Monday, December 20–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly lower in overnight trading. U.S. stock indexes are pointed toward solidly lower openings when the New York day session begins. It’s a risk-off trading day in the marketplace to begin a Christmas-holiday-shortened trading week Monday. The coronavirus pandemic just won’t go away and is raging in several European countries, which is causing fresh business and travel restrictions. The Omicron strain is also surging in parts of the U.S. right as the holiday season approaches.
Also a negative for the U.S. markets is the blockage of the Biden administration’s $1.7 trillion Build Back Better spending program by Sen. Joe Manchin. Many analysts are saying Biden’s big plan is dead in the water now—dealing a huge blow to Biden. Some economists are already dialing back U.S. economic growth projections for 2022.
Pressuring Asian shares overnight is news that another China property firm is in trouble. Reports said the Kaisa firm has announced it defaulted on several U.S. dollar-denominated bonds. The developer is in discussions with creditors regarding a restructuring plan. The bigger troubled China property developer, Evergrande, has had two land parcels in Chengdu reclaimed by local government without compensation, said reports. The Asian markets got little help from China’s central bank cutting its one-year loan prime rate, in a move to shore up the world’s second-largest economy.
The key “outside markets” today see Nymex crude oil prices solidly lower on the pandemic worries, and trading around $68.20 a barrel. The U.S. dollar index is slightly lower early today. Meantime, the yield on the U.S. Treasury 10-year note is presently fetching 1.387%.
U.S. economic data due for release Monday is light and includes leading economic indicators.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are solidly 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 below 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 4,600.000 and then at the overnight high of 4,621.50. Buy stops likely reside just above those levels. Downside support for active traders is seen at the overnight low of 4,526.25 and then at 4,500.00. Sell stops likely reside below those levels. Wyckoff’s Intra-day Market Rating: 4.0
March Nasdaq index futures: Prices are solidly lower and hit a nearly two-month low 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 the overnight high of 15,851.75 and then at 16,000.00. Buy stops likely reside just above those levels. On the downside, shorter-term support is seen at the overnight low of 15,503.00 and then at 15,350.00. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are slightly higher 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 even with 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 163 19/32 and then at 164 even. Buy stops likely reside just above those levels. Shorter-term support lies at 162 13/32 and then at 162 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
March U.S. T-Notes: Prices are higher and hit a three-month high in early U.S. trading. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance is seen at the overnight high of 131.19.0 and then at 131.24.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at Friday’s low of 130.30.5 and then at 130.26.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
EURO CURRENCY
The March Euro currency futures are firmer in early U.S. trading. Bears still have the solid overall near-term technical advantage. However, prices have been trading sideways at lower levels for nearly four weeks. The shorter-term moving averages for the Euro are neutral early today, as the 4-day below with the 9-day. The 9-day is even with the 18-day moving average. Short-term oscillators for the Euro are neutral early today. The Euro currency finds shorter-term technical resistance at 1.1350 and then at the December high of 1.1388. Buy stops likely reside just above those levels. Shorter-term support is seen at the December low of 1.1247 and then at the November low of 1.1221. Sell stops likely reside just below those levels. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
Nymex crude oil prices are solidly lower in early U.S. trading but up from overnight lows. The shorter-term moving averages are neutral early today as the 4-day is below 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 $70.00 and then at $71.00. Look for sell stops just below technical support at the overnight low of $66.84 and then at $66.00. Wyckoff’s Intra-Day Market Rating: 3.5
GRAINS
U.S. grain futures were lower in overnight trading, as keen risk aversion in the marketplace is squelching the grain market bulls. On tap today is the weekly USDA export inspections report. The corn and wheat market bulls still have the overall near-term technical advantage, while the soybean bulls now have the slight technical edge.
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