Monday, December 17–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
European and Asian stock markets were mixed overnight. U.S. stock indexes are pointed steady to mixed openings when the New York day session begins.
An eventful trading week lies ahead. The U.S. Federal Reserve’s Open Market Committee (FOMC) meets Tuesday and Wednesday to discuss monetary policy, while the U.S. government could be shut down at the end of the week if Congress and President Trump cannot agree on a budget plan. Most expected the FOMC to raise interest rates by 0.25% on Wednesday afternoon, at the conclusion of their meeting. Also, the Chinese government could announce major new economic initiatives to stimulate the world’s second-largest economy. China’s central bank made an unexpected injection of money into its financial system on Monday.
In overnight news, the Euro zone got some more very tame inflation news, as its consumer price index for November fell 0.2% from October and was up 1.9%, year-on-year. This continues a string of world inflation data that is not considered close to being problematic.
The key outside markets today see the U.S. dollar index weaker on a corrective pullback after hitting a nearly two-year high on Friday. Meantime, Nymex crude oil prices are firmer and trading around $51.50 a barrel.
U.S. economic data due for release Monday includes the Empire State manufacturing survey, the NAHB housing market index, and Treasury international capital data.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are slightly lower in early U.S. trading today. Prices Friday closed at a bearish weekly low close and closed at the lowest level since last winter. Bears are in firm technical command. 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 to bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 2,616.75 and then at 2,630.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the December low of 2,586.75 and then at 2.575.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
March Nasdaq index December futures: Prices are slightly lower in early U.S. trading. Bears are in firm technical control as prices Friday posted a bearish weekly low close. 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 average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at the overnight high of 6,656.00 and then at 6,700.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the December low of 6,560.25 and then at 6,500.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices were firmer overnight. Bulls are in solid near-term technical control. A bullish pennant pattern has formed on the daily bar chart. Shorter-term moving averages (4- 9- 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at Friday’s high of 143 5/32 and then at 143 11/32. Buy stops likely reside just above those levels. Shorter-term support lies at last week’s low of 142 10/32 and then at 142 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
March U.S. T-Notes: Prices are firmer in early U.S. trading. Bulls have the solid chart advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at Friday’s high of 120.19.0 and then at 120.24.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 120.10.5 and then at last week’s low of 120.06.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The March U.S. dollar index is weaker after hitting a nearly two-year high on Friday. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages for the dollar index 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 dollar index are neutral to bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 96.940 and then at the contract high of 97.195. Shorter-term support is seen at 96.555 and then at 96.310. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
January Nymex crude oil prices are firmer in early U.S. trading today. Bears are still in firm overall near-term technical control even though price action has turned choppy and sideways the past two weeks. There are still no early clues that a market bottom is close at hand. The shorter-term moving averages are neutral early today as the 4-day is below the 9-day. The 9-day is even with 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 last week’s high of $53.27 and then at the December high of $54.55. Look for sell stops just below technical support at $51.00 and then at $50.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
Grain futures prices were firmer overnight, on short covering. Traders will closely examine this morning’s USDA export inspections report. The grain market bears still have the overall near-term technical advantage.
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