Thursday, January 16–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mixed in uneventful dealings overnight. U.S. stock indexes are pointed toward higher openings and at or near record highs when the New York day session begins. With the U.S.-China partial trade deal signed and the geopolitical front quieter this week, focus among stock market traders is on earnings reports, which have been generally upbeat. The Dow Jones Industrial average, arguably the most closely watched stock index among the general public, closed above 29,000 for the fist time ever on Wednesday. This writer remembers working on the trading floor of the Chicago Mercantile Exchange in Chicago in the spring of 1985, and the Dow at that time pushed above 1,300.00 for the first time ever.
The key U.S. data point of the day Thursday will be the retail sales report for December, as traders and investors will get a better read on the holiday shopping season. Retail sales are seen up 0.3% from November.
The key outside markets today see crude oil prices slightly up and trading around $58.00 a barrel. The U.S. dollar index is modestly down early today.
Other U.S. economic data due for release Thursday includes the weekly jobless claims report, the Philadelphia Fed business survey, import and export prices, manufacturing and trade inventories and Treasury international capital data.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are firmer in early U.S. trading and hit a contract and record high overnight. Bulls still have the solid near-term technical advantage and there are no early close 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. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bullish early today. Today, shorter-term technical resistance comes in at the overnight contract high of 3,308.00 and then at 3,325.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at 3,280.00 and then at this week’s low of 3,265.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.5
March Nasdaq index futures: Prices are up in early U.S. trading and near the contract and record high set Tuesday. Bulls have the solid near-term technical advantage to suggest more upside. 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 the contract high of 9,114.75 and then at 9,150.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 9,061.50 and then at 9,000.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are near steady in early U.S. trading. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at this week’s high of 158 23/32 and then at 159 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 158 7/32 and then at 158 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
March U.S. T-Notes: Prices are near steady in early U.S. trading. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at this week’s high of 129.14.0 and then at 129.20.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at Wednesday’s low of 129.04.0 and then at 129.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
U.S. DOLLAR INDEX
The March U.S. dollar index is slightly lower in early U.S. trading. Bulls and bears are on a level overall near-term technical playing field. The shorter-term moving averages for the dollar index are bullish early today, as the 4-day is above the 9-day and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators for the dollar index are neutral to bearish early today. The dollar index finds shorter-term technical resistance at Wednesday’s high of 97.180 and then at last week’s high of 97.300. Shorter-term support is seen at the overnight low of 96.875 and then at 96.500. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
February Nymex crude oil prices are slightly up in early U.S. trading. Bulls and fading and recent price action suggests a near-term market top is in place. 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 neutral to bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $58.39 and then at this week’s high of $59.27. Look for sell stops just below technical support at this week’s low of $57.36 and then at $57.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
US grain futures are lower in early US pre-market trading. Corn is down around 5 cents, while soybeans are around 3 cents lower and wheat is 8 to 9 cents lower. The shine of the US-China partial trade deal signing Wednesday has quickly worn off, with grain traders now wondering about the timing and specific amounts of US ag products China will purchase. Adding to concerns is the recent more aggressive posture of US officials in dealing with China’s communications giant, Huawei. The wheat market bulls can argue Thursday’s losses are just some normal profit taking from recent gains that drove prices to multi-month highs on Wednesday. However, the corn and soybean bulls are fading and need to stabilize their markets to avoid serious technical damage being inflicted. The data points of the day for the grain markets will be the weekly USDA export sales report. Forecasts call for US corn sales of 500,000 to 950,000 metric tons (MT), US soybean sales off 400,000 to 850,000 MT, and US wheat sales of 200,000 to 500,000 MT. Wheat traders are also monitoring a major winter storm and very cold temperatures expected to hit the northern US plains states on Friday. However, most traders expect snow cover to limit any damage from the bitterly cold weather expected.
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