Asian and European stock markets were mostly up overnight. U.S. stock indexes are also set to open the New York day session sharply higher. The marketplace sees better risk appetite late this week, in the wake of the U.S. elections. While it’s still uncertain who will be the U.S. president in January (although Biden appears most likely to be, at present), a near certainty is that there will be gridlock in the U.S. Congress for at least the next two years. That’s good for stock and financial markets because no major, radical legislation would occur with a split U.S. Congress that will likely see the Republicans control the Senate and the Democrats control the House of Representatives.
The “inflation trade” that had gained steam in the weeks heading into the U.S. elections is now being unwound. Polls forecasting a Democratic sweep had many market watchers reckoning huge government spending programs that would help to ignite inflation. That won’t be the case now, and U.S. Treasury yields are dropping like a rock. The yield on the benchmark 30-year Treasury note is presently 0.74%.
Meantime, the U.S. dollar index has sold off sharply in the wake of the election. The other important outside market sees crude oil prices a bit weaker and trading around $39.00 a barrel. Oil market bulls have had a very good week, to suggest at least sideways and choppy price action for that market in the near term.
In overnight news, the Bank of England Thursday said it will ramp up its monetary stimulus measures as the U.K. grapples with increasing lockdowns as Covid-19 infections continue to rise.
The Federal Open Market Committee (FOMC) meeting that started Wednesday morning on Thursday afternoon concludes with a statement on U.S. monetary policy. Fed Chairman Powell will also hold a press conference Thursday afternoon. No major changes in U.S. monetary policy are expected, but as usual the marketplace will be looking for guidance on future actions from the Fed.
Friday the U.S. employment situation report for October from the Labor Department is out. The key non-farm payrolls number is seen up 530,000 and the unemployment rate is seen at 7.7% versus 7.9% seen in September.
U.S. economic data due for release Thursday include the weekly jobless claims report, the Challenger job-cuts report, preliminary productivity and costs, and the monthly chain store sales index.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are sharply higher and hit a three-week high in early U.S. trading. Bulls have the solid overall near-term technical advantage and are in striking range of hitting new highs. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is below 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 high of 3,508.50 and then at the October high of 3,541.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at 3,450.00 and then at the overnight low of 3,428.25. Wyckoff’s Intra-day Market Rating: 7.5
December Nasdaq index futures: Prices are sharply higher and hit a three-week high in early U.S. trading. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at the overnight high of 12,119.50 and then at the October high of 12,249.00. On the downside, shorter-term support is seen at 11,900.00 and then at the overnight low of 11,771.25. Wyckoff’s Intra-Day Market Rating: 7.5.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are solidly higher and hit a three-week high in early U.S. trading. Prices this week have scored a big and bullish reversal up, which is a solid clue that a market bottom is in place. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is even with the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) bullish early today. Shorter-term technical resistance is seen at the overnight high of 175 27/32 and then at 176 even. Shorter-term support lies at the overnight low of 174 19/32 and then at 174 even. Wyckoff’s Intra-Day Market Rating: 7.0
December U.S. T-Notes: Prices are higher and hit a three-week high in early U.S. trading. Prices this week scored a big and bullish “outside day” up on the daily bar chart, to suggest a near-term bottom is in place. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is even with the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at the overnight high of 139.08.5 and then at 139.14.0. Shorter-term technical support lies at the overnight low of 138.30.5 and then at 138.24.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
EURO CURRENCY
The December Euro currency futures are solidly higher in early U.S. trading. The shorter-term moving averages for the Euro are still 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 Euro are bullish early today. The Euro currency finds shorter-term technical resistance at 1.1850 and then at the October high of 1.18945. Shorter-term support is seen at 1.1800 and then at 1.1750. Wyckoff’s Intra Day Market Rating: 7.0
NYMEX CRUDE OIL
December Nymex crude oil prices are weaker in early U.S. trading but have made a very strong recovery from Monday’s low of $33.64, to suggest a near-term market bottom is in place. 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 this week’s high of $39.25 and then at $40.00. Look for sell stops just below technical support at the overnight low of $38.27 and then at $38.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
US grain futures are solidly higher in early U.S. pre-market trading. Better risk appetite in the marketplace is fueling upside action in the grains. The grain market bulls have the solid overall near-term technical advantage amid price uptrends in place in all three markets. On tap today will be weekly USDA export sales.
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