Friday, December 20–Jim Wyckoff’s Morning Markets Report
Asian and European stock indexes were narrowly mixed in quieter trading overnight. The U.S. stock indexes are pointed toward slightly higher openings and near this week’s record highs when the New York day session begins. Traders and investors are turning their attention to the upcoming holidays, including squaring their books, so trading interest and volumes are likely to wane the next couple weeks.
There are still no geopolitical hotspots in the global marketplace to spook traders and investors, which is allowing global equities markets to continue to drift higher. Higher asset flows into stocks have put some price pressure on world bond markets.
The key “outside markets” today see the U.S. dollar index slightly up, as the greenback bulls are having a good week. Meantime, Nymex crude oil prices are weaker and trading around $60.80 a barrel after hitting a three-month high this week.
U.S. economic data due for release Friday includes the final estimate of third-quarter gross domestic product, personal income and outlays, the Kansas City Fed manufacturing survey, and the University of Michigan consumer sentiment survey.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are near steady in early U.S. trading and close to this week’s record 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 3,213.75 and then at 3,225.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 3,177.00 and then at 3,159.25. 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 early today. Shorter-term technical resistance is seen at contract high of 8,682.50 and then at 8,700.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Thursday’s low of 8,608.75 and then at this week’s low of 8,530.00. 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 lower 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 bearish early today. Shorter-term technical resistance is seen at the overnight high of 156 7/32 and then at 157 even. Buy stops likely reside just above those levels. Shorter-term support lies at this 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: 3.5
March U.S. T-Notes: Prices are lower 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 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 the overnight high of 128.08.5 and then at 128.13.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 3.5
U.S. DOLLAR INDEX
The March U.S. dollar index is higher in early U.S. trading. Bulls and bears are back on a level overall near-term technical playing field and the bulls are having a good week. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is above the 9-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 97.250 and then at 97.500. Shorter-term support is seen at the overnight low of 96.975 and then at 96.780. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
February Nymex crude oil prices are weaker in early U.S. trading, but not far below this week’s multi-month high. Bulls have the firm near-term technical advantage and are keeping in place an 11-week-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 bearish early today. Look for buy stops to reside just above technical resistance at this week’s high of $61.40 and then at $62.00. Look for sell stops just below technical support at $60.00 and then at this week’s low of $59.62. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
US grain futures prices were firmer overnight. Corn was up around 1 cent, soybeans up around 2 cents and wheat up around 3 cents. The grain markets have received a boost as the U.S. Congress this week ratified a US trade agreement with Mexico and Canada that will boost agricultural trade between all three. Also, comments from both U.S. and China trade officials that that the trade deal will come to fruition soon, including China honoring its pledge to buy $40 billion in US ag products, has lifted grain traders’ spirits late this week. Bullish grain traders are now looking to the daily USDA export sales announcements for bigger purchases from China. With grain prices pushing to multi-week highs this week, their near-term technical postures have turned more bullish–especially for wheat and soybeans. And there are outside markets that are favoring the grain market bulls, including crude oil prices pushing to multi-month highs this week, while the U.S. dollar index has backed well down from its yearly high scored in early October.
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