Thursday, January 2–Jim Wyckoff’s Morning Markets Report
Asian and European stock indexes were mostly firmer overnight. The U.S. stock indexes are also pointed toward higher openings and at or near record highs when the New York day session begins, on this first trading day of 2020.
Trader and investor attitudes remain upbeat, due in large part to the world’s two largest economies, the U.S. and China, seeing a major thaw in the more-than-two-year-old trade war that has slowed global economic growth. A partial trade deal is set to be signed on January 15th.
China’s central bank eased its monetary policy on Wednesday by lowering its banks’ reserve requirement ratios, which will put more money into China’s financial system. That news also worked to boost world equity markets.
The was major protesting in Hong Kong to start the new year, with reports saying more than 400 civilians were arrested and police using pepper spray and water cannons. This matter could again become a front-burner issue for the marketplace, especially if mainland China gets more involved in quelling the protesters.
In other news, the Euro zone December manufacturing purchasing managers’ index (PMI) was reported at 46.3, which was better than market expectations and compares to the November reading of 46.9. A number below 50.0 suggests contraction in the sector.
A feature in the marketplace during the holiday season has been many currencies rallying significantly against the U.S. dollar. The U.S. dollar index did rebound overnight from a five-month low hit earlier this week. The other key “outside market” today sees Nymex crude oil prices near steady and trading around $61.00 a barrel.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, the U.S. manufacturing PMI, and the global manufacturing PMI.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are up in early U.S. trading and not far below last week’s record and contract high. Bulls have the solid overall near-term technical advantage. There are no early clues that 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. 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 at the contract high of 3,254.00 and then at 3,275.00. Buy stops likely reside just above those levels. Downside support for active traders today is the overnight low of 3,234.25 and then at this week’s low of 3,213.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.5
March Nasdaq index futures: Prices are higher and not far below last week’s contract and record high. Bulls 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 neutral to bullish early today. Shorter-term technical resistance is seen at the contract high of 8,843.50 and then at 8,875.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 8,769.50 and then at this week’s low of 8,692.25. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are firmer in early U.S. trading after hitting a six-week low overnight. Bears have the overall near-term technical advantage. 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 neutral to bullish early today. Shorter-term technical resistance is seen at 156 even and then at 156 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 155 5/32 and then at the November low of 155 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
March U.S. T-Notes: Prices are firmer in early U.S. trading. Bears have the 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. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term support lies at the overnight low of 128.05.0 and then at 128.00.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at this week’s high of 128.22.0 and then at 128.28.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The March U.S. dollar index is higher on a corrective bounce after hitting a five-month low on Tuesday. Bears still have the overall near-term technical advantage. The shorter-term moving averages for the dollar index are 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 dollar index are neutral early today. The dollar index finds shorter-term technical resistance at Tuesday’s high of 96.415 and then at this week’s high of 96.630. Shorter-term support is seen at the overnight low of 96.100 and then at 96.000. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
February Nymex crude oil prices are slightly higher in early U.S. trading. Bulls have the solid near-term technical advantage and are keeping in place a three-month-old uptrend on the daily bar chart. The shorter-term moving averages 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 (RSI and slow stochastics) are neutral early today. Look for buy stops to reside just above technical resistance at the overnight high of $61.60 and then at $62.00. Look for sell stops just below technical support at this week’s low of $60.63 and then at $60.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
There was no US grain futures trading overnight, following the New Year’s holiday Wednesday. Look for some fresh speculator buying interest in the grain markets in early January, as the charts have turned more bullish in recent weeks. Grain market bulls are entering 2020 with some momentum on their side, especially in soybeans and wheat. A bullish feature for the grains recently has been many currencies rallying significantly against the U.S. dollar. The U.S. dollar index hit a five-month low Tuesday and is seeing a corrective bounce today. The US-China trade war has significantly thawed amid recent positive comments from officials on both sides, and that’s also supportive for grain markets as the year winds down. A partial trade agreement will be signed January 15th. The January 10th monthly USDA supply and demand report is now in focus for the grain markets, as estimates of the updated size of the US corn and soybean crops will be issued following a rocky harvest season that was plagued by inclement weather. Weather in South American corn and soybean regions remains mostly non-threatening, but grain traders will continue to monitor mildly dry pockets that could become a bigger concern in January.
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