Wednesday, December 16–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly higher overnight. U.S. stock indexes are pointed toward higher openings, and near the recent record highs, when the New York day session begins. The U.S. and other countries have rolled out Covid-19 vaccines in rapid fashion as there appears to be light at the end of the dark pandemic tunnel. The U.K. and the European Union appear to be getting closer to a smooth Brexit deal, and U.S. congressional Democrats and Republicans may be inching closer to a new financial stimulus package for Americans. Both parties have agreed some members won’t leave Washington, D.C., for the holidays until a deal is done.
The economic data point of the day and arguably of the week is today’s conclusion of the U.S. Federal Reserve’s Open Market Committee (FOMC) meeting that began Tuesday morning and ends Wednesday afternoon with a statement and press conference from Fed Chairman Jerome Powell, including the Fed’s economic projections. The marketplace will parse words and comments from Fed officials, for clues on U.S. monetary policy direction in 2021. Most believe the Fed will keep its very accommodative monetary policy. Specifically, the marketplace wants more guidance on the Fed’s bond-buying program (quantitative easing), as the Fed has said it plans to give an update on the matter.
In overnight news, the Euro zone got some upbeat economic data as the Markit composite purchasing managers index (PMI) came in at 49.8 in December from 45.3 in November. A reading above 50.0 suggests growth.
The U.S. dollar index is lower early today and hit another 2.5-year low overnight. The other important outside market sees January Nymex crude oil futures prices slightly higher and trading around $47.75 a barrel. The yield on the benchmark 10-year U.S. Treasury note futures is currently trading around 0.92%.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, retail sales, the flash manufacturing PMI, the flash services PMI, the NAHB housing market index, manufacturing and trade inventories and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are higher in early U.S. trading and near the recent record high. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Today, shorter-term technical resistance comes in the contract and record high of 3,707.00 and then at 3,725.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at the overnight low of 3,680.00 and then at this week’s low of 3,636.25. Wyckoff’s Intra-day Market Rating: 6.5
March Nasdaq index futures: Prices are higher in early U.S. trading and near the recent record high. Bulls 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 neutral to bullish early today. Shorter-term technical resistance is seen at the contract high of 12,667.75 and then at 12,750.00. On the downside, shorter-term support is seen at this week’s low of 12,388.00 and then at 12,300.00. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are slightly higher in early U.S. trading. Bears have the firm near-term technical advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at this week’s high of 173 31/32 and then at last week’s high of 174 9/32. Shorter-term support lies at this week’s low of 172 16/32 and then at 172 even. Wyckoff’s Intra-Day Market Rating: 5.5
March U.S. T-Notes: Prices are near steady in early U.S. trading. Bears have the near-term technical advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term resistance lies at this week’s high of 138.04.0 and then at last week’s high of 138.07.0. Shorter-term technical support lies at this week’s low of 137.23.0 and then at 137.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
EURO CURRENCY
The March Euro currency futures are higher and hit a nearly two-year high in early U.S. trading. Bulls are in solid technical control. The shorter-term moving averages for the Euro 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 Euro are neutral to bullish early today. The Euro currency finds shorter-term technical resistance at the overnight high of 1.2241 and then at 1.2300. Shorter-term support is seen at the overnight low of 1.2174 and then at this week’s low of 1.2145. Wyckoff’s Intra Day Market Rating: 7.0
NYMEX CRUDE OIL
January Nymex crude oil prices are slightly up and hit a nine-month high in early U.S. trading. Bulls have the solid overall near-term technical advantage amid a price uptrend in place on the daily chart. The shorter-term moving averages are bullish early today as the 4-day is above the 9-day and 18-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 the overnight high of $47.91 and then at $49.00. Look for sell stops just below technical support at Tuesday’s low of $46.54 and then at this week’s low of $45.69. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
US grain futures are higher in early U.S. pre-market trading. The grain markets are proving resilient amid still-solid worldwide demand for U.S. grains. Grain bulls still have the overall near-term technical advantage. The weaker U.S. dollar index continues to work in favor of the grain market bulls.
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