Tuesday, February 8–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed overnight. U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins. Corporate earnings reports are in the spotlight at present. While earnings reports have been mostly upbeat, some have not, including a few big companies. That and inflation worries are making the U.S. stock indexes wobbly. More and more, it’s looking like the Federal Reserve will be aggressive and raise the Fed funds rate by 0.5% at its March meeting. Historically, rising interest rates and rising inflation have been bearish for stock markets.
The U.S. data point of the week will be Thursday morning’s consumer price index report for January, expected to come in at up 7.2%, year-on-year. That would be a hot reading if the CPI number meets market expectations.
The key outside markets today see crude oil prices lower and trading around $89.65 a barrel after prices last Friday hit a seven-year high. The U.S. dollar index is firmer early today. The U.S. Treasury 10-year note yield is presently fetching 1.932%, which is near a three-year high.
U.S. economic data due for release Tuesday includes the weekly chain store and Johnson Redbook retail sales reports, the NFIB small business index, the international trade report, and the IBD/TIPP economic optimism index.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are slightly weaker 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 above the 9-day and 18-day. The 9-day is even with the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Today, shorter-term technical resistance comes in at this week’s high of 4,514.50 and then at 4,532.50. Support for active traders is seen at last Friday’s low of 4,438.50 and then at last week’s low of 4,395.50. Wyckoff’s Intra-day Market Rating: 4.5
March Nasdaq index futures: Prices are weaker in early U.S. trading. 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 average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at this week’s high of 14,806.25 and then at 15,000.00. On the downside, shorter-term support is seen at last week’s low of 14,353.25 and then at 14,200.00. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are lower in early U.S. trading and hit another contract low overnight. 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 bearish early today. Shorter-term technical resistance is seen at the overnight high of 153 18/32 and then at this week’s high of 153 30/32. Shorter-term support lies at the overnight contract low of 152 27/32 and then at 152 16/32. Wyckoff’s Intra-Day Market Rating: 3.5
March U.S. T-Notes: Prices are lower in early U.S. trading and hit a contract low overnight. 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 bearish early today. Shorter-term resistance lies at the overnight high of 126.29.5 and then at this week’s high of 127.01.0. Shorter-term technical support lies at the overnight contract low of 126.15.5 and then at 126.10.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 3.5
EURO CURRENCY
The March Euro currency futures are weaker 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 above the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators for the Euro are neutral early today. The Euro currency finds shorter-term technical resistance at the January high of 1.1495 and then at 1.1550. Shorter-term support is seen at the overnight low of 1.1404 and then at 1.1350. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
March Nymex crude oil prices are lower in early U.S. trading. Bulls still have the strong overall near-term technical advantage amid a nine-week-old price uptrend in place on the daily 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 bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $91.68 and then at last Friday’s seven-year high of $93.17. Look for sell stops just below technical support at the overnight low of $89.01 and then at $88.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
U.S. grain futures are lower in early U.S. pre-market trading, on some routine profit taking from recent gains. Soybean and corn market bulls have the solid overall near-term technical advantage. Wheat bulls and bears are on a level overall near-term technical playing field amid choppy trading. Next up for data is Wednesday’s monthly USDA supply and demand report, with keen focus on USDA’s projection of the sizes of the South American corn and soybean crops.
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