Friday, February 11–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly lower overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins. Traders and investors are still digesting Thursday’s consumer price index report for January that came in hot at up 7.5%, year-on-year. That data fell into the camp of the U.S. monetary policy hawks, who want to see an aggressive pace of Federal Reserve interest rate increases this year. U.S. Treasury yields spiked higher after the report, with the 10-year U.S. Treasury note now yielding 2.003%, which is the highest in over two years.
Federal Reserve Bank of St. Louis President James Bullard said he supports raising interest rates by a full percentage point by the start of July — including the first half-point hike since 2000 — in response to the hottest inflation in four decades. However, some other top Fed officials appear skeptical of a half-point hike, suggesting little need to start a hiking cycle with an aggressive move.
Goldman Sachs economists now expect the Federal Reserve to raise interest rates seven times this year to contain surging U.S. inflation, up from the five hikes they had seen earlier.
Meantime, the Kremlin is tightening its military vise on Ukraine, as thousands of Russian troops Thursday began 10 days of exercises in Belarus. Ukraine also warned of upcoming Russian naval drills so extensive that they would block shipping lanes. Aside from Belarus, satellite images revealed deployments of Russian military equipment and troops in Crimea and western Russia, according to the New York Times.
The key outside markets today see crude oil prices higher and trading around $90.75 a barrel. The U.S. dollar index is higher early today. The U.S. Treasury 10-year note yield is presently fetching 2.005%–the highest in three years.
U.S. economic data due for release Friday is light and includes the University of Michigan consumer sentiment survey.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are lower in early U.S. trading. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is even with the 9-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 the overnight high of 4,498.00 and then at 4,550.00. Support for active traders is seen at 4,438.50 and then at 4,400.00. Wyckoff’s Intra-day Market Rating: 4.0
March Nasdaq index futures: Prices are down in early U.S. trading. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving below 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 the overnight high of 14,712.00 and then at 15,000.00. On the downside, shorter-term support is seen at 14,362.75 and then at 14,200.00. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are firmer in early U.S. trading, on short covering after hitting a contract low on Thursday. Bears have the solid overall near-term technical advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at the overnight high of 152 12/32 and then at 153 even. Shorter-term support lies at the overnight low of 151 15/32 and then at the contract low of 151 2/32. Wyckoff’s Intra-Day Market Rating: 5.5
March U.S. T-Notes: Prices are higher in early U.S. trading, on short covering after hitting a contract low on Thursday. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below 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 resistance lies at 126.08.0 and then at 126.12.0. Shorter-term technical support lies at the contract low of 125.17.5 and then at 125.10.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
EURO CURRENCY
The March Euro currency futures are lower in early U.S. trading. Bears have the overall near-term technical advantage. The shorter-term moving averages for the Euro 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 for the Euro are neutral to bearish early today. The Euro currency finds shorter-term technical resistance at the overnight high of 1.1437 and then at this week’s high of 1.1503. Shorter-term support is seen at the overnight low of 1.1378 and then at 1.1350. Wyckoff’s Intra Day Market Rating: 3.5
NYMEX CRUDE OIL
March Nymex crude oil prices are higher in early U.S. trading. Bulls have the solid overall near-term technical advantage amid a nine-week-old price uptrend in place on the daily chart. 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 neutral early today. Look for buy stops to reside just above technical resistance at $91.74 and then at the February high of $93.17. Look for sell stops just below technical support at this week’s low of $88.41 and then at $87.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
U.S. grain futures are firmer in early U.S. pre-market trading. Soybean and corn market bulls have the solid overall near-term technical advantage. Wheat bulls have gained the slight near-term chart advantage. The keener inflation worries are bullish for the grain markets.
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