Tuesday, February 18–Jim Wyckoff’s Morning Markets Report
Asian and European shares were mostly lower overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins. Risk aversion is keener in the marketplace on this first trading day of the week for U.S. traders and investors, following the President’s Day holiday Monday.
The U.S. marketplace is downbeat following news that Apple has issued a warning saying its first-quarter sales will be lower than initially expected due to the Coronavirus outbreak that has slowed or halted the delivery of Apple’s needed supplies coming from China. The rate of daily spread of the illness has slowed to the lowest since January, reports said. Over 1,800 people have died in China from the illness. The global supply chain has been significantly impacted, as seen by the Apple sales-miss news. Reports also said over 730 million in China are still effectively quarantined, suggesting supply-chain disruptions will continue as the world’s second-largest economy is presently crippled.
In other overnight news, the closely watched German ZEW economic expectations index dropped sharply in February, to 8.7 versus 26.7 in January. The coronavirus was blamed for most of the big decline in February.
The key outside markets today see crude oil prices lower and trading around $51.25 a barrel. Meantime, the U.S. dollar index is slightly up and hit a multi-month high in early U.S. trading.
U.S. economic data due for release Tuesday includes the Empire State manufacturing survey, the NAHB housing market index and Treasury international capital data.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are weaker after hitting another new record high in overnight trading. The bulls still 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 bearish early today. Today, shorter-term technical resistance comes in at the overnight contract high of 3,392.50 and then at 3,400.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at 3,348.50 and then at 3,325.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.0
March Nasdaq index futures: Prices are lower after hitting a contract and record high in overnight trading. Bulls still 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 bearish early today. Shorter-term technical resistance is seen at 9,600.00 and then at the overnight contract high of 9,687.50. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 9,534.25 and then at 9,500.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are solidly higher in early U.S. trading. Bulls have the overall near-term technical advantage. 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 bullish early today. Shorter-term technical resistance is seen at the overnight high of 163 16/32 and then at 164 even. Buy stops likely reside just above those levels. Shorter-term support lies at 163 even and then at 162 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5
March U.S. T-Notes: Prices are higher in early U.S. trading. Bulls have the overall near-term technical advantage. 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 bullish early today. Shorter-term resistance lies at the overnight high of 131.12.5 and then at 131.16.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 131.00.0 and then at the overnight low of 130.25.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5
U.S. DOLLAR INDEX
The March U.S. dollar index is slightly higher and hit another contract high in early U.S. trading. 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 today. The dollar index finds shorter-term technical resistance at the contract high of 99.160 and then at 99.500. Shorter-term support is seen at 98.745 and then at last week’s low of 98.490. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
March Nymex crude oil prices are lower in early U.S. trading. The shorter-term moving averages are neutral early today as the 4-day is above the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral early today. Look for buy stops to reside just above technical resistance at the overnight high of $52.41 and then at $53.00. Look for sell stops just below technical support at $51.00 and then at $50.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
US grain futures are higher in early US pre-market trading Tuesday. Corn is 3 1/2 cents higher,
soybeans around 4 cents higher and wheat is around 10 cents up. The rate of daily spread of the Coronavirus illness in China has slowed to the lowest since January, reports said. That has at least temporarily assuaged the grain markets early this week. Over 1,800 people have died in China from the illness. The global supply chain has been significantly impacted, as seen by the Apple sales-miss news. Reports also said over 730 million in China are still effectively quarantined, suggesting supply-chain disruptions will continue as the world’s second-largest economy is presently crippled. Grain traders are still looking for stepped-up China purchases of US agricultural products in the near term. Wheat prices are seeing support from reports the Australian wheat crop is being pegged at the lowest production in many years. Labor unrest in Brazil is also threatening to reduce soybean shipments from that country. US grain futures traders will closely examine the monthly NOPA crush report due for released today, along with the weekly USDA export inspections report. The latest CFTC commitments of traders report from last Friday shows the big speculative funds short 72,084 corn futures contracts, short 92,172 soybean futures contracts, and long 45,940 wheat futures contracts.
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