Thursday, December 16–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly up in overnight trading. U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins, including the S&P 500 hitting a new record high overnight. Risk appetite is more robust late this week.
Traders and investors Thursday are still digesting the U.S. Federal Reserve FOMC meeting results. The FOMC statement somewhat surprisingly said three interest rate increases are likely in 2022, and that U.S. inflation is rising but suggested it will back off in the coming months. The FOMC is accelerating its monthly asset purchases tapering, which will end in March. The marketplace correctly expected a hawkish lean from the FOMC, but the better clarity on timing and actions of the Fed appeared to assuage traders of many markets, as evidenced by the rally in U.S. stock indexes, stable bond yields and a weaker U.S. dollar index.
Now, the marketplace is awaiting the results of today’s European Central Bank and Bank of England monetary policy meetings. The BOE just announced it is raising its main interest rate by 15 basis points (0.15%).
The pandemic never seems to stray too far from the front burner of the marketplace. Bloomberg today reports “the lockdown mentality turning London into a ghost town is starting to feel like the real thing as Europe resurrects stiff border controls and another Christmas looks set to be lost to the virus.”
The key “outside markets” today see Nymex crude oil prices higher and trading around $72.00 a barrel. The U.S. dollar index is weaker early today but still not far below its recent high. Meantime, the yield on the U.S. Treasury 10-year note is presently fetching 1.434%.
Another busy day for U.S. economic data due for release Thursday includes the weekly jobless claims report, the Philadelphia Fed business survey, new residential construction, industrial production and capacity utilization, the U.S. flash services and manufacturing PMIs, and the Kansas City Fed manufacturing survey.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are solidly higher and hit a contract and record high in early U.S. trading. The shorter-term moving averages (4-, 9- and 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bullish early today. Today, shorter-term technical resistance comes in at 4,750.00 and then at 4,775.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at the overnight low of 4,697.00 and then at 4,650.00. Sell stops likely reside below those levels. Wyckoff’s Intra-day Market Rating: 6.5
March Nasdaq index futures: Prices are solidly higher and hit a two-week high in early U.S. trading. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day average is even with the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at 16,500.00 and then at 16,600.00. Buy stops likely reside just above those levels. On the downside, shorter-term support is seen at the overnight low of 16,277.25 and then at 16,100.00. Sell stops likely reside 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 neutral to bearish early today. Shorter-term technical resistance is seen at Wednesday’s high of 162 15/32 and then at this week’s high of 162 23/32. Buy stops likely reside just above those levels. Shorter-term support lies at Wednesday’s low of 161 9/32 and then at this week’s low of 160 30/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
March U.S. T-Notes: Prices are 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 neutral early today. Shorter-term resistance is seen at this week’s high of 130.30.5 and then at 131.05.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 130.11.5 and then at this week’s low of 130.07.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
EURO CURRENCY
The March Euro currency futures are higher in early U.S. trading. Bears still have the solid overall near-term technical advantage. However, prices have been trading sideways at lower levels for three week. 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 this week’s high of 1.1351 and then at 1.1382. Buy stops likely reside just above those levels. Shorter-term support is seen at this week’s low of 1.1247 and then at the November low of 1.1221. Sell stops likely reside just below those levels. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
Nymex crude oil prices are firmer in early U.S. trading. The shorter-term moving averages 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 (RSI and slow stochastics) are neutral to bullish early today. Look for buy stops to reside just above technical resistance at the overnight high of $72.11 and then at last week’s high of $73.34. Look for sell stops just below technical support at $71.00 and then at $70.00. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
U.S. grain futures were mixed in overnight trading. Not much new this week in subdued, pre-holiday trading in the grains. Lower price action Wednesday did dent the bulls, especially in wheat. The corn and wheat market bulls still have the overall near-term technical advantage, while the soybean bears have the edge. 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