Thursday, December 19–Jim Wyckoff’s Morning Markets Report
Asian and European stock indexes were mixed to weaker overnight. The U.S. stock indexes are pointed toward slightly higher openings and near this week’s record highs when the New York day session begins. Traders and investors are turning their attention to the upcoming holidays, so trading interest and volumes are likely to wane the next couple weeks.
The global market place appears to have so far taken in stride the U.S. House of Representatives’ impeachment of President Trump, which had been fully expected for weeks.
In overnight news, Sweden’s central bank (Riksbank) raised its key interest rate to zero percent. This has many market watchers thinking other major central banks of the world which have negative interest rates are also on a path to raise their interest rates. The Bank of England concludes its monetary policy meeting later today, with no changes expected. Earlier Thursday the Bank of Japan left its monetary policy unchanged, with its key interest rate at 0.1%.
The key “outside markets” today see the U.S. dollar index weaker. Meantime, Nymex crude oil prices are near steady and trading around $61.00 a barrel after hitting a three-month high Wednesday.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Philadelphia Fed business survey, leading economic indicators, existing home sales and international transactions (current account).
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are near steady in early U.S. trading and close to this week’s record high. 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. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at the contract high of 3,203.50 and then at 3,220.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 3,177.00 and then at 3,159.25. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
March Nasdaq index futures: Prices are slightly down but near this week’s contract and record high. Bulls 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 neutral early today. Shorter-term technical resistance is seen at contract high of 8,641.25 and then at 8,675.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 8,580.00 and then at this week’s low of 8,530.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are lower and hit a five-week low in early U.S. trading. Bears this week have gained the overall near-term technical advantage. 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 bearish early today. Shorter-term technical resistance is seen at 156 even and then at the overnight high of 156 12/32. Buy stops likely reside just above those levels. Shorter-term support lies at the November low of 155 1/32 and then at 154 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 3.0
March U.S. T-Notes: Prices are lower in early U.S. trading. Bears have the firm overall near-term technical advantage. 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 bearish early today. Shorter-term support lies at the December low of 127.29.0 and then at 127.24.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 128.10.5 and then at 128.16.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The March U.S. dollar index is weaker in early U.S. trading. Bears have 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 this week’s high of 97.045 and then at 97.250. Shorter-term support is seen at 96.585 and then at this week’s low of 96.295. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
January Nymex crude oil prices are slightly up in early U.S. trading and near this week’s three-month high. Bulls have the firm near-term technical advantage and are keeping in place an 11-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 early today. Look for buy stops to reside just above technical resistance at this week’s high of $61.18 and then at the September high of $61.48. Look for sell stops just below technical support at $60.00 and then at this week’s low of $59.71. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
US grain futures prices were mixed overnight. Corn was down 1 to 2 cents, soybeans off around 5 cents and wheat up around 3 cents. The markets late this week are seeing normal downside corrections following recent good gains that recently pushed prices to multi-week highs that also changed the near-term technical postures to more bullish–especially for wheat and soybeans. There is also some trepidation among grain traders after the initial luster has worn off the Phase 1 US-China trade deal reached last week. That agreement has yet to be signed and there are many skeptics that cannot see China purchasing $40 billion worth of agricultural products, annually, which is about double the previous record-high annual China ag purchases from the US. Some reports say Brazil could lose $10 billion in annual farm exports to China if the U.S.-China trade deal is adhered to by China. Brazil ag exports to China rose to $35 billion in 2018, from $276 billion in 2017. China has invested a lot of money in Brazil’s agriculture infrastructure and many grain market watchers believe China does not want to jeopardize is relationship with Brazil by purchasing more US ag products. Thus, the skepticism on the dollar amount China is expected to spend buying US ag products. Traders Thursday will closely examine the weekly USDA export sales report, especially looking for stepped-up buys from China. Grain futures price action into the end of the year will likely go a long way in determining if the grain futures markets can sustain their fledgling price uptrends, or languish and trade sideways.
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