Thursday, January 7–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly up overnight. U.S. stock indexes are pointed toward higher openings when the New York day session begins. The stock and financial markets appeared to ignore the protesters that stormed and then occupied for several hours the U.S. Capitol Wednesday afternoon. Congress was disrupted but a few hours later voted to confirm Joe Bident as the next U.S. president. There was also, at least initially, not much markets reaction to the two Georgia U.S. Senate seats that went to the Democrats and gave them the majority in the Senate and in Congress.
Said one market analyst in an email dispatch Thursday morning, “The reflation trade is back on,” referring to the likely big government spending by the Democrats in the next couple years. Indeed, an examination of the actions of the raw commodity futures markets sees many of them rallying to multi-month or multi-year highs, led by Nymex crude oil futures surging to a 10-month high of $51.28 a barrel overnight. The U.S. dollar index has rebounded Thursday from a 2.5-year low hit on Wednesday. Still, the USDX is in deep technical trouble as a price downtrend remains firmly in place. The other market suggesting inflation is on the rise is the U.S. Treasury market, whose 10-year note yield this week has pushed above 1.0%. Thursday the 10-year was yielding 1.044%.
It’s hard for the general marketplace to ignore the price action in Bitcoin recently, as the crypto currency hit a record high above $39,000 on Thursday. Some are calling Bitcoin “the new gold.”
The Employment Situation Report issued by the Labor Department comes out on Friday morning. That report is expected to show a U.S. unemployment rate of 6.8% and a non-farm jobs rise of 50,000 in December, versus a rise of 245,000 in November. However, the big miss on the downside in the ADP national employment report on Wednesday has many thinking the same will occur in Friday’s jobs report—a big contraction in non-farm jobs.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, international trade in goods and services, and the ISM report on business.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are firmer in early U.S. trading. Bulls have the solid overall near-term technical advantage as prices are near this week’s record high. A near-term price uptrend is in place on the daily bar chart. 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 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 record high of 3,774.75 and then at 3,800.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at 3,700.00 and then at this week’s low of 3,652.50. Wyckoff’s Intra-day Market Rating: 6.0
March Nasdaq index futures: Prices are higher in early U.S. trading. Bulls have the solid overall near-term technical advantage. 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 average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at Wednesday’s high of 12,844.25 and then at the record high of 12,959.75. On the downside, shorter-term support is seen at 12,600.00 and then at this week’s low of 12,491.25. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are near steady in early U.S. trading and did hit a contract low overnight. Bears have the solid overall near-term technical advantage amid a price downtrend in place on the daily chart. 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 bearish early today. Shorter-term technical resistance is seen at 170 even and then at 171 even. Shorter-term support lies at the overnight contract low of 169 2/32 and then at 168 even. Wyckoff’s Intra-Day Market Rating: 4.5
March U.S. T-Notes: Prices are near steady and hit another seven-week low 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 bearish early today. Shorter-term resistance lies at 137.16.0 and then at 137.24.0. Shorter-term technical support lies at the overnight low of 137.00.5 and then at 136.24.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
EURO CURRENCY
The March Euro currency futures are lower on profit taking after hitting a two-year high on Wednesday. Bulls are still 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 bearish early today. The Euro currency finds shorter-term technical resistance at this week’s high of 1.2368 and then at 1.2400. Shorter-term support is seen at 1.2250 and then at 1.2200. Wyckoff’s Intra Day Market Rating: 6.5
NYMEX CRUDE OIL
February Nymex crude oil prices are slightly higher in early U.S. trading and hit another 10-month high overnight. 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. The 9-day is above the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are bullish early today. Look for buy stops to reside just above technical resistance at the overnight high of $51.28 and then at $52.00. Look for sell stops just below technical support at $50.00 and then at $49.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
US grain futures are mixed in early U.S. pre-market trading after this week setting contract highs. The grain markets bulls have the strong overall near-term technical advantage amid price uptrends in place on the daily charts. The steep price gains in the grains recently suggest market tops are likely to occur sooner rather than later. 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