Monday, December 16–Jim Wyckoff’s Morning Markets Report
Asian and European stock indexes were higher overnight. The U.S. stock indexes are pointed toward higher openings and at or very near record highs when the New York day session begins. Risk appetite is keener to start the trading week as events last week cleared up a lot of uncertainty in the world marketplace. The U.S. and China have reached a partial trade deal, U.K. Prime Minister Boris Johnson won an election mandate on Brexit, and the U.S. reached a trading deal with its neighbors, Canada and Mexico.
China also got some upbeat economic data Monday, as its industrial output in November was up 6.2%, year-on-year, beating market expectations for a rise of 5.0%.
In other overnight news, the Euro zone composite purchasing managers index (PMI) came in at 50.6 in December, which was in line with market expectations. However, the manufacturing PMI was 45.9 versus expectations for a reading of 47.3 in the period. A reading below 50.0 suggests contraction in the sector. Germany’s manufacturing PMI came in at 44.1, also a miss to the downside.
The key “outside markets” today see the U.S. dollar lower. Meantime, Nymex crude oil prices are near steady and trading around $60.00 a barrel.
U.S. economic data due for release Monday includes the Chicago Fed national activity index and new residential sales.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are higher and near the contract and record high set Friday, in early U.S. trading. 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 bullish early today. Today, shorter-term technical resistance comes in at the contract high of 3,188.25 and then at 3,200.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Friday’s low of 3,159.75 and then at 3,140.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
March Nasdaq index futures: Prices are up and hit a contract and record high in early U.S. trading. 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 bullish early today. Shorter-term technical resistance is seen at the overnight contract high of 8,558.75 and then at 8,600.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight 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: 6.5.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are weaker 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 Friday’s high of 158 11/32 and then at last week’s high of 159 2/32. Buy stops likely reside just above those levels. Shorter-term support lies at 157 5/32 and then at 156 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. 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 128.20.0 and then at 128.16.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight 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: 4.0
U.S. DOLLAR INDEX
The March U.S. dollar index is weaker in early U.S. trading. Bears 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 bearish early today. The dollar index finds shorter-term technical resistance at 96.810 and then at 97.000. Shorter-term support is seen at Friday’s low of 96.295 and then at 96.000. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
January Nymex crude oil prices are near steady in early U.S. trading. Bulls have the 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 bullish early today. Look for buy stops to reside just above technical resistance at last week’s high of $60.48 and then at $61.00. Look for sell stops just below technical support at the overnight low of $59.71 and then at Friday’s low of $59.27. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
US grain futures prices were higher overnight. Corn was up around 6 cents, soybeans around 8 cents higher and wheat up about 7 cents. Grain traders are cheered to start the trading week as events last week cleared up a lot of uncertainty. The U.S. and China have reached a partial trade deal, in which China has agreed to purchase more US ag products. However, grain traders are still wondering about the timing of the large agricultural purchases agreed to by China. U.K. Prime Minister Boris Johnson won an election mandate on Brexit, and the U.S. reached a trading deal with its neighbors, Canada and Mexico. China also got some upbeat economic data Monday, as its industrial output in November was up 6.2%, year-on-year, beating market expectations for a rise of 5.0%. However, with the China-U.S. trade war at least temporarily at a truce, focus turns back to worldwide demand for U.S. grains, which has been tepid most of this year. 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. 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