Friday, December 18–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed overnight. U.S. stock indexes are also pointed toward narrowly mixed openings when the New York day session begins. Trader and investor risk sentiment has been very upbeat this week, heading into the holidays. This week saw an FOMC meeting in which the U.S. Federal Reserve reaffirmed its very easy monetary policy stance for at least the next two years. Also, the U.S. Congress is inching closer to agreement on a financial stimulus package for Americans that likely includes a check for American taxpayers totaling around $600-$700 and more financial help for businesses. Also, hopes are higher late this week the U.K. and the European Union can come to agreement on a “smooth Brexit.” That’s the good news. Some in the marketplace are wondering if traders and investors could soon focus more on the bad news: a Covid-19 pandemic crisis in the U.S. and other countries that is likely to get worse before it gets better, and which is already producing a few signs of a second body blow to major global economies that were just beginning to recover from the springtime business lockdowns.
A feature in the marketplace this week has been a strong surge in Bitcoin prices to a new record high. This newer investment vehicle has been getting mixed reviews from the overall marketplace. Some are calling Bitcoin the new gold. Some TV advertisements are portraying those who hold gold as a safe-haven asset as being behind the times. The other side of the argument says that when sh*t really, really hits the fan, is the rattled investor going to be comfortable holding an asset that can only be seen on his computer screen when the internet is in service. The jury is still out on that matter. One thing that’s important to point out regarding Bitcoin’s price action this week: It’s gone “parabolic” in trading parlance—meaning a nearly straight up price move. Any time a market does such it’s a warning signal that from a time perspective a market top is likely coming sooner rather than later.
In overnight news, the Bank of Japan at its monetary policy meeting said it would increase its bond purchases and extend its pandemic-relief program by six months.
The U.S. dollar index is slightly up on a tepid bounce after hitting a 2.5-year low on Thursday. The USDX remains in a strong price downtrend and it’s important to note that trends in the currency markets tend to be stronger and longer-lasting than price trends in other markets. The other important outside market sees January Nymex crude oil futures prices slightly lower and trading around $48.30 a barrel. The yield on the benchmark 10-year U.S. Treasury note futures is currently trading around 0.92%.
U.S. economic data due for release Friday is light and includes leading economic indicators and international transactions from a current account perspective.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are higher in early U.S. trading and hit another record high. Bulls have the solid overall near-term technical advantage. 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 to bullish early today. Today, shorter-term technical resistance comes in the contract and record high of 3,723.00 and then at 3,750.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at the overnight low of 3,699.25 and then at 3,675.00. Wyckoff’s Intra-day Market Rating: 6.5
March Nasdaq index futures: Prices are higher in early U.S. trading and hit another record high. 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 the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at the overnight contract high of 12,769.00 and then at 12,900.00. On the downside, shorter-term support is seen at the overnight low of 12,707.00 and then at 12,572.00. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are near steady in early U.S. trading. Bears have the firm 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. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at the overnight high of 173 1/32 and then at Thursday’s high of 173 22/32. Shorter-term support lies at this week’s low of 172 4/32 and then at 172 even. Wyckoff’s Intra-Day Market Rating: 5.0
March U.S. T-Notes: Prices are near steady in early U.S. trading. Bears have the near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is even with the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at 138.00.0 and then at this week’s high of 138.04.0. Shorter-term technical support lies at this week’s low of 137.19.5 and then at 137.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
EURO CURRENCY
The March Euro currency futures are slightly lower early today and not far below this week’s nearly two-year high. Bulls are in solid technical control. The shorter-term moving averages for the Euro 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 for the Euro are neutral early today. The Euro currency finds shorter-term technical resistance at this week’s high of 1.2303 and then at 1.2350. Shorter-term support is seen at Thursday’s low of 1.2219 and then at 1.2200. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
January Nymex crude oil prices are near steady and not far below this week’s nine-month high, in early U.S. trading. Bulls have the solid overall near-term technical advantage amid a 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 and 18-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 this week’s high of $48.59 and then at $49.00. Look for sell stops just below technical support at Wednesday’s low of $47.17 and then at Tuesday’s low of $46.54. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
US grain futures are higher in early U.S. pre-market trading. The grain markets bulls have had a very good week, to suggest more upside in the near term. Solid worldwide demand for U.S. grains remains a major bullish fundamental. There is also some adverse weather in South America corn and soybean regions that is helping to drive prices up. And the weaker U.S. dollar index continues to work in favor of the grain market bulls.
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