Monday, December 31–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
European and Asian stock markets were mostly higher overnight. Some world stock markets were closed today, including China, Japan and Germany bourses. U.S. stock indexes are pointed toward higher openings when the New York day session begins. Traders and investors are in upbeat moods on this last day of 2018, following a tweet from U.S. President Trump that he and Chinese President Xi Jinping had a good telephone conversation and made “big progress” regarding their trade dispute.
There was some more downbeat economic data coming out of China today. The official manufacturers’ purchasing managers index (PMI) for December fell to 49.4 versus 50.0 in November. A reading below 50.0 suggests contraction in the sector.
The key outside markets today see the U.S. dollar index modestly lower. Meantime, Nymex crude oil prices are firmer. February crude is trading just below $46.00 a barrel.
The U.S. government has entered its second week of being partially closed. That means some U.S. economic data is being delayed amid the shutdown.
U.S. economic data due for release Monday includes the Texas manufacturing outlook survey.
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are firmer in early U.S. trading today. Last week’s price action produced a bullish key reversal up that suggests a market bottom is in place. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are bullish early today. Today, shorter-term technical resistance comes in at last week’s high of 2,523.00 and then at 2,550.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Friday’s low of 2,472.75 and then at 2,450.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
March Nasdaq index December futures: Prices are higher in early U.S. trading. Last week’s gains produced a bullish “key reversal” up on the daily bar chart to suggest a market bottom is in place. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at last week’s high of 6,402.50 and then at 6,450.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Friday’s low of 6,423.75 and then at 6,400.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are slightly weaker in early U.S. trading. Prices last week hit a contract and bulls are in solid near-term technical control. 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 bearish early today. Shorter-term technical resistance is seen at the contract high of 146 3/32 and then at 146 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at last week’s low of 144 13/32 and then at 144 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
March U.S. T-Notes: Prices are slightly higher in early U.S. trading. Prices last week hit a contract high and bulls have the solid chart advantage. 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 neutral to bearish early today. Shorter-term resistance lies at the contract high of 121.26.0 and then at 122.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 121.16.0 and then at 121.09.0. 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 lower in early U.S. trading. Bulls are fading. The shorter-term moving averages for the dollar index 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 dollar index are bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 96.070 and then at 96.500. Shorter-term support is seen at the December low of 95.630 and then at 95.385. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
February Nymex crude oil prices are higher on a corrective bounce. Prices last week hit a 17-month low of $42.36. Bears are still in solid overall near-term technical control. There not yet any strong, early chart clues that a market bottom is in place, but there is strong longer-term technical support at the $42.00 area that may have stopped the bleeding. The shorter-term moving averages are still bearish early today as the 4-day is below the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral to bullish early today. Look for buy stops to reside just above technical resistance at last week’s high of $47.00 and then at $48.00. Look for sell stops just below technical support at $45.00 and then at $44.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
Grain futures were mixed overnight. While the grain market bears still have the overall near-term technical advantage, the upbeat news reports on U.S.-China trade relations and the rebounding U.S. stock market are bullish elements for the grains.
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