Wednesday, November 20–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were weaker overnight and the U.S. stock indexes are pointed toward lower openings when the New York day session begins. There is an uptick in risk aversion at mid-week following comments from President Trump Tuesday, when he said the U.S. could slap more trade tariffs on China. The U.S. Congress is also contemplating passing a resolution in support of Hong Kong’s protesters. And there are ongoing reports coming out of China that no trade deal would be agreed upon by China unless the U.S. lifts all of its tariffs on China’s imports into the U.S. Trump could impose more tariffs on Chinese goods as soon as December 15.
In overnight news, China’s central bank again eased its monetary policy just a bit by lowering its one-year-loan prime rate to 4.15% from 4.2%. The five-year-loan rate was lowered from 4.85% to 4.80%. That’s the second lowering of interest rates this week by the People’s Bank of China.
There was another dour inflation report coming out of the Euro zone Wednesday. The German producer price index for October fell 0.6%, year-on-year, suggesting very low inflation remains a serious problem for the Euro zone.
The U.S. economic data point of the week is Wednesday afternoon’s minutes from the last meeting of the Federal Reserve’s Open Market Committee (FOMC). Traders will be parsing the minutes for clues on the timing of the next monetary policy move by the Fed.
The key “outside markets” today see the U.S. dollar index higher. Nymex crude oil prices are slightly up and trading around $55.35 a barrel.
Other U.S. economic data due for release Wednesday includes the weekly mortgage applications survey and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are weaker on profit taking in early U.S. trading after hitting new contract and record highs on Tuesday. Bulls have the solid overall near-term technical advantage. 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 the overnight high of 3,116.75 and then at the contract high of 3,132.50. Buy stops likely reside just above those levels. Downside support for active traders today is located at 3,100.00 and then at 3,080.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
December Nasdaq index futures: Prices are lower on profit taking after hitting new contract and record highs on Tuesday. Bulls still have the solid near-term technical advantage. 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 8,334.00 and then at the contract high of 8,379.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at this week’s low of 8,279.25 and then at 8,250.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are higher and hit a two-week high in early U.S. trading, on safe-haven demand. Bulls have gained momentum recently. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at the overnight high of 160 17/32 and then at 161 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 159 12/32 and then at 159 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
December U.S. T-Notes: Prices are higher and hit a two-week high in early U.S. trading, on safe-haven demand. Bulls have momentum on their side now. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term support lies at the overnight low of 129.14.0 and then at Tuesday’s low of 129.05.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 129.28.5 and then at 130.00.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The December U.S. dollar index is higher in early U.S. trading. Bulls have the overall near-term technical advantage. 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 with the 18-day moving average. Short-term oscillators for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at 98.000 and then at the November high of 98.300. Shorter-term support is seen at this week’s low of 97.550 and then at 97.250. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
December Nymex crude oil prices are slightly up in early U.S. trading but did hit a three-week low overnight. A six-week-old uptrend on the daily bar chart has been negated this week. 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 neutral to bearish early today. Look for buy stops to reside just above technical resistance at $56.00 and then at $57.00. Look for sell stops just below technical support at the overnight low of $54.76 and then at $54.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
US grain futures prices were mixed overnight, with corn around 2 cents lower, soybeans up 2 to 3 cents and wheat down 2 to 3 cents. The U.S.-China trade talks appear at an impasse at mid-week following comments from President Trump Tuesday, when he said the U.S. could slap more trade tariffs on China. The U.S. Congress is also contemplating passing a resolution in support of Hong Kong’s protesters. And there are ongoing reports coming out of China that no trade deal would be agreed upon by China unless the U.S. lifts all of its tariffs on China’s imports into the U.S. Trump could impose more tariffs on Chinese goods as soon as December 15. US Midwest weather is neutral to slightly bullish for the grain futures markets at midweek as some scattered showers are delaying harvesting, but the bulk of the Corn Belt has been dry enough to have farmers in their fields. However, extended weather forecasts for the region are calling for more precipitation. Grain traders are focusing on thousands of rail workers at Canada’s largest railway, Canadian Pacific Railway that are on strike, which is disrupting shipments of commodities. Canada is a major shipper of commodities on its rail system, including grains. The near-term technical chart postures for all three grain markets favors the bears as all three grains are in near-term price downtrends on the daily bar charts.
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