Friday, December 27–Jim Wyckoff’s Morning Markets Report
Asian and European stock indexes were mostly up in overnight trading. The U.S. stock indexes are pointed toward higher openings and at their record highs when the New York day session begins.
There has been little markets-moving news in the global marketplace this holiday week. The past several weeks have seen the geopolitical front quiet, which has diminished trader and investor worries and uncertainties, and has allowed world stock markets to continue to drift higher, with some stock indexes, including those in the U.S., hitting record highs. This lull won’t go on indefinitely and veteran market watchers are pondering the next major event to disrupt the calm.
The key “outside markets” today see the U.S. dollar index lower. Meantime, Nymex crude oil prices are slightly up and hit a seven-week high overnight, trading around $61.90 a barrel.
U.S. economic data due for release Friday is light and includes the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are firmer in early U.S. trading and hit another record and contract high overnight. Bulls have the solid overall near-term technical advantage. There are no early clues that 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. 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 contract high of 3,253.75 and then at 3,265.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 3,241.50 and then at this week’s low of 3,227.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.5
March Nasdaq index futures: Prices are up and hit another contract and record high overnight. Bulls have the solid 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 to bullish early today. Shorter-term technical resistance is seen at the contract high of 8,842.50 and then at 8,875.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 8,800.25 and then at 8,750.00. 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 higher in early U.S. trading. Bears 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 even with the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at 157 even and then at 157 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 156 15/32 and then at 156 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
March U.S. T-Notes: Prices are firmer in early U.S. trading. Bears 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 even with the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term support lies at the overnight low of 128.12.5 and then at 128.06.5. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 128.17.5 and then at 128.24.0. 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 lower in early U.S. trading. Bulls and bears are on a level overall near-term technical playing field amid recent choppy trading. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is above the 9-day and 18-day. The 9-day is even with 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 97.000 and then at the overnight high of 97.160. Shorter-term support is seen at 96.500 and then at the December low of 96.295. Wyckoff’s Intra Day Market Rating: 3.5
NYMEX CRUDE OIL
February Nymex crude oil prices are slightly higher and hit another seven-month high in early U.S. trading. Bulls have the firm near-term technical advantage and are keeping in place a three-month-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 bullish early today. Look for buy stops to reside just above technical resistance at $62.00 and then at $62.50. Look for sell stops just below technical support at the overnight low of $61.55 and then at $61.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
US grain futures prices were higher overnight. Corn was up around 1 1/2 cents, soybeans up around 3 1/2 cents and wheat around 5 cents higher. As the year winds down the big speculative “fund” traders that had been short the grain futures markets are covering those shorts as grain prices rise. More short covering is likely next week as the big funds appear to have been caught on the wrong side of the market late this year. Today’s focus will be on the weekly USDA export sales report, delayed one day by the Christmas holiday. US corn sales are seen at 500,000 to 1,300,000 metric tons (MT), US soybeans at 700,000 to 1,550,000 MT and US wheat 200,000 to 900,000 MT. The U.S.-China trade war appears to be significant decelerating amid the recent positive comments on the matter from officials on both sides. The January monthly USDA supply and demand report is the next major inflection point for the grain markets, as estimates of the updated size of the U.S. corn and soybean crops will be issued following a rocky harvest season that was plagued by inclement weather. Weather in South American corn and soybean regions remain mostly non-threatening, but grain traders will continue to monitor mildly dry pockets that could become a bigger concern in January.
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