Wednesday, December 11–Jim Wyckoff’s Morning Markets Report
Asian and European stock indexes were mixed weaker overnight. The U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins. This Sunday (Dec. 15) is the deadline for new U.S. trade tariffs going into effect against Chinese goods imported into the U.S. While the rhetoric this week has been mostly upbeat on the matter, the history of the U.S.-China trade war is one of distinct highs and lows regarding progress toward a deal. And the marketplace knows President Trump’s mercurial personality. Thus, markets and traders are likely to remain tentative the rest of this week, and slightly leaning toward risk aversion.
Traders and investors are also awaiting the U.S. economic highlight of the week: the Federal Reserve’s Open Market Committee meeting (FOMC) that began Tuesday morning and ends Wednesday afternoon with a statement. The Fed is expected to make no changes in its monetary policy. However, the FOMC statement and Fed Chairman Powell’s press conference will be closely scrutinized for clue on futures monetary policy moves. The European Central Bank also meets on monetary policy Thursday.
The key “outside markets” today see the U.S. dollar index firmer. Meantime, Nymex crude oil prices are weaker and trading around $59.00 a barrel.
Other U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the consumer price index, 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 slightly lower in early U.S. trading. Bulls still have the solid overall near-term technical advantage. 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 even with the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at the overnight high of 3,145.75 and then at the contract high of 3,159.75. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 3,118.25 and then at 3,100.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
March Nasdaq index futures: Prices are near steady in early U.S. trading. Bulls still have the solid near-term technical advantage. 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 even with the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at the overnight high of 8,416.50 and then at this week’s high of 8,447.75. Buy stops likely reside just above those levels. On the downside, short-term support is seen at this week’s low of 8,319.50 and then at 8,300.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are modestly higher in early U.S. trading. Bulls and bears are on a level overall near-term technical playing field. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at this week’s high of 158 17/32 and then at 159 even. Buy stops likely reside just above those levels. Shorter-term support lies at this week’s low of 157 18/32 and then at 157 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
March U.S. T-Notes: Prices are modestly higher in early U.S. trading. Bulls and bears are on a level overall near-term technical playing field. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term support lies at this week’s low of 128.25.5 and then at last week’s low of 128.21.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at this week’s high of 129.07.0 and then at 129.14.5. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The March U.S. dollar index is slightly up in early U.S. trading. Bulls and bears are on a level overall near-term technical playing field. 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 neutral early today. The dollar index finds shorter-term technical resistance at this week’s high of 97.275 and then at 97.500. Shorter-term support is seen at last week’s low of 96.820 and then at 96.500. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
January Nymex crude oil prices are weaker in early U.S. trading, on a corrective pullback from recent gains that pushed prices to a 2.5-month high last week. Bulls have the near-term technical advantage and are keeping in place a 10-week-old uptrend on the daily bar 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 bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $59.17 and then at last week’s high of $59.85. Look for sell stops just below technical support at this week’s low of $58.23 and then at $58.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
US grain futures prices were mixed to weaker overnight. Tuesday’s monthly USDA supply and demand report contained no surprises and had no updates on the size of the US corn and soybean crops. Those estimates will come in the January USDA report. Tuesday’s report showed US corn ending stocks unchanged from November at 1.91 billion bushels. US soybean ending stocks were also unchanged from last month at 475 million bushels. US wheat ending stocks were reduced to 974 million bushels from 1.014 billion bushels in last month’s report. This Sunday (Dec. 15) is the deadline for new U.S. trade tariffs going into effect against Chinese goods imported into the U.S. While the rhetoric this week has been mostly upbeat on the matter, the history of the U.S.-China trade war is one of distinct highs and lows regarding progress toward a deal. And grain traders know President Trump’s mercurial personality. Thus, grain markets are likely to remain tentative and quieter the rest of this week. The grain futures showed little reaction to news the U.S. has reached a trade deal with its neighbors, Canada and Mexico. Grain traders are looking more closely at weather in South American crop-growing regions. There are no major problems at present, with soil moisture adequate in most crop regions. The near-term technical postures for corn and soybeans remain bearish, with wheat being neutral to slightly bullish on the charts.
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