Tuesday, February 11–Jim Wyckoff’s Morning Markets Report
Asian and European shares were mostly higher overnight. U.S. stock indexes are also pointed toward higher openings when the New York day session begins. While the coronavirus outbreak continues to spread, it is now spreading at a lower rate of growth of new cases, which has again somewhat assuaged the marketplace Tuesday. There are now over 1,000 reported dead in China and over 42,500 afflicted. On this day the marketplace reckons the spread of the illness is getting under control and that the Chinese government, working with the U.S. and other countries, will keep the outbreak from becoming a pandemic. Traders and investors have been calmed down before on this matter, only to become anxious again. Once again, traders are markets are fickle.
Focus of U.S. traders today will be on the testimony from Federal Reserve Chairman Jerome Powell to a House of Representatives financials services committee. Several other Federal Reserve officials are scheduled to give speeches Tuesday.
The key outside markets today see crude oil prices higher and trading around $50.30 a barrel. Meantime, the U.S. dollar index is slightly weaker overnight after hitting a nine-month high Monday.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the NFIB small business index.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are firmer and hit a contract and record high in early U.S. trading. The bulls have the solid technical advantage. There are no early chart clues to suggest a market top is close at hand. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Today, shorter-term technical resistance comes in at the overnight high of 3,364.75 and then at 3,375.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at the overnight low of 3,349.25 and then at 3,325.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.5
March Nasdaq index futures: Prices are higher and hit a contract and record high in early U.S. trading. Bulls have the solid overall near-term technical advantage. 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 average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at the overnight contract high of 9,583.25 and then at 9,600.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 9,516.50 and then at 9,450.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are lower in early U.S. trading. Bulls still have the overall near-term technical advantage. 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 bearish early today. Shorter-term technical resistance is seen at the overnight high of 162 24/32 and then at 163 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 162 5/32 and then at 162 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
March U.S. T-Notes: Prices are lower in early U.S. trading. Bulls still have the overall near-term technical advantage. 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 bearish early today. Shorter-term resistance lies at the overnight high of 131.06.0 and then at Monday’s high of 131.12.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 130.28.5 and then at 130.20.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The March U.S. dollar index is near steady in early U.S. trading and hit a nine-month high overnight. 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 early today. The dollar index finds shorter-term technical resistance at the overnight high of 98.805 and then at 99.000. Shorter-term support is seen at Monday’s low of 98.490 and then at 98.300. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
March Nymex crude oil prices are higher in early U.S. trading, on short covering. A price downtrend is still in place on the daily bar chart. The shorter-term moving averages 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 (RSI and slow stochastics) are neutral to bullish early today. Look for buy stops to reside just above technical resistance at $51.00 and then at $52.00. Look for sell stops just below technical support at $50.00 and then at the February low of $49.31. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
US grain futures are mixed in early US pre-market trading Monday. Corn is down around 1 cent, soybeans up around 1 1/2 cents and wheat steady to 3 cents down. Focus today will be on the midday monthly USDA supply and demand report, which is expected to show 2019/20 marketing year US corn ending stocks at 1.86 billion bushels, US soybean ending stocks at around 0.45 billion bushels, and US wheat stocks around 0.95 billion bushels. USDA said last week this report will not include Phase 1 U.S.-China trade details, regarding China’s purchase commitments to the US, but that the overall deal is being factored into USDA forecasts. While the coronavirus outbreak continues to spread, it is now spreading at a lower rate of growth of new cases, which has again somewhat assuaged the global marketplace Tuesday. There are now over 1,000 reported dead in China and over 42,500 afflicted. On this day the marketplace reckons the spread of the illness is getting under control and that the Chinese government, working with the U.S. and other countries, will keep the outbreak from becoming a pandemic. Traders and investors have been calmed down before on this matter, only to become anxious again. Once again, traders are markets are fickle. Grain market traders are still tentative on the matter, which means less buying interest.
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