Friday, February 25–Jim Wyckoff’s Morning Markets Report
The Russia-Ukraine war continues on the front burner of the marketplace to end the trading week. There is still risk aversion in the marketplace. However, it can be argued that marketplace anxiety is not as high as it was early Thursday. U.S. and western country sanctions against Russia are being deemed not as severe as expected, including no sanctions on Russian crude oil or natural gas industries. Also, President Biden reiterated Thursday that the U.S. has no plans to get the world’s most powerful military involved in the Russia-Ukraine war. In other words, the major economies of the world will stand by and watch the war unfold, with the likely outcome a complete Russian takeover of Ukraine. As the marketplace continues to digest this matter, a main worry remains a mistake made by either Russia or NATO that would suck the West into the conflagration.
Some of the markets that had initial extreme price movements have retraced much of those price moves, including U.S. stock indexes, gold, grains and U.S. Treasuries. Gold is the most notable example. The safe-haven metal rallied to a 1.5-year high of $1,976.50 early Thursday, but has dropped sharply since then and is presently trading just above $1,900.00. Some gold traders fear that Russian President Putin may have to sell some or much of his vast gold reserves to support the depreciating Russian currency, the ruble. Russia’s stock market also tanked Thursday, at one point losing half its value, before rebounding. Bitcoin and the other cryptocurrencies have stabilized Friday, after suffering initial losses at the start of Russia’s invasion of Ukraine.
Still, commodity market traders realize Russia and Ukraine are major producers and world suppliers of many major raw commodities, including metals and grains. A Dow Jones Newswires headline this morning reads, “Ukraine war means another supply shock to global economy—the last thing it needs.” Look for many raw commodity prices to remain elevated, even if their spike highs Thursday may not be revisited.
The key outside markets today see Nymex crude oil prices posting mild losses and trading around $92.50 a barrel. The U.S. dollar index is a bit higher after hitting a 1.5-year high Thursday. The benchmark U.S. 10-year Treasury note is presently yielding 1.95%.
U.S. economic data due for release Friday includes personal income and outlays, durable goods orders, the pending home sales index, and the University of Michigan consumer sentiment survey.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are down in early U.S. trading. Prices are trending lower on the daily bar chart and the bears are in firm technical control. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at 4,300.00 and then at 4,345.50. Support for active traders is seen at 4,200.00 and then at 4,150.00. Wyckoff’s Intra-day Market Rating: 4.0
March Nasdaq index futures: Prices are weaker in early U.S. trading. Bears are in firm control amid a price downtrend in place. Shorter-term moving averages (4- 9-and 18-day) are bearish early today. The 4-day moving below the 9-day and 18-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at this week’s high of 14,157.50 and then at 13,300.00. On the downside, shorter-term support is seen at 13,500.00 and then at 13,250.00. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are near steady in early U.S. trading. Bears have the overall near-term technical advantage. 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 technical resistance is seen at the overnight high of 153 7/32 and then at 154 even. Shorter-term support lies at this week’s low of 152 2/32 and then at 151 16/32. Wyckoff’s Intra-Day Market Rating: 5.0
March U.S. T-Notes: Prices are slightly lower 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 the overnight high of 126.21.5 and then at 127.00.0. Shorter-term technical support lies at this week’s low of 126.03.0 and then at 126.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
EURO CURRENCY
The June Euro currency futures are near steady in early U.S. trading. Bears have the solid overall near-term technical advantage. The shorter-term moving averages for the Euro are bearish early today, as the 4-day is below the 9-day and 18-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 1.1266 and then at 1.1300. Shorter-term support is seen at 1.1200 and then at this week’s low of 1.1147. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
Nymex crude oil prices are a bit weaker in early U.S. trading. Bulls have the solid overall near-term technical advantage but may now be tired and need to pause. 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 today. Look for buy stops to reside just above technical resistance at the overnight high of $95.64 and then at $97.50. Look for sell stops just below technical support at $90.00 and then at this week’s low of $89.06. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
U.S. grain futures are posting sharp losses in early U.S. pre-market trading, on steep downside corrections the spike highs seen on Thursday. It’s going to be very tough for the bulls to overcome technical resistance at those spike highs, and in fact those spike highs may be market tops that will remain for a while. Still, keen uncertainty regarding the effects on global grain trade from the Russia-Ukraine conflict will keep grain futures prices elevated. Look for continued higher daily price volatility in the near term.
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