Markets pause ahead of FOMC meeting

Tuesday, January 26–Jim Wyckoff’s Morning Markets Report

Global stock markets were mixed overnight, with Asian indexes mostly down and European indexes mostly up. U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins. It’s a busy week for U.S. economic data, highlighted by the Federal Reserve’s two-day Open Market Committee (FOMC) meeting that begins Tuesday morning and ends Wednesday afternoon with a statement and Fed Chairman Powell’s press conference. The featured data point in the U.S. today is the consumer price index. It’s also a busy week for corporate earnings reports.

The marketplace continues to monitor progress or lack thereof on the Biden administration’s efforts to push a $1.9 trillion financial aid package through Congress, to help Americans and businesses hurt by the pandemic. Right now, most reckon the package will get through Congress with possible modifications.

In other news, the U.S. Senate on Monday confirmed former Fed chair Janet Yellen as the new U.S. Treasury Secretary. A Wall Street Journal story just out had the headline: “Treasury and Fed Set for Close Alliance.” That suggests more easy money policies coming from the Fed and Treasury for some time to come.

The key “outside markets” today see the U.S. dollar index near steady. Meantime, Nymex crude oil futures prices are firmer and trading around $53.15 a barrel. The yield on the benchmark 10-year U.S. Treasury note stands at 1.04%.

U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and Goldman Sachs retail sales reports, the monthly house price index, the S&P-Case-Shiller home price indexes, the Richmond Fed business survey, the consumer price index and the FOMC meeting conclusion.

–Jim

U.S. STOCK INDEXES

March S&P 500 e-mini futures: Prices are near steady in early U.S. trading and not far below last week’s record high. Bulls have the solid overall near-term technical advantage. A near-term price uptrend is firmly in place 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 the record high of 3,859.75 and then at 3,885.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at the overnight low of 3,821.50 and then at 3,800.00. Wyckoff’s Intra-day Market Rating: 5.5

March Nasdaq index futures: Prices are slightly down after hitting a record high Monday. 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 neutral early today. Shorter-term technical resistance is seen at Monday’s record high of 13,554.50 and then at 13,650.00. On the downside, shorter-term support is seen at the overnight low of 13,380.25 and then at 13,250.00. Wyckoff’s Intra-Day Market Rating: 5.0.

U.S. TREASURY BONDS AND NOTES FUTURES

March U.S. T-Bonds: Prices are lower in early U.S. trading, on a mild pullback after solid gains and a three-week high scored overnight. Bears still have the solid overall near-term technical advantage amid a price downtrend in place on the daily chart. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-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 the overnight high of 170 9/32 and then at 171 even. Shorter-term support lies at 169 even and then at Monday’s low of 168 19/32. Wyckoff’s Intra-Day Market Rating: 4.0

March U.S. T-Notes: Prices are weaker in early U.S. trading and seeing a mild pullback after hitting a three-week high Monday. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above 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 this week’s high of 137.14.5 and then at 137.20.0. Shorter-term technical support lies at 137.02.0 and then at 137.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5

EURO CURRENCY

The March Euro currency futures are slightly lower in early U.S. trading. The shorter-term moving averages for the Euro 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 for the Euro are neutral to bullish early today. The Euro currency finds shorter-term technical resistance at last week’s high of 1.2203 and then at 1.2239. Shorter-term support is seen at the overnight low of 1.2120 and then at 1.2100. Wyckoff’s Intra Day Market Rating: 5.0

NYMEX CRUDE OIL

March Nymex crude oil prices are firmer in early U.S. trading. Bulls still have the solid overall near-term technical advantage amid a price uptrend in place on the daily chart. The shorter-term moving averages are neutral early today as the 4-day is even with 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 the overnight high of $53.24 and then at the January high of $53.94. Look for sell stops just below technical support at the overnight low of $52.29 and then at last week’s low of $51.44. Wyckoff’s Intra-Day Market Rating: 5.5

GRAINS

U.S. grain futures are mostly higher in early U.S. pre-market trading, as the bulls early this week work to stabilize their markets after last Friday’s big losses. So far, bulls are making progress on repairing the near-term technical damage inflicted last week, but the corn and bean bulls have more work to do to suggest near-term price uptrends can be restarted. Wheat remains in a near-term price uptrend. Monday’s lows in the grains are now very important technical support levels that the bulls must defend.

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