Tuesday, December 24–Jim Wyckoff’s Morning Markets Report
Asian and European stock indexes were mostly slightly up in more quiet trading overnight. The U.S. stock indexes are pointed toward slightly higher openings and at or near their record highs when the New York day session begins. Traders and investors are gearing up for the upcoming holidays, including squaring their books as the end of the year approaches, so trading interest and volumes are likely to be lighter the next week or so. Markets are closed Wednesday for the Christmas holiday and many, including the U.S. stock markets, close early today.
The geopolitical front has been quieter for many weeks, including U.S.-China trade tensions relaxing the past couple weeks, and that’s making for a “risk-on” trading environment that is boosting global equities. Notions of better global economic growth in the coming new year are also lifting raw commodity markets, with crude oil leading the way.
The key “outside markets” today see the U.S. dollar index higher. Meantime, Nymex crude oil prices are slightly up and trading around $60.65 a barrel after hitting a multi-month high last week.
U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and Goldman Sachs retail sales reports, and the Richmond Fed business survey.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are slightly firmer in early U.S. trading and near Monday’s record and contract high. Bulls have the solid overall near-term technical advantage. 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 3,234.25 and then at 3,250.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at last Friday’s low of 3,208.50 and then at 3,200.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
March Nasdaq index futures: Prices are slightly up and near Monday’s contract and record high. 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 8,743.25 and then at 8,800.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at last Friday’s low of 8,665.25 and then at 8,600.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are slightly up in early U.S. trading. Bears have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-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 Monday’s high of 156 24/32 and then at 157 even. Buy stops likely reside just above those levels. Shorter-term support lies at last week’s low of 155 14/32 and then at the November low of 155 1/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
March U.S. T-Notes: Prices are slightly down in early U.S. trading. Bears have the firm overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term support lies at the December low of 127.29.0 and then at 127.24.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at Monday’s high of 128.12.5 and then at 128.16.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The March U.S. dollar index is firmer in early U.S. trading. Bulls and bears are on a level overall near-term technical playing field and the bulls still have some momentum. 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 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 Monday’s high of 97.405 and then at 97.500. Shorter-term support is seen at 97.000 and then at 96.780. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
February Nymex crude oil prices are slightly higher in early U.S. trading, but not far below last week’s multi-month high. 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 early today. Look for buy stops to reside just above technical resistance at $61.00 and then at last week’s high of $61.40. Look for sell stops just below technical support at $60.00 and then at last week’s low of $59.62. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
US grain futures prices were mixed overnight. Corn was steady, soybeans down 5 cents and wheat up around 1 cent. Low-volume holiday trading is expected the next week or so in the grains, which can also lead to some higher volatility. Grain traders remain upbeat heading into the end of the year, as the U.S.-China trade war appears to be winding down. Focus of grain traders in the coming weeks will be on daily and weekly export sales announcements from USDA, specifically for stepped-up purchases from China. With grain prices pushing to multi-week highs just recently, their near-term technical postures have turned more bullish–especially for wheat and soybeans. Importantly, it appears other raw commodity markets are perking up, including crude oil, gold, silver, cotton and coffee. This suggests traders and investors are more upbeat on world economic growth prospects in the coming new year. It also means more speculator buying interest in the commodity markets, including the big “fund” traders. Veteran grain market watchers know that solid bull runs in their markets need active participation from speculators.
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