Wednesday, December 18–Jim Wyckoff’s Morning Markets Report
Asian and European stock indexes were mixed overnight. The U.S. stock indexes are pointed toward modestly higher openings and will be at or near 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.
Risk appetite is receding a bit at mid-week, following last week’s U.S.-China partial trade agreement. That deal has yet to be signed and there are many skeptics that wonder how China will be able to purchase $40 billion worth of agricultural products, which is about double the previous record-high annual China ag purchases from the U.S.
In overnight news, the Euro zone consumer price index for November was reported down 0.3% from October and up 1.0%, year-on-year, which was in line with trade expectations but still shows worrisomely low inflation in Europe.
The key “outside markets” today see the U.S. dollar index firmer. Greenback bulls are still on the defensive, however, after prices hit a 4.5-month low last week. Meantime, Nymex crude oil prices are weaker and trading around $60.50 a barrel after hitting a three-month high Tuesday.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are slightly higher in early U.S. trading and close to Tuesday’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 up and near Tuesday’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 to bullish early today. Shorter-term technical resistance is seen at contract high of 8,626.50 and then at 8,650.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at this week’s low of 8,530.00 and then at 8,500.00. 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 higher in early U.S. trading. Bulls and bears are on a level overall near-term technical playing field amid recent choppy trading. 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 158 2/32 and then at 158 11/32. Buy stops likely reside just above those levels. Shorter-term support lies at this week’s low of 156 21/32 and then at 156 5/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
March U.S. T-Notes: Prices are higher in early U.S. trading. Bears have 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 neutral early today. Shorter-term support lies at this week’s low of 128.13.0 and then at 128.05.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at this week’s high of 128.30.0 and then at 129.00.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The March U.S. dollar index is firmer in early U.S. trading. Bears still 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 to bullish early today. The dollar index finds shorter-term technical resistance at 97.000 and then at 97.250. Shorter-term support is seen at this week’s low of 96.495 and then at last week’s low of 96.295. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
January Nymex crude oil prices are weaker in early U.S. trading, on a normal corrective pullback after hitting a three-month high Tuesday. 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 to bearish early today. Look for buy stops to reside just above technical resistance at this week’s high of $61.06 and then at the September high of $61.48. Look for sell stops just below technical support at this week’s low of $59.71 and then at $59.27. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
US grain futures prices were weaker overnight. Corn and soybeans were down 1 to 2 cents and wheat was off around 4 to 7 cents. The markets are seeing normal downside corrections following recent good gains that have changed the near-term technical postures to bullish for wheat and soybeans and neutral for corn. Grain trader enthusiasm has receded a bit at mid-week, following last week’s U.S.-China partial trade agreement. That deal has yet to be signed and there are many skeptics that wonder how China will be able to purchase $40 billion worth of agricultural products, which is about double the previous record-high annual China ag purchases from the U.S. Some believe part of the total will be U.S. farm equipment and not just ag commodities. Soybean oil futures this week hit a 1.5-year high as U.S. lawmakers have amended a government spending bill to extend a tax credit for the biodiesel industry through 2022 and retroactively to when it expired in 2018. Price action into the end of the year will likely go a long way in determining if the US grain futures markets can sustain price uptrends, or continue to languish and trade sideways. 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.
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