Wednesday, January 9–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
European and Asian stock markets were mostly higher overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. Investors are in a good mood this week as reports continue to be positive on the U.S.-China trade talks going on in Beijing. Those talks are expected to end today. “Talks with China are going very well,” President Trump tweeted Tuesday.
The marketplace is awaiting the Wednesday afternoon release of the minutes from the last meeting of the Federal Reserve’s Open Market Committee (FOMC). Traders will parse the report for clues on the direction and timing of Fed policy in the coming year.
St. Louis Federal Reserve President James Bullard overnight said the Fed should refrain from raising interest rates for fear of bringing on a U.S. recession. Bullard is a voting member of the FOMC.
In other overnight news, the Euro zone reported its unemployment rate for November was 7.9% versus 8.0% in October. The November reading was the lowest in 10 years.
The U.S. government shutdown is into its third week, but the matter is currently not a front-burner issue for markets. President Trump addressed U.S. citizens in a speech on the matter Tuesday evening, and leading Democrats countered.
The key outside markets today see the U.S. dollar index slightly lower. The USDX has been trending sideways to lower on the daily chart for three weeks. Meantime, Nymex crude oil prices are higher and trading above the key $50.00 a barrel level. There are chart clues the oil market has bottomed out, including prices pushing back above the important psychological level of $50.00.
Other 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 today and hit another three-week high overnight. There are early chart clues the index has put in a bottom. 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 bullish early today. Today, shorter-term technical resistance comes in at 2,600.00 and then at 2,625.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Tuesday’s low of 2,547.50 and then at this week’s low of 2,523.25. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
March Nasdaq index December futures: Prices are higher in early U.S. trading and hit another three-week high overnight. There are early technical clues the index has bottomed out. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day average is even with the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at the overnight high of 6,609.50 and then at 6,650.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 6,546.75 and then at 6,500.00. 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 weaker in early U.S. trading today, on more profit taking from recent good gains. Bulls are still in firm near-term technical control. 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 146 even and then at Tuesday’s high of 146 14/32. Buy stops likely reside just above those levels. Shorter-term support lies at 145 even and then at 144 16/32. 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, on more profit taking. Bulls still have the firm chart 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 121.24.0 and then at Tuesday’s high of 122.01.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at 121.16.0 and then at 121.10.0. 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 lower in early U.S. trading. The bulls are fading as prices hit a two-month low Monday and have been trending lower on the daily chart for three weeks. 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 bearish early today. The dollar index finds shorter-term technical resistance at Tuesday’s high of 95.615 and then at this week’s high of 95.730. Shorter-term support is seen at this week’s low of 95.195 and then at 95.000. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
February Nymex crude oil prices are higher and hit a three-week high of $51.09 in overnight trading. Strong longer-term technical support at the $42.00 area appears to have put in a market bottom. The shorter-term moving averages are neutral early today as the 4-day is above 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 $52.00 and then at $52.50. Look for sell stops just below technical support at the overnight low of $49.71 and then at $49.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
Grain futures were firmer overnight. There are increasing hopes the U.S. and China will reach a trade deal in the coming weeks, which is supporting gains in the grains. Rising oil prices are also bullish for grains and the rest of the raw commodity sector.
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