Thursday, November 29–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
European stock markets were also mostly higher overnight. Asian stock indexes were also mostly firmer. U.S. stock indexes are pointed toward weaker openings when the New York day session begins, following strong gains Wednesday. The U.S. stock index bulls are having a very good week, so far.
The marketplace is still buzzing about Fed Chairman Jerome Powell’s dovish remarks on U.S. monetary policy in a speech to the Economic Club of New York Wednesday. Powell said at present, U.S. interest rates are just below “neutral” levels and that the Fed will remain data dependent, with no set path on adjusting interest rates. Traders and investors interpreted Powell’s comments as meaning the Fed will likely raise interest rates slightly at its December meeting, but after that all bets are off. Prior to Powell’s speech, the sense of the marketplace was that the Federal Reserve would continue on a gradual rate-hike course in 2019. Powell also intimated that U.S. inflation is not at all problematic at present. The U.S. stock market rallied strongly on the news, while the U.S. dollar index sold off moderately. Gold prices also rallied on the news. Traders will get an update on Federal Reserve policy discussion when the FOMC minutes are released this afternoon.
Focus this week is also on the upcoming Group of 20 meetings that begin Friday in Argentina and will feature a face-to-face meeting between the U.S. and Chinese presidents on Saturday. The world’s two largest economies are locked in a heated trade war.
In overnight news, the European Central Bank issued a warning regarding the growing risks to the Euro zone financial sector. Trade disputes, Brexit and high debt levels of member countries were cited by the ECB as worrisome elements.
The key outside markets today find Nymex crude oil futures prices lower and hitting a 13-month low of $49.41 a barrel. Rising U.S. oil inventories are prompting the fresh selling pressure. Crude prices are down around 30% following the recent sharp declines. A key OPEC oil cartel meeting is scheduled for next week in Vienna, Austria.
The other key outside market today finds the U.S. dollar index trading firmer.
U.S. economic data due for release Thursday includes the weekly jobless claims report, personal income and outlays, pending home sales and the FOMC minutes.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are weaker in early U.S. trading, on a corrective pullback from strong gains scored Wednesday. Bears still have the overall near-term technical advantage. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at this week’s high of 2,750.50 and then at 2,775.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 2,725.00 and then at 2,700.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
March Nasdaq index December futures: Prices are lower in early U.S. trading today, on a downside correction from Wednesday’s strong gains. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at this week’s high of 6,950.00 and then at 7,000.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 6,850.00 and then at 6,800.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES
March U.S. T-Bonds: Prices are higher and hit a two-month high in early U.S. trading today. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at the overnight high of 140 4/32 and then at 140 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at 139 16/32 and then at 139 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
March U.S. T-Notes: Prices are higher and hit an 11-week high in early U.S. trading today. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term resistance lies at the overnight high of 119.20.0 and then at 119.24.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 119.10.0 and then at the overnight low of 119.03.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The March U.S. dollar index is firmer in early U.S. trading. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages for the dollar index 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 for the dollar index are neutral to bullish early today. The dollar index finds shorter-term technical resistance at the November high of 96.930 and then at 97.500. Shorter-term support is seen at the overnight low of 96.000 and then at 95.690. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
January Nymex crude oil prices are lower and hit another 13-month low of $49.41 today. Bears are in solid near-term technical control. There are no early clues that a market bottom is close at hand. The shorter-term moving averages are bearish early today as the 4-day is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $51.04 and then at $52.00. Look for sell stops just below technical support at $49.41 and then at $49.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
Grain futures prices are set to open mostly weaker today. Traders will examine today’s weekly USDA export sales report. Traders are also awaiting the weekend meeting between the U.S. and China on trade. The grain market bears still have the overall near-term technical advantage.
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