Monday, February 22–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly weaker overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins. The stock market traders are taking note of the competing asset class of government bonds, as the 10-year U.S. Treasury note yield is currently fetching 1.369%, a one-year high. Still, one stock market analyst said U.S. T-Note yields would have to rise to around 4% to become competitive with the U.S. technology stock sector, on a return on investment basis. And overall trader and investor risk sentiment remains low, as the U.S. government is set to roll out a new, big financial stimulus package for Americans. Also, Covid-19 infections are on the decline while vaccines are continuing to ramp up.
Inflation concerns in the marketplace are on the rise. Broker SP Angel said Monday morning in an email dispatch: “As the U.S., China, EU, U.K. and beyond all look to roll out their own packages of environmental initiatives, the post-crisis consumption of industrial metals is widely expected to outstrip near-term and medium-term supply. Inflation expectations have also helped base metals, with copper prices rising 18% for every 1% in consumer prices since 1992. Goldman Sachs reported last week the copper market is facing the largest deficit in a decade this year, with a high risk of scarcity over the coming months.” Many raw commodity futures market prices are trending up at present.
The marketplace is looking ahead to Federal Reserve Chairman Jay Powell’s testimony on U.S. monetary policy to the Senate Banking Committee on Tuesday.
The key “outside markets” today sees Nymex crude oil futures prices are up and trading around $59.75 a barrel. The U.S. dollar index is weaker.
U.S. economic data due for release Monday includes the Chicago Fed national activity index, leading economic indicators, and the Texas manufacturing outlook survey.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are lower and hit a two-week low in early U.S. trading. Bulls still have the solid overall near-term technical advantage. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is below the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 3,914.50 and then at the record high of 3,936.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at the overnight low of 3,861.25 and then at 3,840.00. Wyckoff’s Intra-day Market Rating: 4.0
March Nasdaq index futures: Prices are lower and hit a three-week low in early U.S. trading. Bulls still have the firm overall near-term technical advantage. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is below the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at 13,500.00 and then at 13,600.00. On the downside, shorter-term support is seen at the overnight low of 13,300.00 and then at 13,200.00. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are lower and hit a contract low in early U.S. trading. Bears have the solid 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 163 2/32 and then at 163 16/32. Shorter-term support lies at the overnight contract low of 162 2/32 and then at 161 16/32. Wyckoff’s Intra-Day Market Rating: 3.0
March U.S. T-Notes: Prices are down in early U.S. trading and hit a contract low. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at the overnight high of 135.14.5 and then at 135.20.0. Shorter-term technical support lies at the overnight contract low of 135.01.0 and then at 134.28.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 3.0
EURO CURRENCY
The March Euro currency futures are higher in early U.S. trading. Bulls have the overall near-term technical advantage but trading has been choppy. The shorter-term moving averages for the Euro are neutral early today, as the 4-day is below the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators for the Euro are bullish early today. The Euro currency finds shorter-term technical resistance at 1.2150 and then at the February high of 1.2176. Shorter-term support is seen at the overnight low of 1.2096 and then at 1.2050. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
April Nymex crude oil prices are higher in early U.S. trading. Bulls have the solid overall near-term technical advantage amid a price uptrend firmly in place on the daily 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 early today. Look for buy stops to reside just above technical resistance at the overnight high of $60.18 and then at $61.00. Look for sell stops just below technical support at the overnight low of $58.82 and then at $58.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
U.S. grain futures are higher in early U.S. pre-market trading. On tap today is the weekly USDA export inspections report. The bulls have the firm overall near-term technical advantage as prices mostly trending up—both on a near-term and longer-term basis. Overall supply and demand fundamentals remain bullish for the grains.
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