Thursday, December 26–Jim Wyckoff’s Morning Markets Report
Asian and European stock indexes were mixed to slightly up in quiet, holiday 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.
There is little markets-moving news in the global marketplace on the day after the Christmas holiday. The past several weeks have seen the geopolitical front quiet, which has squelched trader and investor worries and uncertainties and has allowed world stock markets to drift higher, with some stock indexes, including those in the U.S., hitting record highs. Veteran market watchers know the quiet trading atmosphere cannot go on indefinitely and are pondering the next event to upset the calm.
A feature in the markets this week is the rallying gold and silver markets, which today hit seven-week highs. The safe-haven metals are rallying despite little risk aversion in markets. Gold bulls are focusing on better demand for precious metals in 2020, amid outlooks for increased global economic growth in the new year.
The key “outside markets” today see the U.S. dollar index slightly higher. Meantime, Nymex crude oil prices are slightly up, hit a seven-week high overnight, and trading around $61.25 a barrel.
U.S. economic data due for release Thursday includes the weekly MBA mortgage applications survey and weekly jobless claims.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are slightly firmer in early U.S. trading and near this week’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 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 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 this 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 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 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 near steady 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 this week’s high of 156 24/32 and then at 157 even. Buy stops likely reside just above those levels. Shorter-term support lies at the December 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: 5.0
March U.S. T-Notes: Prices are near steady 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 early today. Shorter-term support lies at 128.00.0 and then at the December low of 127.29.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 128.14.0 and then at 128.20.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 5.0
U.S. DOLLAR INDEX
The March U.S. dollar index is slightly up in early U.S. trading. Bulls and bears are on a level overall near-term technical playing field. 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 neutral to bullish early today. The dollar index finds shorter-term technical resistance at this week’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 and hit a seven-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 the overnight high of $61.54 and then at $62.00. Look for sell stops just below technical support at $61.00 and then at $60.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
US grain futures prices were closed overnight, due to the Christmas holiday Wednesday. Low-volume holiday trading is expected into the end of the year in the grains, which can also lead to some higher volatility in thin conditions. Focus is on the weekly USDA export sales report that is out Friday morning. Grain traders remain upbeat heading into the new year, as the U.S.-China trade war appears to be winding down. The January monthly USDA supply and demand report is the next major inflection point for the grain markets, as estimates of the updated size of the U.S. corn and soybean crops will be issued following a rocky harvest season that was plagued by inclement weather. With grain prices pushing to multi-week highs 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