Wednesday, January 22–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mixed overnight. U.S. stock indexes are pointed toward firmer openings and new contract and record highs when the New York day session begins.
Focus at mid-week is on the World Economic Forum annual meeting in Davos, Switzerland. President Trump, in an interview with CNBC, said U.S. economic growth has been hamstrung by the Federal Reserve keeping interest rates too high, and by the grounded Boeing jetliner situation. Trump also threatened new trade tariffs on European countries that manufacture automobiles.
The global marketplace is keeping an eye on China health officials battling a coronavirus that has killed at least six with hundreds more afflicted, and is rapidly spreading. A case was reported in the Seattle, Washington area Tuesday.
The markets are so far paying very little attention to the impeachment of President Trump. The U.S. Senate this week is holding hold Trump’s trial.
The key outside markets today see crude oil prices down and trading around $58.00 a barrel. The U.S. dollar index is slightly up early today.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the weekly Goldman Sachs and Johnson Rebook retail sales reports, the Chicago Fed national activity index, the monthly house price index and existing home sales.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are higher and hit new contract and record highs in early U.S. trading. Bulls 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 bullish early today. Today, shorter-term technical resistance comes in at the overnight contract high of 3,336.50 and then at 3,350.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at Monday’s low of 3,307.25 and then at 3,275.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.5
March Nasdaq index futures: Prices are higher and hit new contract and record highs in early U.S. trading. Bulls 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 bullish early today. Shorter-term technical resistance is seen at the contract high of 9,237.25 and then at 9,275.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 9,174.25 and then at 9,150.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are slightly higher in early U.S. trading. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at today’s high of 158 25/32 and then at 159 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 158 5/32 and then at this week’s low of 157 9/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
March U.S. T-Notes: Prices are slightly lower in early U.S. trading. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at the overnight high of 129.19.5 and then at 129.24.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 129.12.0 and then at this week’s low of 129.03.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
U.S. DOLLAR INDEX
The March U.S. dollar index is slightly up in early U.S. trading. Bulls have the slight overall near-term technical advantage. Prices have been trending higher for more than three weeks. The shorter-term moving averages for the dollar index are bullish early today, as the 4-day is above the 9-day and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at last week’s high of 97.485 and then at 97.750. Shorter-term support is seen at this week’s low of 97.225 and then at 97.000. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
March Nymex crude oil prices are lower in early U.S. trading. 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 bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $58.38 and then at $59.00. Look for sell stops just below technical support at last week’s low of $57.42 and then at $57.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
US grain futures are higher in early US pre-market trading Wednesday. Corn is 2 1/2 to 3 cents up, soybeans around 4 cents higher and wheat is 3 to 8 cents higher. Trading has turned choppy and more volatile recently. Corn and soybean bulls have faded recently but the wheat market bulls are strong, pushing futures prices to multi-month highs recently. Grain traders are still monitoring China health officials battling a coronavirus that has killed at least six, with a case now discovered on the US west coast. US grain futures traders will continue to monitory daily and weekly USDA export sales figures, mainly looking for more purchases coming from China. Some of the selling in the grain markets this week is due to notions the Chinese will not be doing much buying of grains in the near term, as their big Lunar New Year holiday begins in a few days and lasts for a week. Soybeans are seeing some selling pressure this week on ideas of big South American soybean crop that has seen very few weather problems develop. The big question on wheat traders’ minds: Can wheat futures prices continue to rally at the same time corn and soybean prices trend sideways to lower? Veteran grain traders think this scenario cannot last long.
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