Tuesday, February 2–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly firmer overnight. U.S. stock indexes are pointed toward higher openings when the New York day session begins and have made strong recoveries after the recent declines. Traders and investors are more upbeat this week on news that the Covid-19 pandemic, while still gripping many countries, is showing some signs of peaking in the U.S. and Europe as vaccines continue to be distributed to populations, but not without some serious bottlenecks. Also, marketplace attention is on a new pandemic relief package that is likely to pass the U.S. Congress in the coming weeks. It also appears the GameStop and “Redditor” trade saga has died down, at least for now, as the marketplace again focuses on corporate earnings reports and upcoming economic data that includes Friday’s U.S. employment situation report.
Silver futures prices are trading sharply lower in early U.S. trading, after posting three sessions of solid gains. The big pullback from Monday’s eight-year high of $30.35 in March silver futures suggests retail trader efforts to produce a short squeeze have failed—at least for the moment. The big jump in silver futures caught the attention of the Commodity Futures Trading Commission (CFTC), with acting Chairman Rostin Behnam saying the futures regulator is “closely monitoring” the activity. “The Commission is communicating with fellow regulators, the exchanges, and stakeholders to address any potential threats to the integrity of the derivatives markets for silver and remains vigilant in surveilling these markets for fraud and manipulation,” he stated. The Comex did raise trading margins on silver futures this week.
In other overnight news, the Euro zone economy contracted 0.7% in the fourth quarter and shrunk 5.1%, year on year. Those numbers were just a bit better than expected, however.
The key “outside markets” today see the U.S. dollar index higher and hitting a seven-week high overnight. Importantly, the USDX is now trending higher on a near-term basis and some of the major currency futures markets are now in fledgling near-term price downtrends, while others have at least seen their price uptrends stall. Meantime, Nymex crude oil futures prices are solidly higher, hit a more-than-12-month high overnight and trading around $55.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note stands at 1.10%.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the ISM New York report on business, the IDB/TIPP economic optimism index and domestic auto industry sales.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are higher in early U.S. trading and have made a strong rebound after hitting a four-week low early Monday. Bulls have the firm overall near-term technical advantage. However, a near-term price uptrend on the daily bar chart has at least temporarily been negated. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is even with 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 overnight high of 3,804.00 and then at 3,823.50. Buy stops likely reside just above those levels. Downside support for active traders is seen at the overnight low of 3,760.00 and then at 3,730.00. Wyckoff’s Intra-day Market Rating: 6.5
March Nasdaq index futures: Prices are higher in early U.S. trading and have made a strong rebound after hitting a two-week low Monday. Bulls have the firm overall near-term technical advantage. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-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 13,400.00 and then at 13,500.00. On the downside, shorter-term support is seen at the overnight low of 13,230.50 and then at 13,100.00. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are lower and hit a two-week low in early U.S. trading. Bears have the solid overall near-term technical advantage and have regained downside momentum. 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 169 1/32 and then at this week’s high of 169 12/32. Shorter-term support lies at 168 even and then at the January low of 167 11/32. Wyckoff’s Intra-Day Market Rating: 4.0
March U.S. T-Notes: Prices are lower in early U.S. trading. 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 137.07.0 and then at this week’s high of 137.09.5. Shorter-term technical support lies at last week’s low of 136.28.5 and then at 136.20.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
EURO CURRENCY
The March Euro currency futures are lower and hit a two-month low in early U.S. trading. The shorter-term moving averages for the Euro are bearish early today, as the 4-day is below the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators for the Euro are bearish early today. The Euro currency finds shorter-term technical resistance at the overnight high of 1.2098 and then at this week’s high of 1.2147. Shorter-term support is seen at 1.2000 and then at 1.1950. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
March Nymex crude oil prices are solidly higher and hit a 12-month high in early U.S. trading. Bulls have the solid overall near-term technical advantage and prices have seen a bullish upside “breakout” from the recent trading range at higher levels. 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 bullish early today. Look for buy stops to reside just above technical resistance at $55.00 and then at $56.00. Look for sell stops just below technical support at $54.00 and then at today’s low of $53.45. Wyckoff’s Intra-Day Market Rating: 7.0
GRAINS
U.S. grain futures are lower in early U.S. pre-market trading, on some routine profit taking from recent gains. The bulls still have the overall near-term technical advantage as prices are not far below their recent highs. Supply and demand fundamentals are also still bullish for the grains.
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