Thursday, January 9–Jim Wyckoff’s Morning Markets Report
Risk appetite has quickly returned to the global marketplace Thursday, on ideas the U.S. and Iran have stepped back from the brink of an escalating military conflict that had been brewing for months. Statements coming from the U.S. and Iran strongly suggested such the past 24 hours, including President Trump saying Iran is “standing down.” Most don’t at all expect the U.S. and Iran to become friendly, but more likely is Iran’s clandestine operations against the U.S. that have been carried on by Iran and its proxies for years. Meantime, the U.S. will continue to put the screws to Iran by harsh economic sanctions and working to prevent the nation from developing a nuclear weapon.
Global stock markets have rallied Thursday. U.S. stock indexes are pointed toward firmer openings and at record highs when the New York day session begins. Gold prices have backed down from the spike seven-year highs seen early Wednesday, while Nymex crude oil prices have also come down from a spike high and are trading around $59.75 a barrel.
Traders and investors are getting back to examining economic data and other market fundamentals, including awaiting Friday morning’s December U.S. employment situation report from the Labor Department. Wednesday’s stronger-than-expected ADP national employment report has some leaning toward a stronger non-farm jobs number in Friday’s report, which has been forecast to come in at up 160,000.
Global stock markets were also buoyed Thursday on reports China has confirmed it will sign a “Phase 1” trade deal with the U.S. next week. China’s senior trade official will travel to Washington, D.C. for the signing. A partial trade deal between the world’s two largest economies should work to boost global economic growth in 2020.
In overnight news, the Euro zone jobless rate was reported at 7.5% in November, unchanged from October and in line with market expectations.
Inflation in China picked up and hit an eight-year high, at up 2.9% in 2019. The main culprit was rising pork prices due to major disease decimating China’s hog herd.
The World Gold Council has reported world central banks bought a net 41.8 metric tons of gold in October. That was 16% lower than in September and 29% below August. However, analysts believe the gold purchase pace from the central banks will pick up in 2020.
U.S. economic data due for release Thursday includes the weekly jobless claims report and the monthly chain store sales index. Several Federal Reserve officials are also slated to give speeches Thursday.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are firmer and hit a contract and record high in early U.S. trading. Bulls have the solid near-term technical advantage to suggest another leg up in prices in the near term. The 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 is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bullish early today. Today, shorter-term technical resistance comes in at the contract high of 3,274.00 and then at 3,300.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at 3,250.00 and then at 3,225.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 7.0
March Nasdaq index futures: Prices are firmer and hit a contract and record high in early U.S. trading. Bulls have the solid near-term technical advantage to suggest more upside. 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 bullish early today. Shorter-term technical resistance is seen at 9,000.00 and then at 9,050.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 8,932.50 and then at 8,900.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 7.0.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are slightly up in early U.S. trading. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at 157 even and then at 157 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 156 7/32 and then at 156 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
March U.S. T-Notes: Prices are slightly up in early U.S. trading. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term resistance lies at 129.00.0 and then at 129.08.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 128.22.0 and then at 128.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The March U.S. dollar index is higher and hit a two-week high in early U.S. trading. Bulls and bears are back on a level overall near-term technical playing field. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is above the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 97.200 and then at 97.405. Shorter-term support is seen at the overnight low of 96.955 and then at 96.750. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
February Nymex crude oil prices are slightly up in early U.S. trading after spiking to a nine-month high of $65.65 on Wednesday and then crashing back down to score a big and bearish “outside day” down on the daily chart that suggests a near-term market top is in place. 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 the overnight high of $60.31 and then at $61.00. Look for sell stops just below technical support at this week’s low of $59.15 and then at $59.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
US grain futures were higher overnight. Corn was up around 2 cents, soybeans up around 4 to 5 cents and wheat about 5 cents higher. Risk appetite has quickly returned to the global marketplace Thursday, on ideas the U.S. and Iran have stepped back from the brink of an escalating military conflict that had been brewing for months. That’s bullish for grains. Statements coming from the U.S. and Iran strongly suggested such the past 24 hours, including President Trump saying Iran is “standing down.” Grain traders are getting back to examining supply and demand fundamentals, including news China has confirmed it will sign a “Phase 1” trade deal with the U.S. next week. China’s senior trade official will travel to Washington, D.C. for the signing. A partial trade deal between the world’s two largest economies should work to boost global economic growth in 2020. That would mean better demand for U.S. grains. A winter storm on the U.S. east coast has delayed the weekly USDA export sales report until Friday. Traders are awaiting Friday’s USDA’s supply and demand report. Forecasts for corn harvested acres averaged 81.3 million acres, with a U.S. corn yield at 166 bushels per acre. U.S. corn production is estimated at 13.5 billion bushels. U.S. soybean harvested acres are forecast at 75.6 million, with a soybean yield of 46.5 bushels an acre. U.S. soybean production is estimated at 3.5 billion bushels. Average U.S. ending stocks are estimated at 1.776 billion bushels of corn, 431 million bushels of soybeans and 970 million bushels for wheat.
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