Tuesday, February 5–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
European and Asian stock markets were mostly firmer in quieter dealings overnight. Chinese markets and some other Asian markets are closed this week for the Lunar New Year holiday, which could make for quieter trading in world markets most of this week. U.S. stock indexes are pointed toward firmer openings when the New York day session begins.
In overnight news, the Euro zone reported downbeat retail sales in December, at off 1.6% from November and up a paltry 0.8%, year-on-year. The monthly decline was the most in eight years. Meantime, the Euro zone January services purchasing managers index (PMI) came in at a better-than-expected 51.2, which was unchanged from December.
President Trump had dinner with Fed Chairman Jerome Powell and Treasury Secretary Steve Mnuchin at the White House Monday evening, to discuss the U.S. economy—the first time Powell and Trump had a face-to-face conversation since Powell became the Fed chair. Trump had considered firing Powell just a few months ago. Then Powell and the Fed shifted their tenor on U.S. monetary policy to a more dovish stance.
The U.S. highlight of the day will be President Trump’s State of the Union speech in the evening. Many market watchers will want to know what the president says about U.S.-China trade relations. The trade talks appear to be progressing ahead of the early-March deadline for a deal being reached.
The outside markets today see the U.S. dollar index trading higher again. Meantime, Nymex crude oil prices are up and trading just above $55.00 a barrel. Political turmoil in Venezuela, a crude oil exporter, is a bullish element for the oil market.
U.S. economic reports due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the U.S. services PMI, the IBD/TIPP economic optimism index, the ISM non-manufacturing report on business, and the global services PMI.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are firmer and hit a seven-week high in early U.S. trading. Prices are in an 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 and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bullish early today. Today, shorter-term technical resistance comes in at 2,750.00 and then at 2,775.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Monday’s low of 2,697.00 and then at 2,675.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
March Nasdaq index December futures: Prices are slightly up after hitting a two-month high Monday. Prices are in an uptrend on the daily bar chart. Shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above with 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 high of 6,983.00 and then at 7,000.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 6,900.00 and then at Monday’s low of 6,858.25. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are weaker in early U.S. trading today. Bulls have the overall near-term technical advantage but trading has been choppy recently. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 145 12/32 and then at Monday’s high of 146 3/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 144 31/32 and then at the January low of 144 9/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
March U.S. T-Notes: Prices are slightly down in early U.S. trading. Bulls have the overall chart advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at the overnight high of 121.25.5 and then at Monday’s high of 122.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 121.19.5 and then at 121.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
U.S. DOLLAR INDEX
The March U.S. dollar index is firmer in early U.S. trading. The shorter-term moving averages for the dollar index 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 dollar index are bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 95.740 and then at 96.000. Shorter-term support is the overnight low of 95.540 and then at Monday’s low of 94.305 . Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
March Nymex crude oil prices are near slightly up. Prices Monday hit a 2.5-month high. 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 Monday’s high of $55.75 and then at $56.00. Look for sell stops just below technical support at Monday’s low of $53.29 and then at $53.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
Grain futures were mixed overnight. USDA reports are showing China is buying some U.S. soybeans, which is limiting selling interest in the grains. There is a slew of back-up USDA data coming out Friday morning and the grain markets are likely to be quieter up to that point. Corn and wheat bears have the near-term technical advantage, while the soybean market is in a neutral near-term technical posture.
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