Friday, January 17–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mixed to firmer overnight. U.S. stock indexes are pointed toward higher openings and at record highs again when the New York day session begins. Trader and investor risk appetite remains robust amid a quieter geopolitical front. Given the low interest rate environment at present, and no signs of inflation becoming problematic any time soon, many investors reckon the only game in town is and will be buying shares.
In overnight news China, the world’s second-largest economy, had its worst annual GDP growth pace in 29 years in 2019, at 6.1%. China’s industrial production was up 6.9% in December, year-on-year, which did beat expectations. All in all, the marketplace deemed the data as more upbeat because China’s economy is picking up speed from what was seen a few months ago.
Meantime, the Euro zone consumer price index was reported up 0.3% in December from November and up 1.3%, year-on-year. Those numbers were in line with expectations but still underscore the very low inflationary environment in the major economies.
The markets are so far paying very little attention to the impeachment process of President Trump. The U.S. Senate is set for Trump’s trial, likely starting in the next couple weeks.
The key outside markets today see crude oil prices slightly up and trading around $58.75 a barrel. The U.S. dollar index is higher early today.
U.S. economic data due for release Friday includes new residential construction, industrial production and capacity utilization and the University of Michigan consumer sentiment survey.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are higher in early U.S. trading and hit another contract and record high overnight. Bulls still have the solid near-term technical advantage and there are no early close to suggest a market top is close at hand. 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 neutral to bullish early today. Today, shorter-term technical resistance comes in at the overnight contract high of 3,327.00 and then at 3,350.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at Thursday’s low of 3,294.00 and then at this week’s low of 3,265.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.5
March Nasdaq index futures: Prices are up in early U.S. trading and hit a contract and record high overnight. Bulls have the solid near-term technical advantage to suggest more upside. 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 neutral to bullish early today. Shorter-term technical resistance is seen at the contract high of 9,172.50 and then at 9,200.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 9,133.50 and then at 9,100.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are lower in early U.S. trading. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at today’s high of 157 30/32 and then at 158 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 157 5/32 and then at 157 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
March U.S. T-Notes: Prices are near steady in early U.S. trading. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term resistance lies at this week’s high of 129.14.0 and then at 129.20.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 129.00.0 and then at this week’s low of 128.25.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
U.S. DOLLAR INDEX
The March U.S. dollar index is higher in early U.S. trading and is headed for a bullish weekly high close. Bulls have gained the slight overall near-term technical advantage. The shorter-term moving averages for the dollar index are bullish early today, as the 4-day is above the 9-day and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at this week’s high of 97.305 and then at 97.400. Shorter-term support is seen at the overnight low of 97.010 and then at this week’s low of 96.815. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
February Nymex crude oil prices are modestly up in early U.S. trading. Recent price action still suggests a near-term market top is in place. The shorter-term moving averages are bearish early today as the 4-day is below the 9-day and 18-day. The 9-day is below 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 this week’s high of $59.27 and then at $60.00. Look for sell stops just below technical support at the overnight low of $58.42 and then at this week’s low of $57.36. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
US grain futures are mixed but mostly up in early US pre-market trading. Corn is up around 3 cents, while soybeans are around 1 1/2 cents lower and wheat is 1 to 3 cents higher. It appears to be a classic “buy the rumor, sell the fact” situation regarding the U.S.-China partial trade deal. Prices rallied up to the signing of the agreement and then promptly sold off. The grain market bears have seized the initiative by promoting the notion that the signed deal is so vague that it’s unclear just how much ag products China will purchase from the U.S., and when. It appears grain market traders now want actual Chinese purchases showing up in USDA export sales reports before they get to bulled up. Wheat traders are also monitoring a major winter storm and very cold temperatures hitting the northern US plains states on Friday and Saturday. However, most traders expect snow cover to limit any damage from the bitterly cold weather expected. This week’s price action in the grain futures markets has inflicted significant near-term technical damage to the corn and soybean markets, to suggest their price action will be sideways-at-best in the near term. And if corn and soybeans languish in the near term, it’s hard to imagine wheat being able to continue its price uptrend on the 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