Thursday, December 12–Jim Wyckoff’s Morning Markets Report
Asian and European stock indexes were mixed mostly firmer overnight. The U.S. stock indexes are pointed toward modestly higher openings when the New York day session begins. The marketplace is still digesting Wednesday’s conclusion of the FOMC meeting of the Federal Reserve, which saw no change in U.S. interest rates and a mostly upbeat assessment of the U.S. economy. The FOMC did tip its hand and say there were no rate-cut plans on the table for 2020 and implied that interest rates could remain stable for a prolonged period of time. The FOMC statement and comments from Fed Chairman Powell were deemed mostly neutral, but the gold and U.S. Treasury markets rallied, while the U.S. dollar index sold off in the aftermath of the FOMC statement Wednesday afternoon.
The European Central Bank is meeting today, headed up by new ECB President Christine Lagarde. No changes in ECB monetary policy are expected.
A general election in the U.K. today will help determine the course of Brexit and Prime Minister Boris Johnson’s conservative policies.
In other overnight news, China’s official Xinhua news agency said China will lower “funding costs” for the overall economy.
Euro zone industrial production in October was reported down 0.5% from September and down 2.2%, year-on-year. Those figures were a bit worse than expected.
The Sunday, Dec. 15 U.S. trade tariffs deadline on China’s imports is looming over the marketplace. While recent rhetoric from both sides has been mostly upbeat recently, traders know that the situation is still very fluid. Many markets are likely to be more tentative the rest of this week, knowing that a surprise could come this weekend.
The key “outside markets” today see the U.S. dollar index firmer. Meantime, Nymex crude oil prices are higher and trading around $59.00 a barrel.
U.S. economic data due for release Thursday includes the weekly jobless claims report and the producer price index.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are slightly higher in early U.S. trading. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is even with 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 contract high of 3,159.75 and then at 3,175.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 3,118.25 and then at 3,100.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
March Nasdaq index futures: Prices are slightly up in early U.S. trading. Bulls have the solid near-term technical advantage. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day average is even with the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at the overnight high of 8,454.50 and then at the contract high of 8,479.25. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 8,400.00 and then at 8,368.25. 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 weaker in early U.S. trading. Bulls and bears are on a level overall near-term technical playing field. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at this week’s high of 159 2/32 and then at 159 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 158 8/32 and then at this week’s low of 157 18/32. 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 and bears are on a level overall near-term technical playing field. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term support lies at the overnight low of 129.01.5 and then at this week’s low of 128.25.5. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at this week’s high of 129.11.0 and then at 129.16.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 4.5
U.S. DOLLAR INDEX
The March U.S. dollar index is slightly up in early U.S. trading after hitting a five-week low Wednesday. Bears have gained the overall near-term technical advantage. The shorter-term moving averages for the dollar index 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 for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at 97.000 and then at this week’s high of 97.275. Shorter-term support is seen at this week’s low of 96.575 and then at 96.250. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
January Nymex crude oil prices are firmer in early U.S. trading. Bulls have the near-term technical advantage and are keeping in place a 10-week-old uptrend on the daily bar 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 bullish early today. Look for buy stops to reside just above technical resistance at this week’s high of $59.52 and then at last week’s high of $59.85. Look for sell stops just below technical support at this week’s low of $58.11 and then at $57.50. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
US grain futures prices were mixed overnight. Corn, soybean and wheat bulls have faded this week, with corn leading the way by dropping to a three-month low. Slack U.S. exports in recent months continue to be a bearish weight overhanging the grain futures markets. Traders will closely examine Thursday morning’s weekly USDA export sales report, including looking for larger purchases from China. This Sunday (Dec. 15) is the deadline for new U.S. trade tariffs going into effect against Chinese goods imported into the U.S. While the rhetoric this week has been mostly upbeat on the matter, the history of the U.S.-China trade war is one of distinct highs and lows regarding progress toward a deal. And grain traders know President Trump’s mercurial personality. Grain traders are looking more closely at weather in South American crop-growing regions. While there are no major problems at present, there are some dry pockets traders are monitoring to see if the dryness persists. One veteran grain markets analyst pointed out Thursday that major droughts start out as minor dry pockets. The near-term technical postures for corn and soybeans remain bearish, with wheat being neutral to slightly bullish 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