Tuesday, December 10–Jim Wyckoff’s Morning Markets Report
Asian and European stock indexes were mostly weaker overnight. The U.S. stock indexes are pointed toward lower openings when the New York day session begins. Risk aversion has crept up early this week. Next Sunday (Dec. 15) is the deadline for the imposition of new tariffs on Chinese imports into the U.S. If those new tariffs are allowed by President Trump to go into effect, then the U.S.-China trade war would likely escalate and no partial trade deal would be in sight, most believe. The keener uncertainty as the deadline approaches is likely to keep market participants leery the rest of this week. There is no real consensus on what will happen before Sunday, which makes the marketplace even more cautious.
The U.S. economic highlight of the week is the Federal Reserve’s Open Market Committee meeting (FOMC) that begins Tuesday morning and ends Wednesday afternoon with a statement. The Fed is expected to make no changes in its monetary policy. The European Central Bank also meets on monetary policy Thursday.
The closely watched German ZEW current conditions index came in at -19.9 in December versus -24.7 in November. The expectations index was 10.7 in December compared to -2.1 in November. The expectations index was well above market expectations and was the best reading of the year.
The key “outside markets” today see the U.S. dollar index weaker. Meantime, Nymex crude oil prices are slightly lower and trading around $59.00 a barrel.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the NFIB small business index, revised productivity and costs, and the Manpower employment outlook survey.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are modestly 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 bullish early today. The 4-day moving average is above the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 3,140.75 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 3,100.00 and then at 3,083.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.0
March Nasdaq index futures: Prices are down 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 even with the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bearfish early today. Shorter-term technical resistance is seen at the overnight high of 8,394.50 and then at Monday’s high of 8,447.75. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 8,300.00 and then at 8,250.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are 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 to bullish early today. Shorter-term technical resistance is seen at 158 22/32 and then at 159 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 157 31/32 and then at Monday’s low of 157 18/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
March U.S. T-Notes: Prices are 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 to bullish early today. Shorter-term support lies at the overnight low of 128.31.0 and then at Monday’s low of 128.27.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at 129.10.0 and then at 129.14.5. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The March U.S. dollar index is weaker 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 bearish early today. The dollar index finds shorter-term technical resistance at Monday’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: 4.5
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 Friday. 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 $59.41 and then at last week’s high of $59.85. Look for sell stops just below technical support at Monday’s low of $58.23 and then at $58.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
US grain futures prices were narrowly mixed overnight. Traders are awaiting Tuesday morning’s monthly USDA’s supply and demand report. No updates on the size of the US corn and soybean crops will be made in today’s report. Those figures will come in the January report. Next Sunday (Dec. 15) is the deadline for the imposition of new U.S. tariffs on Chinese imports into the U.S. If those new tariffs are allowed by President Trump to go into effect, then the U.S.-China trade war would likely escalate and no partial trade deal would be in sight, most believe. The keener uncertainty as the deadline approaches is likely to keep grain market participants leery the rest of this week. There is no real consensus on what will happen before Sunday, which makes the grain marketplace even more cautious. One bright spot on the matter is reports Monday that Chinese soybean importers bought at least five cargo shipments of U.S. soybeans for shipment in January and February. Chinese officials also reportedly said they hoped to make a trade deal with the U.S. as soon as possible, before the new tariffs take effect. Grain traders are also looking at weather patterns in South American 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