Friday, January 6–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed overnight. U.S. stock indexes are pointed toward mixed openings when the New York day session begins. Trading activity was subdued overnight ahead of what is arguably the most important U.S. data point of the month: this morning’s employment situation report for December from the Labor Department. The key non-farm payrolls number is expected to come in at up 200,000, following a rise of 263,000 in the November report. On Thursday, the U.S. ADP national employment report came in at up 235,000 jobs in December, compared to the consensus forecast of up 153,000. The stronger ADP report has some market watchers suspecting today’s non-farm jobs number may be stronger, too.
Analyst Craig Erlam of OANDA said today in an email dispatch: “The November (U.S. jobs) report contained everything the Federal Reserve did not want to see: strong jobs growth, with upward revisions to prior releases, much higher wages than anticipated and weaker participation. If that’s a blip in the trend, it’s no big deal. But a second consecutive month would deliver a sledgehammer to hopes of a lower terminal rate. The Fed has remained extremely hawkish throughout all of this, through fear of feeding investors’ craving for a dovish pivot and unintentionally easing financial conditions. But another strong jobs report today would further justify such a hawkish approach and perhaps send risk assets into a bit of a tailspin as the prospect of a higher terminal rate increases alongside recession risks.”
In overnight news, the Euro zone December consumer price index rose 9.2%, year-on-year, compared to a rise of 10.1% in November, and was a bit lower than the consensus forecast of up 9.7%. The core CPI (minus food and energy) came in up 5.2% in December.
The key outside markets today see the U.S. dollar index higher. Nymex crude oil futures prices are near steady and trading around $73.75 a barrel. Meantime, the yield on the benchmark U.S. 10-year Treasury note is presently fetching 3.727%.
Other U.S. economic data due for release Friday includes the ISM report on business services, and manufacturers’ shipments and inventories.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are near steady 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 below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at this week’s high of 3,906.75 and then at 3,919.75. Support for active traders is seen at the December low of 3,788.50 and then at 3,750.00. Wyckoff’s Intra-day Market Rating: 5.0
March Nasdaq index futures: Prices are slightly down in early U.S. trading. Shorter-term moving averages (4- 9-and 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at 11,000.00 and then at this week’s high of 11,182.00. On the downside, shorter-term support is seen at the December low of 10,758.75 and then at the October low of 10,595.25. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are near steady 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 bullish early today. Shorter-term technical resistance is seen at this week’s high of 128 4/32 and then at 129 even. Shorter-term support lies at Thursday’s low of 126 15/32 and then at 126 even. Wyckoff’s Intra-Day Market Rating: 5.0
March U.S. T-Notes: Prices are weaker 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 early today. Shorter-term resistance lies at this week’s high of 113.15.5 and then at 113.24.0. Shorter-term technical support lies at this week’s low of 112.12.5 and then at the December low of 111.28.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
EURO CURRENCY
The March Euro currency futures are lower and hit a four-month low in early U.S. trading. Bulls still have the overall near-term technical advantage but are fading. The shorter-term moving averages for the Euro are bearish early today, as the 4-day is below the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators for the Euro are bearish early today. The Euro currency finds shorter-term technical resistance at 1.0600 and then at Thursday’s high of 1.0679. Shorter-term support is seen at 1.0500 and then at 1.0450. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
February Nymex crude oil prices are slightly lower in early U.S. trading. The shorter-term moving averages 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 (RSI and slow stochastics) are neutral to bearish early today. Look for buy stops to reside just above technical resistance at $75.00 and then at $77.00. Look for sell stops just below technical support at this week’s low of $72.46 and then at $72.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
Prices were firmer overnight on upside corrections after strong losses posted this week. Bulls have faded this week to begin to suggest near-term market tops are in place in the grains. Risk aversion in the marketplace at present has the grain market bulls still timid. On tap today is the weekly USDA export sales report.
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