Tuesday, January 14–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mixed to weaker overnight. U.S. stock indexes are pointed toward modestly lower openings when the New York day session begins. Corrective pullbacks are in order on this “turnaround Tuesday,” following recent gains that put U.S. stock indexes at record highs overnight. Trader and investor risk appetite remains robust as the geopolitical scene has quieted down markedly the past few days.
The marketplace this week is focused on the U.S.-China partial trade agreement that is scheduled to be signed Wednesday in Washington, D.C. The trade deal is expected to boost global economic growth in 2020. China Tuesday reported its exports grew by just 0.5% in 2019, compared to 10% growth in 2018, as evidence of the trade war with the U.S. damaging China’s economy. China’s imports were reported down 2.8% in 2019 compared to rising 16% in 2018.
In overnight news, the Chinese yuan appreciated to its highest level against the U.S. dollar since last summer, after the U.S. on Monday announced China was no longer on its list of currency manipulators.
The key outside markets today see crude oil prices firmer and trading around $58.50 a barrel. The U.S. dollar index is modestly up early today.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the NFIB small business optimism index, the consumer price index, real earnings and the IDB/TIPP economic optimism index.
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are slightly lower in early U.S. trading after hitting a contract and record high overnight. Bulls still have the solid near-term technical advantage and there are no early close to suggest 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 overnight contract high of 3,296.75 and then at 3,325.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at Monday’s low of 3,265.50 and then at 3,250.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.0
March Nasdaq index futures: Prices are weaker after hitting a contract and record high overnight. Bulls still have the solid near-term technical advantage to suggest more upside. 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 overnight contract high of 9,114.75 and then at 9,150.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 9,040.75 and then at 9,000.00. 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 firmer in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is even with the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at Monday’s high of 157 23/32 and then at 158 even. Buy stops likely reside just above those levels. Shorter-term support lies at last Friday’s low of 156 20/32 and then at last week’s low of 155 29/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
March U.S. T-Notes: Prices are firmer in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is even with the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at Monday’s high of 129.03.5 and then at 129.08.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at last week’s low of 128.17.5 and then at 128.10.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The March U.S. dollar index is slightly higher 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 even with 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 last week’s high of 97.300 and then at 97.405. Shorter-term support is seen at 96.955 and then at 96.750. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
February Nymex crude oil prices are modestly up after hitting a four-week low overnight. Recent price action suggests a near-term market top is in place. The shorter-term moving averages are bearish early today as the 4-day is below the 9-day and 18-day. The 9-day is below 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 $59.00 and then at Monday’s high of $59.27. Look for sell stops just below technical support at the overnight low of $57.72 and then at $57.00. Wyckoff’s Intra-Day Market Rating: 5.5
US grain futures were mixed in early U.S. pre-market trading. Corn is near steady, while soybeans are around 1 cent lower and wheat is 2 to 3 cents higher. The main event for the grain markets this week is the U.S. and China signing their partial trade agreement on Wednesday in Washington, D.C. Reports Tuesday said China is committing to buy around $80 billion of US manufactured goods the next two years, as well as $50 billion in energy products and $35 billion in services. No agricultural breakdown was mentioned, which has somewhat deflated the grain market bulls. It appears the grain markets have factored into their futures prices the positive impact of the U.S.-China partial trade deal—at least for now. Any positive surprises on specifics for China’s purchases of US ag products this week would likely lift the grain futures markets. Weather in South American corn and soybean regions is mostly benign at present, but some dry pockets are likely to develop in the coming weeks.
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.