Wednesday, January 19–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed to weaker overnight. U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins, following solid losses Tuesday. Risk aversion is heightened at mid-week. The Biden Administration said it thinks Russia may be on the brink of invading Ukraine. North Korea is test-firing missiles again, and terrorists attacked the United Arab Emirates with drones a few days ago. And bond yields are rising on rising inflation concerns.
In overnight news, U.K. inflation rose to a 30-year high as the consumer price index rose 5.4% in December, year-on-year.
The key outside markets today see crude oil prices higher, at a seven-year high and trading around $86.50 a barrel. The International Energy Agency forecast that global oil demand in 2022 will exceed that of the pre-pandemic levels.
The U.S. dollar index is weaker early today. The U.S. Treasury 10-year note yield is presently fetching 1.89%. The U.S. two-year note yield has pushed above 1.0%. The 10-year German bond (bund) yield moved into positive territory for the first time in nearly three years, fetching 0.008%.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the weekly chain store sales index, new residential construction, and the Johnson Redbook retail sales report.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are slightly up in early U.S. trading after hitting a four-week low overnight. Bulls have faded recently. 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 early today. Today, shorter-term technical support comes in at the overnight low of 4,535.50 and then at 4,520.25. Sell stops likely reside just below those levels. Resistance for active traders is seen at 4,600.00 and then at 4,650.00. Buy stops likely reside just above those levels. Wyckoff’s Intra-day Market Rating: 5.5
March Nasdaq index futures: Prices are firmer in early U.S. trading and hit a three-month low overnight. Bulls have faded to suggest a market top is in place. 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 15,500.00 and then at this week’s high of 15,653.25. On the downside, shorter-term support is seen at the overnight low of 15,050.75 and then at 15,000.00. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are lower and hit a contract low in early U.S. trading. Bears have the solid overall near-term technical advantage. Prices have been trending lower for six weeks. 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 the overnight high of 153 25/32 and then at 154 even. Shorter-term support lies at the overnight contract low of 153 7/32 and then at 153 even. Wyckoff’s Intra-Day Market Rating: 4.0
March U.S. T-Notes: Prices are lower and hit a contract 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 neutral early today. Shorter-term resistance lies at the overnight high of 127.11.5 and then at 127.16.0. Shorter-term technical support lies at the overnight contract low of 127.02.0 and then at 127.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 3.5
EURO CURRENCY
The March Euro currency futures are slightly higher in early U.S. trading. Bears have the firm overall near-term technical advantage but recent price action suggests a market bottom is in place. 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 1.1400 and then at this week’s high of 1.1447. Shorter-term support is seen at this week’s low of 1.1328 and then at 1.1300. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
February Nymex crude oil prices are higher in early U.S. trading and hit another seven-year high. Bulls have the solid overall near-term technical advantage amid a six-week-old 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 neutral to bullish early today. Look for buy stops to reside just above technical resistance at the overnight high of $87.08 and then at $88.00. Look for sell stops just below technical support at this week’s low of $83.50 and then at $83.00. Wyckoff’s Intra-Day Market Rating: 6.5
GRAINS
U.S. grain futures are solidly higher in early U.S. pre-market trading. Grain traders appear to be concerned about Russia invading Ukraine. Both countries are major wheat producers. The corn and soybean markets are being supported by very dry weather in South American growing regions. Corn and bean bulls have the overall near-term technical advantage. Wheat prices are still trending lower on the daily bar charts, but the bulls have gained momentum this week.
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