices are near steady in early U.S. trading. Bulls still have the solid overall near-term technical advantage amid a seven-week-old price uptrend in place on the daily chart. 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 neutral to bearish early today. Look for buy stops to reside just above technical resistance at this week’s high of $86.09 and then at the January high of $87.10. Look for sell stops just below technical support at Monday’s low of $81.90 and then at $81.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
U.S. grain futures are steady to firmer in early U.S. pre-market trading. The grain market bulls are being squelched a bit early this week by keener risk aversion in the general marketplace. The corn and soybean markets are still being supported by very dry weather in South American growing regions. Corn and bean bulls have the firm overall near-term technical advantage. Wheat prices have rebounded recently and the bulls have gained momentum–once again proving resilient.
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