Monday, December 30–Jim Wyckoff’s Morning Markets Report
Asian and European stock indexes were narrowly mixed in quieter overnight trading. The U.S. stock indexes are also pointed toward mixed openings when the New York day session begins on this last full trading day of 2019.
The markets are showing little reaction to the weekend U.S. air strikes against terrorist positions located in Iraq and Syria.
Trader and investor attitudes remain upbeat, due in large part to the world’s two largest economies, the U.S. and China, seeing a thaw in the more-than-two-year-old trade war. Most believe a partial trade deal will be signed in January.
A feature in the marketplace recently has been a rally in gold prices to a three-month high. Gold is on track to post its best annual price performance since 2010, with a gain of around 18% for the year.
The key “outside markets” today see the U.S. dollar index slightly lower. The greenback bulls have faded to end the year. Meantime, Nymex crude oil prices are slightly up and trading close to a multi-month high at around $62.00 a barrel.
U.S. economic data due for release Monday includes advance economic indicators, the ISM Chicago business survey, pending home sales and the Texas manufacturing outlook survey.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are near steady in early U.S. trading and not far below last week’s record and contract high. 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 bearish early today. Today, shorter-term technical resistance comes in at the contract high of 3,254.00 and then at 3,275.00. Buy stops likely reside just above those levels. Downside support for active traders today is last week’s low of 3,227.00 and then at 3,215.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
March Nasdaq index futures: Prices are slightly lower but not far below last week’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 bearish early today. Shorter-term technical resistance is seen at the contract high of 8,843.50 and then at 8,875.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 8,850.00 and then at 8,800.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are solidly lower 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 above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at 156 even and then at 156 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at the December low of 155 14/32 and then at 155 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
March U.S. T-Notes: Prices are lower 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 above the 9-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 128.04.0 and then at the December low of 127.29.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at 128.16.0 and then at the overnight high of 128.22.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The March U.S. dollar index is weaker in early U.S. trading. Bulls and bears are on a level overall near-term technical playing field but bears have momentum. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is below 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 the overnight high of 96.630 and then at 97.000. Shorter-term support is seen at the December low of 96.295 and then at 96.000. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
February Nymex crude oil prices are slightly higher and not far below last week’s multi-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 Friday’s low of $61.24 and then at $61.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
US grain futures prices were steady to higher overnight. Corn was near steady, soybeans up 5 to 6 cents and wheat around 3 cents higher. On this last full trading day of 2019, the big speculative “fund” traders that had been short the grain futures markets are continuing to cover those shorts as grain futures prices rise. More short covering is likely this week, as well as some new speculative long positions from traders. Today’s focus will be on the weekly USDA export inspections report. The US-China trade war has significantly thawed amid recent positive comments from officials on both sides. The January monthly USDA supply and demand report is the next major data point for the grain markets, as estimates of the updated size of the US 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 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