Wednesday, February 12–Jim Wyckoff’s Morning Markets Report
Asian and European shares were mostly higher overnight. U.S. stock indexes are also pointed toward higher openings and near record highs when the New York day session begins. Trader and investor risk appetite is upbeat around the globe at midweek. While the coronavirus outbreak continues to spread, the rate of growth of new cases is slowing. There are now over 1,100 reported dead in China and over 45,000 afflicted. Still, there are reports in Asian countries of supply chains and local commerce being significantly interrupted by the outbreak.
In other overnight news, Euro zone industrial output for December was down 2.1% from November and down 4.1%, year-on-year. Those numbers were worse than expected.
The key outside markets today see crude oil prices higher and trading around $50.70 a barrel. Meantime, the U.S. dollar index is slightly up in early U.S. trading and not far below this week’s multi-month high.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the weekly DOE liquid energy stocks report, and the monthly Treasury budget statement. Federal Reserve Chairman Jerome Powell will testify to the Senate today after speaking to the House Tuesday.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are firmer and near Tuesday’s contract and record high in early U.S. trading. The bulls have the solid technical advantage. There are no early chart clues to suggest a market top is close at hand. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Today, shorter-term technical resistance comes in at the contract high of 3,374.50 and then at 3,385.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at the overnight low of 3,355.50 and then at 3,335.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.5
March Nasdaq index futures: Prices are higher and near Tuesday’s contract and record high in early U.S. trading. Bulls have the solid overall 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 bullish early today. Shorter-term technical resistance is seen at the contract high of 9,609.50 and then at 9,650.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 9,523.75 and then at 9,500.00. 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 lower in early U.S. trading. 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 below the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 162 9/32 and then at Tuesday’s high of 162 25/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 161 17/32 and then at 161 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
March U.S. T-Notes: Prices are lower in early U.S. trading. 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 below the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at the overnight high of 130.30.0 and then at Tuesday’s high of 131.06.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 130.20.5 and then at 130.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The March U.S. dollar index is slightly up in early U.S. trading. Prices hit a nine-month high Tuesday. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages for the dollar index 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 for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at the overnight high of 98.725 and then at this week’s high of 98.855. Shorter-term support is seen at this week’s low of 98.490 and then at 98.300. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
March Nymex crude oil prices are higher in early U.S. trading, on more short covering. A price downtrend is still in place on the daily bar chart. The shorter-term moving averages 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 (RSI and slow stochastics) are bullish early today. Look for buy stops to reside just above technical resistance at $51.00 and then at $52.00. Look for sell stops just below technical support at $50.00 and then at the February low of $49.31. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
US grain futures are narrowly mixed in early US pre-market trading Wednesday. With Tuesday’s monthly USDA supply and demand report out of the way with no major surprises, focus is on global commerce. Asian and European shares were mostly higher overnight and U.S. stock indexes are also pointed toward higher openings and near record highs when the New York day session begins. Trader and investor risk appetite is upbeat around the globe at midweek, and that’s a positive for the grain markets. While the coronavirus outbreak continues to spread, the rate of growth of new cases is slowing. There are now over 1,000 reported dead in China and over 44,000 afflicted. Still, there are reports in Asian countries of supply chains and local commerce being significantly interrupted by the outbreak. The wheat markets have faltered this week and technical damage has been inflicted to suggest the wheat markets have put in a least near-term tops. Soybean charts are still overall bearish as prices are trending lower, while corn bears also have the near-term chart advantage amid sideways and choppy trading at lower levels. Another negative element for US grain markets is the strength of the US dollar on the foreign exchange markets. The US dollar index this week hit a multi-month high, thus making US grains more expensive to purchase on the world market in non-US currency.
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