Wednesday, February 14–Jim Wyckoff’s morning markets report
Asian and European stock markets were mixed in overnight trading. China is celebrating its Lunar New Year holiday this week and many China markets are still closed. U.S. stock index futures are set to open higher when the New York day session begins.
The marketplace has mostly digested Tuesday’s U.S. consumer price index report for January that came in at up 3.1%, year-on-year, compared to forecasts for up 2.9% and compares to a rise of 3.4% in the December report. The “core” CPI (excluding food and energy) for January came in at up 3.9%, year-on-year. The U.S. stock indexes sold off sharply, the U.S. dollar index surged, U.S. Treasury yields rose significantly and gold prices posted solid losses. The CPI report all but dashed hopes the Federal Reserve would start to lower interest rates early this spring. The warmer-but-still-not-hot CPI print Tuesday was not that far out of line from market expectations, yet the aforementioned markets showed serious reactions. It’s my bias the CPI report that was a bit warmer than expected was just an excuse for the U.S. stock market to experience a downside correction that was needed anyway, after the major U.S. indexes hit record highs earlier this week. And the U.S. dollar index was already trending up before the CPI news. Bond yields were already creeping up, too. Don’t be surprised to see stock market bulls look at Tuesday’s big pullback as a buying opportunity in existing solid price uptrends for the major indexes.
The next U.S. inflation report comes with Friday’s producer price index report for January, seen coming in at up 0.1% from December, compared to a 0.1% month-on-month decline in the December PPI report.
U.S. data out today includes the weekly MBA mortgage applications survey and the weekly DOE liquid energy stocks report.
STOCK INDEXES
March S&P 500 e-mini futures: Prices are firmer in early U.S. trading. Bulls still have the solid overall near-term technical advantage. Prices are in a three-month-old uptrend on the daily bar chart. 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 early today. Today, shorter-term technical resistance comes in at Tuesday’s high of 5,040.00 and then at the record high of 5,066.50. Support for active traders is seen at this week’s low of 4,936.50 and then at 4,900.00. Wyckoff’s Intra-day Market Rating: 5.5
March Nasdaq index futures: Prices are firmer in early U.S. trading. Bulls still 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 is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at Tuesday’s high of 17,963.25 and then at the contract high of 18,121.50. On the downside, shorter-term support is seen at this week’s low of 17,542.00 and then at 17,400.00. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are firmer after hitting a nine-week low overnight. 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 119 even and then at 120 even. Shorter-term support lies at the overnight low of 117 27/32 and then at 117 even. Wyckoff’s Intra-Day Market Rating: 5.5
March U.S. T-Notes: Prices are higher in early U.S. trading after hitting a 2.5-month low overnight. 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 resistance lies at 110.00.0 and then at 110.16.0. Shorter-term technical support is seen at the overnight low of 109.16.5 and then at 109.08.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
EURO CURRENCY
The March Euro currency futures are near steady in early U.S. trading and hit a 3.5-month low overnight. Bears have the near-term technical advantage. Prices are trending down on the daily bar chart. The shorter-term moving averages for the Euro are bearish early today, as the 4-day is below the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators for the Euro are neutral to bearish early today. The Euro currency finds shorter-term technical resistance at 1.0800 and then at this week’s high of 1.0830. Shorter-term support is seen at 1.0700 and then at 1.0650. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
March Nymex crude oil prices are near steady in early U.S. trading. The shorter-term moving averages are neutral early today as the 4-day is above the 9-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 this week’s high of $78.47 and then at the January high of $79.29. Look for sell stops just below technical support at $76.00 and then at $75.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
Grain futures prices were lower overnight. The rallying U.S. dollar index this week and the risk-off trader mentality in the general marketplace are bearish for the grains. This week is the annual USDA Ag Outlook conference Thursday and Friday, which will have new supply and demand estimates for the grains. Charts are still fully bearish for corn, wheat, soybeans, meal and bean oil. All the grain markets are trending down on the daily bar charts. Seasonality factors are turning a bit more bullish for the grain markets as springtime approaches. But still, there are no solid, early technical clues to suggest the grain markets have put in price bottoms.
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