Wednesday, February 23–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly firmer overnight. The U.S. stock indexes are pointed toward higher openings when the New York day session begins. The S&P 500 stock index is being termed in “correction” territory, meaning a 10% decline from its recent record high.
On the front burner of the marketplace remains the Russian incursion into Ukraine. The U.S. and other nations have slapped sanctions on Russia, but it appears the West has no intention of military action against Russia. That has somewhat assuaged the marketplace, for now. It’s still a dicey situation, as a military mistake by either side could significantly escalate the conflict. The major question on traders’ and investors’ minds is whether the uncertainty/anxiety factor has peaked, from a markets perspective. Remember that markets many times overreact to major geopolitical events in the early stages of those events. Traders tend to factor into market prices a worst-case scenario, only to see that scenario typically not occur. Still, in this particular geopolitical situation another major “shoe could drop,” such as a full-blown Russia invasion of Ukraine, to further destabilize markets.
In overnight news, the Euro zone consumer price index for January came in at up 0.3% from December and up 5.1%, year-on-year. Those numbers were right in line with market expectations.
The key outside markets today see Nymex crude oil prices weaker and trading around $91.50 a barrel. The U.S. dollar index is a bit weaker early today. The benchmark U.S. 10-year Treasury note is presently yielding 1.977%.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, and the weekly Johnson Redbook and chain store sales indexes.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are higher in early U.S. trading. Prices are trending lower on the daily bar chart and the bears are in technical control. The shorter-term moving averages (4-, 9- and 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at Tuesday’s high of 4,391.25 and then at 4,425.00. Support for active traders is seen at 4,300.00 and then at 4,275.00. Wyckoff’s Intra-day Market Rating: 6.0
March Nasdaq index futures: Prices are higher in early U.S. trading. Bears are in control amid a price downtrend in place. Shorter-term moving averages (4- 9-and 18-day) are bearish early today. The 4-day moving below the 9-day and 18-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at Tuesday’s high of 14,157.50 and then at 14,300.00. On the downside, shorter-term support is seen at 13,706.00 and then at Tuesday’s low of 13,580.25. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are weaker in early U.S. trading. Bears have the solid 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 neutral early today. Shorter-term technical resistance is seen at the overnight high of 153 12/32 and then at 154 even. Shorter-term support lies at the overnight low of 152 15/32 and then at 152 even. Wyckoff’s Intra-Day Market Rating: 4.5
March U.S. T-Notes: Prices are lower in early U.S. trading. 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 the overnight high of 126.19.5 and then at 126.24.0. Shorter-term technical support lies at the overnight low of 126.05.0 and then at 126.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
EURO CURRENCY
The June Euro currency futures are slightly up in early U.S. trading. Bears have the overall near-term technical advantage. The shorter-term moving averages for the Euro are neutral early today, as the 4-day is below the 9-day and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators for the Euro are neutral early today. The Euro currency finds shorter-term technical resistance at last week’s high of 1.1437 and then at 1.1480. Shorter-term support is seen at last week’s low of 1.1325 and then at 1.1300. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
Nymex crude oil prices are weaker in early U.S. trading. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages are neutral early today as the 4-day is even with the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are bearish today. Look for buy stops to reside just above technical resistance at the overnight high of $92.37 and then at $94.00. Look for sell stops just below technical support at Tuesday’s low of $89.06 and then at last week’s low of $87.46. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
U.S. grain futures are mixed in early U.S. pre-market trading. Grain markets this week are seeing price gains on the uncertainty regarding the Russia-Ukraine conflict. Russia and Ukraine are major global grain producers. Grain market bulls have the solid overall near-term technical advantage. However, corn, soybeans and wheat prices are all in historically “thin air.”
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