Wednesday, January 8–Jim Wyckoff’s Morning Markets Report
Global markets that were open Tuesday evening U.S. time were rocked when Iran launched at least a dozen missiles at military bases in Iraq where U.S. troops were stationed. Iran immediately claimed responsibility for the attacks, which it called “hard revenge” for the U.S. killing of its leading military general last week. Reports say there are no U.S. casualties. President Trump tweeted “all is well” and said he would have more to say today. At first blush, it appears the Iranian leadership launched the missiles to appease Iranian citizens who were calling for revenge. However, it also appears Iran did not want to kill Americans which would then likely see a massive U.S. retaliation. Reports also said Iranian officials notified the U.S. the missile strikes were coming. Military analysts believe Iran’s missiles are accurate enough to have inflicted more loss of human life, if that’s what Iran’s leaders wanted. But that’s still just speculation. Iran’s leadership did say the missile attacks were “proportionate” and said they did not want an escalation of the conflict. The wildcard is, how will Trump respond? The marketplace Wednesday morning is acting like this situation will de-escalate from here, at least for the near term.
Gold prices spiked to a nearly seven-year high of $1,613.30 on initial news of the Iranian missile attack. Crude oil spiked to a nine-month high of $65.65, basis Nymex crude oil futures. U.S. Treasury prices rallied on the initial news, while U.S. stock indexes sold off sharply. However, once it appeared there were no U.S. casualties in the Iranian attack, global markets began to settle down. Gold prices are now just moderately up and oil is slightly higher. Asian and European stock markets were weaker overnight.
Right now, U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins. Nymex crude oil prices are trading around $63.00 a barrel and the U.S. dollar index is modestly up.
The other news overnight is the crash of a Ukrainian Boeing 737 jet airliner in Iran that killed over 170 people. Right now, Iranian authorities are saying the cause of the crash is mechanical issues. This plane was not the 737 Max that has been grounded for almost a year.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the ADP national employment report, and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are firmer in early U.S. trading after spiking to a three-week low overnight. Bulls still have the solid near-term technical advantage. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Today, shorter-term technical resistance comes in at this week’s high of 3,254.50 and then at the contract high of 3,263.50. Buy stops likely reside just above those levels. Downside support for active traders today is seen at 3,200.00 and then at the overnight low of 3,181.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
March Nasdaq index futures: Prices are firmer in early U.S. trading after hitting a three-week low overnight. 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 to bullish early today. Shorter-term technical resistance is seen at the contract high of 8,907.25 and then at 8,950.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 8,800.00 and then at 8,750.00. 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 slightly up in early U.S. trading after spiking to a five-week high overnight. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at 158 even and then at 159 even. Buy stops likely reside just above those levels. Shorter-term support lies at this week’s low of 157 11/32 and then at 157 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
March U.S. T-Notes: Prices are firmer in early U.S. trading and well down from the spike high overnight that saw prices hit a nine-week high. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at Monday’s high of 129.16.0 and then at 129.20.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at this week’s low of 129.04.5 and then at 129.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The March U.S. dollar index is firmer in early U.S. trading. Bears have the overall near-term technical advantage amid a price downtrend in place on the daily chart. 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 bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 96.845 and then at 97.000. Shorter-term support is seen at the overnight low of 96.525 and then at this week’s low of 96.230. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
February Nymex crude oil prices are slightly up in early U.S. trading after spiking to a nine-month high of $65.65 overnight. Bulls have the solid near-term technical advantage amid a three-month-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 $64.00 and then at $65.00. Look for sell stops just below technical support at this week’s low of $62.11 and then at $61.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
US grain futures were mixed overnight. Corn was off around 1 1/2 to 2 cents, soybeans down around 1 cent and wheat steady to 1 1/2 cents higher. Geopolitical tensions are high, which means less buying interest in the grains due to the keen uncertainty. Traders are awaiting Friday’s monthly USDA supply and demand report. The agency will update estimates of the size of the US corn and soybean crops. The key “outside markets” remain friendly for the grain futures markets, as the U.S. dollar index is trending lower and crude oil prices are trending higher. Other raw commodity markets like gold, silver, sugar and cotton are also making bull moves, which should further support some speculative buying interest in the grains in the near term.
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