Monday, January 29–Jim Wyckoff’s morning markets report
Risk aversion is keener to start the trading week after an Iran-backed Houthi drone strike against U.S. troops in Jordan killed three U.S. soldiers. President Biden said the U.S. would respond.
In other overnight news, reports said a Hong Kong court has issued a liquidation order on China’s Evergrande Group after the property development company failed to reach an agreement with its creditors. The liquidation will be closely watched by the marketplace. Bloomberg reported most of Evergrande’s assets are located in mainland China with the order to test the legal reach of Hong Kong courts.
The U.S. economic data point of the week is the Open Market Committee meeting of the Federal Reserve that begins Tuesday morning and ends Wednesday afternoon with a statement and press conference from Fed Chairman Jerome Powell. The FOMC is not expected to change U.S. monetary policy at this meeting but will likely give fresh guidance on futures policy plans.
The key outside markets today see the U.S. dollar index firmer. Nymex crude oil prices are near steady and trading around $78.00 a barrel. Meantime, the yield on the benchmark U.S. Treasury 10-year note is presently fetching 4.107%.
U.S. economic data due for release Monday is light and includes the Texas manufacturing outlook survey.
STOCK INDEXES
March S&P 500 e-mini futures: Prices are slightly higher in early U.S. trading after hitting a contract and record high Friday. Bulls have the solid overall near-term technical advantage. Prices are in a three-month-old uptrend on the daily bar chart. 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 early today. Today, shorter-term technical resistance comes in at the contract high of 4,934.25 and then at 4,950.00. Support for active traders is seen at last week’s low of 4,874.25 and then at 4,841.50. Wyckoff’s Intra-day Market Rating: 5.5
March Nasdaq index futures: Prices are a bit firmer in early U.S. trading. Prices hit a contract and record high last week. Bulls have the solid overall near-term technical advantage. Shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above with the 9-day and 18-day. The 9-day is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at the contract high of 17,793.50 and then at 17,900.00. On the downside, shorter-term support is seen at last week’s low of 17,409.50 and then at 17,300.00. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are solidly higher in early U.S. trading on short covering after hitting a six-week low last week. 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 technical resistance is seen at last week’s high of 121 5/32 and then at 122 even. Shorter-term support lies at the overnight low of 119 23/32 and then at last week’s low of 119 even. Wyckoff’s Intra-Day Market Rating: 6.0
March U.S. T-Notes: Prices are higher in early U.S. trading. 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 last week’s high of 111.19.5 and then at 112.00.0. Shorter-term technical support is seen at the overnight low of 111.05.0 and then at the January low of 110.26.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
EURO CURRENCY
The March Euro currency futures are lower in early U.S. trading and near Friday’s six-week low. 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 the overnight high of 1.0872 and then at 1.0900. Shorter-term support is seen at last week’s low of 1.0834 and then at 1.0800. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
March Nymex crude oil prices are slightly up in early U.S. trading after hitting a two-month high overnight. 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 $79.29 and then at $80.00. Look for sell stops just below technical support at $77.00 and then at $76.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
Grain futures prices were weaker overnight. On tap today is the weekly USDA export inspections report. Charts are bearish for corn and wheat. Technicals are also bearish for soybeans, meal and soybean oil. All the grain markets are trending down on the daily bar charts. That means the path of least resistance for their prices remains sideways to lower.
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