Thursday, November 21–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mostly weaker overnight and the U.S. stock indexes are pointed toward lower openings when the New York day session begins.
Once again, the marketplace is focusing on the up-and-down U.S.-China trade talks, and now with a downbeat bias. Reports overnight say China trade officials have contacted U.S. trade officials regarding a meeting in China soon. The reports said the U.S. has yet to respond. This news follows comments from President Trump this week that dented optimism for a partial trade deal being signed anytime soon. Trump late Wednesday said China is not “stepping up” on a trade deal and that the U.S. could slap more tariffs on Chinese imports. A report Wednesday also said China is standing firm on wanting the U.S. to rollback all of its tariffs on Chinese products. Most traders and investors have become numb to the matter.
Hong Kong civil unrest remains high and the protestors got a psychological boost this week when the U.S. Congress proposed official U.S. backing of them. That has also angered mainland China. This situation is likely to get worse before it gets better.
In other overnight news, the Paris-based OECD think tank has forecast global economic growth in 2020 at 2.9% and at 3.0% in 2021. Those numbers are steady to slightly lower than the previous forecasts for the time periods. The OECD also forecast China’s economic growth in 2021 slowing to 5.5%.
The key “outside markets” today see the U.S. dollar index modestly higher. Nymex crude oil prices are weaker and trading around $56.75 a barrel.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Philadelphia Fed business survey, leading economic indicators and existing home sales.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are slightly weaker on more profit taking in early U.S. trading after hitting new contract and record highs on Tuesday. Bulls still 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 and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at Wednesday’s high of 3,118.50 and then at the contract high of 3,132.50. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 3,091.25 and then at 3,075.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
December Nasdaq index futures: Prices are slightly lower on more mild profit taking after hitting new contract and record highs on Tuesday. Bulls still 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 bearish early today. Shorter-term technical resistance is seen at Wednesday’s high of 8,348.00 and then at the contract high of 8,379.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at this week’s low of 8,231.00 and then at 8,200.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are weaker in early U.S. trading, on a normal corrective pullback from recent good gains. Bulls and bears are back on a level overall near-term technical playing field. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above 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 the overnight high of 160 29/32 and then at 161 even. Buy stops likely reside just above those levels. Shorter-term support lies at Wednesday’s low of 159 12/32 and then at 159 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
December U.S. T-Notes: Prices are lower in early U.S. trading, on a normal downside correction from recent good gains. Bulls have the slight overall 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 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 Wednesday’s low of 129.14.0 and then at Tuesday’s low of 129.05.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 130.02.0 and then at 130.08.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The December U.S. dollar index is slightly lower in early U.S. trading. Bulls still have the overall near-term technical advantage. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is below the 9-day. The 9-day is above with the 18-day moving average. Short-term oscillators for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at this week’s high of 97.930 and then at the November high of 98.300. Shorter-term support is seen at this week’s low of 97.550 and then at 97.250. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
January Nymex crude oil prices are slightly down in early U.S. trading. Bulls have the slight near-term technical advantage. The shorter-term moving averages are neutral early today as the 4-day is below the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral to bearish early today. Look for buy stops to reside just above technical resistance at $57.50 and then at this week’s high of $58.17. Look for sell stops just below technical support at $56.00 and then at $55.50. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
US grain futures prices were mixed again overnight, with corn around 1/2 cents higher, soybeans near steady and wheat up around 1 cent. Focus today is on the weekly USDA export sales report. Traders are forecasting US corn sales of 400,000 to 900,000 metric tons (MT), US soybeans at 800,000 to 1.4 million MT, and US wheat sales of 200,000 to 500,000 MT. Traders will again be looking for bigger purchases from China. The up-and-down U.S.-China trade talks now have a downbeat bias. Reports overnight say China trade officials have contacted U.S. trade officials regarding a meeting in China soon. The reports said the U.S. has yet to respond. This news follows comments from President Trump this week that dented optimism for a partial trade deal being signed anytime soon. Trump late Wednesday said China is not “stepping up” on a trade deal and that the U.S. could slap more tariffs on Chinese imports. A report Wednesday also said China is standing firm on wanting the U.S. to rollback all of its tariffs on Chinese products. Most grain traders have become numb to the matter and want to see actual increased China purchases of US ag products. US Midwest weather is neutral to slightly bullish for the grain futures markets late this week as some showers are again delaying harvesting, but the bulk of the Corn Belt has been dry enough to have farmers in their fields. However, extended weather forecasts for the region are calling for more precipitation. The near-term technical chart postures for all three grain markets continue to favor the bears as all three grains are in near-term price downtrends on the daily bar charts.
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