Monday, January 11–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly weaker overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins. Trader and investor risk appetite is dented to start the trading week. A downbeat U.S. unemployment report last Friday and the aftermath of the U.S. Capitol riot have combined with the still-raging Covid-19 pandemic are weighing on the marketplace. The trading and investment climate “is a little bumpier” than at this time last week, said one market analyst.
Gold prices are posting decent gains Monday, on some safe-haven demand and bargain hunting after prices on Friday dropped sharply and hit a three-week low.
The key “outside markets” today see the U.S. dollar index solidly up. Said one market analyst in a morning email dispatch: “ Shorting the dollar was the most recommended trade in currency markets heading into 2021. However, rising (U.S. government bond) yields could now lead to a rethinking of this strategy. If the yield curve becomes steeper and differentials become much wider, expect to see a strong recovery in the dollar despite the new billions in expected stimulus. According to the latest CFTC data, we are already seeing a trimming of long positions in major currencies (futures) against the greenback.”
Meantime, Nymex crude oil futures prices are weaker and are trading around $51.75 a barrel. Profit taking is featured after crude oil prices last Friday hit a 10-month high.
The benchmark U.S. 10-year Treasury note yield is currently fetching 1.103%.
U.S. economic data due for release Monday is light and includes the employment trends index.
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are lower on profit taking after hitting a record high last Friday. Bulls still have the solid overall near-term technical advantage. A near-term price uptrend is 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 to bearish early today. Today, shorter-term technical resistance comes in at the record high of 3,824.50 and then at 3,850.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at Friday’s low of 3,777.00 and then at 3,750.00. Wyckoff’s Intra-day Market Rating: 4.0
March Nasdaq index futures: Prices are weaker in early U.S. trading after hitting a contract high last Friday. 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 average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at the record high of 13,125.00 and then at 13,250.00. On the downside, shorter-term support is seen at 13,000.00 and then at Friday’s low of 12,919.00. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are slightly higher in early U.S. trading and hit another contract low overnight. Bears 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 bearish early today. The 4-day moving average is below 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 Friday’s high of 169 13/32 and then at 170 even. Shorter-term support lies at the overnight contract low of 168 2/32 and then at 167 16/32. Wyckoff’s Intra-Day Market Rating: 5.0
March U.S. T-Notes: Prices are near steady and hit a contract low in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at Friday’s high of 136.29.5 and then at 137.00.0. Shorter-term technical support lies at the overnight contract low of 136.14.5 and then at 136.08.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
The March Euro currency futures are lower and hit a three-week low on more profit taking after hitting a two-year high last week. Bulls are fading. The shorter-term moving averages for the Euro are neutral early today, as the 4-day is below the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators for the Euro are bearish early today. The Euro currency finds shorter-term technical resistance at the overnight high of 1.2235 and then at 1.2300. Shorter-term support is seen at the overnight low of 1.2171 and then at 1.2150. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
February Nymex crude oil prices are weaker in early U.S. trading after hitting a 10-month high last Friday. 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 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 last week’s high of $52.75 and then at $53.00. Look for sell stops just below technical support at Friday’s low of $50.81 and then at $50.00. Wyckoff’s Intra-Day Market Rating: 4.5
US grain futures are mixed in early U.S. pre-market trading. The grain markets bulls have the strong overall near-term technical advantage amid price uptrends in place on the daily charts. The steep price gains in the grains recently suggest market tops are likely to occur sooner rather than later. On tap today is weekly USDA export inspections. However, the big highlight of the week and of the month for the grain markets is Tuesday’s USDA supply and demand reports, which are expected to favor the bullish camps.
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.