Wednesday, December 12–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
World stock markets were mostly higher overnight as global traders and investors chose to focus on improving prospects for a U.S.-China trade deal, instead of the uncertainty of leadership of the United Kingdom. U.S. stock indexes are pointed toward higher openings when the New York day session begins. Trading in the U.S. stock indexes has been volatile this week, with many stock market experts saying to expect this to be the norm for at least a while.
The present U.S.-China trade negotiations are so far producing tangible results, according to reports coming from both nations. Officials from both sides appear to be upbeat on the progress. The marketplace reckons that if the world’s two largest economies come to terms on trade, the spillover effect would be positive for most world economies.
Brexit turmoil has been kicked up a notch at mid-week, as U.K. Prime Minister Theresa May will face a no-confidence vote from members of Parliament today. May on Monday called off a vote on her Brexit plan, which most reckoned would be defeated anyway. She has quickly lost popularity in the U.K. public eye and among members of Parliament. However, most global markets are not being significantly impacted by the political turmoil in the U.K.
The key U.S. economic data point of the week, the consumer price index for November, is due out shortly. CPI is forecast at unchanged from October. Recent U.S. inflation reports have shown very tame inflation, after data released earlier this year raised some concern regarding rising inflation becoming problematic.
The key outside markets early today find the U.S. dollar index slightly lower on a corrective pullback from recent solid gains that pushed the index to a new for-the-move high Tuesday. Meantime, Nymex crude oil prices are higher on a corrective bounce. There are still no early technical clues the crude oil market is close to a bottom.
Other U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, real earnings, the monthly Treasury budget statement and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are higher in early U.S. trading today, on a continuation of the recovery after the market Monday hit a contract low. Bears are still in firm technical command. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is even with the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Today, shorter-term technical resistance comes in at this week’s high of 2,682.00 and then at 2,700.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,636.00 and then at the October low of 2,609.50. 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, on a corrective bounce from Monday’s losses. Bears are still in technical control. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-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 this week’s high of 6,822.50 and then at 6,850.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 6,707.00 and then at Tuesday’s low of 6,675.50. 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 were weaker overnight on a corrective pullback after hitting a 3.5-month high on Monday. Bulls are still in solid 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 overnight high of 143 11/32 and then at this week’s high of 143 31/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 142 27/32 and then at 142 12/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
March U.S. T-Notes: The market is near steady in early U.S. trading. Prices scored a contract high on Monday. 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 early today. Shorter-term resistance lies at Tuesday’s high of 120.24.5 and then at the contract high of 120.30.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 120.10.0 and then at 120.06.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
U.S. DOLLAR INDEX
The March U.S. dollar index is slightly higher in early U.S. trading. Prices Tuesday hit a contract high. 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 bullish early today. The dollar index finds shorter-term technical resistance at Tuesday’s contract high of 96.995 and then at 97.250. Shorter-term support is seen at 96.500 and then at Tuesday’s low of 96.310. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
January Nymex crude oil prices are higher in early U.S. trading today, on short covering. Bears are still in firm overall near-term technical control. 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 even with the 9-day. The 9-day is below 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 $53.30 and then at $54.55. Look for sell stops just below technical support at $52.00 and then at $51.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
Grain futures prices were firmer overnight, on short covering and on optimism the U.S.-China trade talks are going well. The grain market bears still have the overall near-term technical advantage, but it does appear corn and soybean prices have put in market bottoms.
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