Wednesday, February 27–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Asian and European stock markets were mostly lower overnight. U.S. stock indexes are also pointed toward weaker openings when the New York day session begins. There is some risk aversion in the marketplace today, especially in Asian markets.
There is a geopolitical hotspot that has the attention of the world marketplace at mid-week. India and Pakistan have exchanged military strikes on each other the past two days. India bombed what it said was a terrorist camp in Pakistan, with Pakistan retaliating by shooting down two Indian aircraft. This news has Asian stock and financial markets on edge.
Brexit concerns still have European traders just slightly worried, but it appears Prime Minister Theresa May and Parliament have agreed to extend the Brexit deadline past late-March if a deal on the U.K. exiting the European Union is not reached.
Traders, investors and markets did not show big reactions to Federal Reserve Chairman Jerome Powell’s testimony to the U.S. Senate on Tuesday. Powell sounded a more dovish tone on U.S. monetary policy, which is what most expected. Powell speaks to the House of Representatives today.
In another sign of the low inflation expectations in the world marketplace at present, the German government today auctioned its 10-year bonds (bunds) for an average yield of just 0.12%. That’s the lowest level in nearly 2.5 years.
The key outside markets today see the U.S. dollar index slightly lower. The greenback bulls are fading a bit this week. Nymex crude oil prices are higher and trading around $56.50 a barrel.
U.S. economic reports due for release Wednesday include the weekly MBA mortgage applications survey, the advance economic indicators report, pending home sales, manufacturers’ shipments and inventories, and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are weaker on another corrective pullback after hitting a nearly three-month high on Monday. Prices are still in an uptrend on the daily bar chart and the bulls have the firm 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. 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 this week’s high of 2,819.50 and then at 2,825.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at last week’s low of 2,768.50 and then at 2,750.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
June Nasdaq index December futures: Prices are slightly lower on profit taking after hitting a three-month high on Monday. Prices are still 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 this week’s high of 7,195.00 and then at 7,225.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at this week’s low of 7,100.00 and then at 7,050.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are near steady in early U.S. trading today. Trading has been choppy recently. Bulls still 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 even with the 9-day. The 9-day is above 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 146 17/32 and then at 147 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 145 31/32 and then at Tuesday’s low of 145 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
June U.S. T-Notes: Prices are slightly up in early U.S. trading. Bulls have the overall chart advantage. 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 bullish early today. Shorter-term resistance lies at 122.28.0 and then at 123.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at Tuesday’s low of 122.12.5 and then at this week’s low of 122.08.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The June U.S. dollar index is weaker and hit a three-week low in early U.S. trading. Bulls still have the overall near-term technical advantage, but have faded a bit recently. 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 even with the 18-day moving average. Short-term oscillators for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 95.570 and then at Tuesday’s high of 95.835. Shorter-term support is at 95.000 and then at 94.750. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
April Nymex crude oil prices are higher in early U.S. trading. 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 $57.00 and then at the February high of $57.81. Look for sell stops just below technical support at $56.00 and then at $55.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
Grain futures were firmer overnight on short covering and bargain hunting. General worldwide demand for U.S. grains remains anemic, which is keeping the bears in overall control of the grain markets.
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