Friday, December 30–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed to weaker overnight. U.S. stock indexes are pointed toward slightly lower openings when the New York day session begins. The marketplace is quieter this week following the Christmas holiday and just ahead of the new year. Traders will hit the exit doors early today, ahead of the three-day New Year holiday weekend.
The marketplace in the new year will continue to closely monitor China’s battle with Covid. Broker SP Angel this morning reports in an email dispatch:
“Chinese Covid rates are going to have a substantial impact on the ability of factories to produce, transporters to deliver, builders to build, and on finance companies to finance. This could stall the Chinese economy for a few months, though we suspect China’s authorities will do their best to keep the wheels on. The authorities are already telling Covid-positive people to go to work, a policy which is likely to spread the infection faster than in any other nation. The narrative seems to be that Omicron is milder than Delta and presents a lesser risk to nation. China is also asking families to sign Cremation forms saying: “I guarantee that the deceased XXX did not die of #COVID, and I will be fully responsible for any false claim.” (The Telegraph). Chinese covid deaths have risen to 9,000 a day, around double last week’s mortality rate, according to U.K. research firm Airfinity, the world’s first dedicated COVID-19 health analytics and intelligence platform. (Reuters). Airfinity also reckons cumulative deaths reached 100,000 over the past 30 days with some 18.6 million infections using modelling based on data from Chinese provinces before recent changes on reporting cases. The research group expects China’s Covid infections to reach their first peak on Jan. 13 with 3.7 million cases a day and for Covid deaths to peak on Jan. 23 around 25,000 a day with cumulative deaths reaching 1.7 million by end-April. China has officially reported just 10 COVID deaths since 7th December.”
With the lack of fresh, major business news this week, let’s look at some news headlines Friday morning from the Dow Jones Newswire.
“This was a terrible year for stocks; next year could surprise—positively”
“China’s Covid easing and policy pivots brighten outlook for stocks”
“Small businesses find some relief from hiring woes”
“Copper set for first annual decline in four years”
“What a crazy year: a bear market (stocks), oil’s pop, and those bond yields”
“Higher rates threaten U.S. renovation boom”
“(U.S.) mortgage rates log biggest yearly rise”
“Dollar rally loses some steam”
“Crypto went 12 rounds with Mike Tyson in 2022; now, Bitcoin whales are buying”
The key outside markets today see the U.S. dollar index weaker. Nymex crude oil prices are slightly lower and trading around $78.75 a barrel. Meantime, the yield on the benchmark U.S. 10-year Treasury note is presently 3.854%.
U.S. economic data due for release Friday is light and includes the Chicago ISM business survey.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are weaker in early U.S. trading. The shorter-term moving averages (4-, 9- and 18-day) are still bearish early today. The 4-day moving average is below 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 3,900.50 and then at last week’s high of 3,919.75. Support for active traders is seen at 3,800.00 and then at the December low of 3,788.50. Wyckoff’s Intra-day Market Rating: 4.5
March Nasdaq index futures: Prices are slightly down in early U.S. trading. Shorter-term moving averages (4- 9-and 18-day) are bearish early today. The 4-day moving average is below 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 11,183.75 and then at last week’s high of 11,411.00. On the downside, shorter-term support is seen at this week’s low of 10,758.75 and then at the October low of 10,595.25. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are slightly lower in early U.S. trading. 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 bearish early today. Shorter-term technical resistance is seen at Wednesday’s high of 125 31/32 and then at 127 even. Shorter-term support lies at this week’s low of 124 20/32 and then at 124 even. Wyckoff’s Intra-Day Market Rating: 4.5
March U.S. T-Notes: Prices are weaker in early U.S. trading. 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 bearish early today. Shorter-term resistance lies at Wednesday’s high of 112.22.0 and then at 113.00.0. Shorter-term technical support lies at this week’s low of 112.04.0 and then at 112.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
EURO CURRENCY
The March Euro currency futures are slightly down in early U.S. trading. Bulls have the firm overall near-term technical advantage. Prices are in a three-month-old uptrend on the daily chart. The shorter-term moving averages for the Euro 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 Euro are neutral to bullish early today. The Euro currency finds shorter-term technical resistance at today’s week’s high of 1.0753 and then at the December high of 1.0807. Shorter-term support is seen at this week’s low of 1.0665 and then at 1.0600. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
February Nymex crude oil prices are slightly weaker in early U.S. trading. A fledgling price uptrend on the daily bar chart has stalled out. 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 bearish early today. Look for buy stops to reside just above technical resistance at $80.00 and then at this week’s high of $81.18. Look for sell stops just below technical support at this week’s low of $76.79 and then at $75.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
Prices were mixed overnight. Not much new this week. Corn bulls have the overall near-term technical advantage as prices are now trending higher. Wheat bears have the overall near-term technical advantage, but bulls are working on fledgling price uptrends that suggest near-term market bottoms are in place. Soybeans bulls still have the chart edge as prices are in an uptrend. On tap today is the weekly USDA export sales report.
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