Friday, November 22–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mixed overnight and the U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins.
Amid a quieter geopolitical front recently, trader and investor focus remains on the U.S.-China trade war and ongoing negotiations between the world’s two largest economies. Late this week the tenor is mixed, highlighted by Chinese Premiere Xi saying China will “fight back” on trade if the U.S. imposes more tariffs on China’s products. Yet, reports from China also say trade officials, including Xi, want to get a deal done, with Xi saying he does not want a trade war. Reports Thursday said Chinese trade officials invited U.S. trade officials to China for more talks in the near term. This pattern of optimism and then pessimism on trade-talks progress continues.
In other overnight news, the German October manufacturing purchasing managers index (PMI) came in at 43.8, which was a bit better than expected but still well below the 50.0 level, indicating contraction in the sector.
The key “outside markets” today see the U.S. dollar index slightly higher. Nymex crude oil prices are weaker and trading around $58.25 a barrel. Oil prices hit a two-month high on Thursday.
U.S. economic data due for release Friday includes the U.S. flash manufacturing and services purchasing managers indexes, the Federal Reserve Kansas City manufacturing survey, and the University of Michigan consumer sentiment survey.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are slightly up in early U.S. trading. Bulls have the solid 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 even with the 9-day and 18-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 3,118.50 and then at the contract high of 3,132.50. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 3,091.25 and then at 3,075.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
December Nasdaq index futures: Prices are firmer in early U.S. trading. Bulls have the solid near-term technical advantage. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is even 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 Wednesday’s high of 8,348.00 and then at the contract high of 8,379.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at this week’s low of 8,231.00 and then at 8,200.00. 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 higher in early U.S. trading. Bulls and bears are on a level overall near-term technical playing field. 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 even with the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at this week’s high of 160 4/32 and then at 160 26/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 158 19/32 and then at 158 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 in early U.S. trading. Bulls and bears are on a level overall near-term technical playing field. 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 even with the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term support lies at the overnight low of 129.12.5 and then at 129.05.5. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at 130.00.0 and then at this week’s high of 130.04.0. 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 near steady in early U.S. trading. Bulls still have the overall near-term technical advantage. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is below the 9-day. The 9-day is above with the 18-day moving average. Short-term oscillators for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at this week’s high of 97.600 and then at the November high of 97.870. Shorter-term support is seen at this week’s low of 97.135 and then at 97.000. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
January Nymex crude oil prices are weaker down in early U.S. trading, on a corrective pullback from good late-week gains that saw prices hit a two-month high Thursday. Bulls have the near-term technical advantage. 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 this week’s high of $58.67 and then at $59.00. Look for sell stops just below technical support at $58.00 and then at $57.50. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
US grain futures prices were mixed again overnight, with corn near steady, soybeans down around 1 1/2 cents and wheat up around 2 cents. Grain trader focus remains on the U.S.-China trade war and ongoing negotiations between the world’s two largest economies. Late this week the tenor is mixed, highlighted by Chinese Premiere Xi saying China will “fight back” on trade if the U.S. imposes more tariffs on China’s products. Yet, reports from China also say trade officials, including Xi, want to get a deal done, with Xi saying he does not want a trade war. Reports Thursday said Chinese trade officials invited U.S. trade officials to China for more talks in the near term. This pattern of optimism and then pessimism on trade-talks progress continues. US Midwest weather remains neutral to slightly bullish for the grain futures markets as harvesting of corn and soybeans is winding down. Some wet areas in the Midwest are hampering harvest, but other areas are dry and allowing gather of the crops to be completed. Weather focus is turning to South American corn and soybean regions as corn and soybean crops are being sowed. The near-term technical chart postures for all three grain markets continue to favor the bears as all three grains are in near-term price downtrends on the daily bar charts.
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