Friday, December 6–Jim Wyckoff’s Morning Markets Report
Asian and European stock indexes were mostly up overnight. The U.S. stock indexes are pointed toward higher openings when the New York day session begins. European equities shrugged off a very downbeat report on German industrial production for October, which come in at down 1.7% from September and down 5.3%, year-on-year. That was the biggest drop in 10 years.
Traders are awaiting the U.S. economic data point of the week, if not the month: Friday morning’s employment situation report for November from the Labor Department. The key non-farm payroll number is expected to come in at up around 185,000 jobs. However, Wednesday’s ADP national employment report for November came in at up just 67,000 jobs, which was a big miss to the downside from market expectations for a rise of 150,000 and has many thinking Friday’s job’s number will be a downside miss, too. The overall unemployment rate is expected to remain at a recent historical low 3.6%. Look for more active markets in the immediate aftermath of today’s jobs report—especially if it’s a big miss.
The OPEC oil cartel is meeting late this week and is expected to continue to limit its crude oil production in an effort to keep prices propped up. Crude oil prices have rallied this week on those expectations.
Another markets feature this week is a rally in the British pound to a multi-month high, on notions the U.K. citizens will next week in the general election produce a win for Prime Minister Boris Johnson and his Conservative party.
The key “outside markets” today see the U.S. dollar index slightly up. The USDX hit a four-week low Thursday and the greenback bulls are fading. Meantime, Nymex crude oil prices are near steady and trading around $58.35 a barrel.
Other U.S. economic data due for release Friday includes monthly wholesale trade, consumer credit and the University of Michigan consumer sentiment survey.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are firmer in early U.S. trading. While bulls still have the overall near-term technical advantage, early-week price action produced a significantly bearish “key reversal” down on the daily bar chart, which is one technical clue that a near-term market top is in place. However, gains to end Friday would negate that pattern and put the bulls back in solid control. 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 above 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 3,145.00 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 Thursday’s low of 3,105.00 and then at Wednesday’s low of 3,083.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
March Nasdaq index futures: Prices are higher in early U.S. trading. Bulls 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 below the 9-day and 18-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at 8,400.00 and then at the contract high of 8,479.25. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 8,330.50 and then at Thursday’s low of 8,293.50. 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 are near steady 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 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 to bearish early today. Shorter-term technical resistance is seen at Thursday’s high of 159 5/32 and then at 160 even. Buy stops likely reside just above those levels. Shorter-term support lies at Thursday’s low of 157 26/32 and then at this week’s low of 157 6/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
March U.S. T-Notes: Prices are steady 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 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 support lies at the overnight low of 129.04.5 and then at 129.00.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at 129.20.0 and then at 129.28.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 5.0
U.S. DOLLAR INDEX
The March U.S. dollar index is firmer in early U.S. trading. Bulls have lost their overall near-term technical advantage as prices hit a four-week low Thursday. 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 Thursday’s high of 97.120 and then at 97.315. Shorter-term support is seen at this week’s low of 96.905 and then at 96.750. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
January Nymex crude oil prices are modestly lower in early U.S. trading, on a corrective pullback from recent good gains that pushed prices to a 2.5-month high on Thursday. Bulls have the near-term technical advantage and are keeping in place a nine-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 early today. Look for buy stops to reside just above technical resistance at this week’s high of $59.12 and then at $60.00. Look for sell stops just below technical support at the overnight low of $57.92 and then at $57.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
US grain futures prices were higher overnight. Corn was up around 1 1/2 cents, soybeans around 7 cents up and wheat 1 to 2 cents higher. Traders are awaiting next Tuesday monthly USDA’s supply and demand report, although no updates on the size of the US corn and soybean crops will be made in this report. Those figures will come in the January report. Grain traders remain tuned into the U.S. and China trade war and the negotiations to end it. Grain trader attitudes late this week are mostly upbeat about a partial deal getting done soon. December 15 looms as the next inflection point for the trade talks between the world’s two largest economies, as that’s when new U.S. tariffs are scheduled to go into effect. Grain traders are also looking at weather patterns in South American growing regions. There are no major problems at this time, 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