Thursday, December 30–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly firmer overnight. U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins, and are at or near their record highs. Look for lower-volume trading the last two days of 2021. Risk aversion is not keen late this week, but neither is risk appetite. The U.S. has just recorded its highest number of Covid cases ever as the Omicron variant rages. Still, the marketplace is viewing Covid as “serious but manageable” given the vaccines and other drugs to battle the virus.
Other “back-burner” matters that traders and investors are monitoring include China’s crackdown on democracy in Taiwan and Russia’s troop buildup on the Ukrainian border. Both situations could quickly escalate into major geopolitical crises.
The key “outside markets” today see Nymex crude oil prices weaker and trading around $76.00 a barrel. The U.S. dollar index is firmer early today. Meantime, the yield on the U.S. Treasury 10-year note is presently fetching 1.529%–up significantly from earlier this week.
U.S. economic data due for release Thursday is light and includes the weekly jobless claims report and the Chicago ISM business survey.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are slightly up in early U.S. trading and close to this week’s contract and record high. Bulls have the solid 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 to bullish early today. Today, shorter-term technical resistance comes in at the contract high of 4,798.00 and then at 4,825.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at this week’s low of 4,713.25 and then at 4,684.25. Sell stops likely reside below those levels. Wyckoff’s Intra-day Market Rating: 6.0
March Nasdaq index futures: Prices are a bit firmer in early U.S. trading and near the record high. 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 this week’s high of 16,659.50 and then at the record high of 16,768.00. Buy stops likely reside just above those levels. On the downside, shorter-term support is seen at this week’s low of 16,304.25 and then at 16,200.00. Sell stops likely reside 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 slightly up after solid losses posted Wednesday. Bulls are fading and prices are now trending down. 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 neutral early today. Shorter-term technical resistance is seen at 160 even and then at 160 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at this week’s low of 159 1/32 even and then at 158 16/32. 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 neutral early today. The 4-day moving average is below 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 130.16.0 and then at this week’s high of 130.24.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at this week’s low of 130.03.0 and then at 130.0.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
EURO CURRENCY
The March Euro currency futures are lower in early U.S. trading. Bears still have the firm overall near-term technical advantage. However, prices have been trading sideways at lower levels for nearly four weeks. The shorter-term moving averages for the Euro 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 for the Euro are neutral to bearish early today. The Euro currency finds shorter-term technical resistance at this week’s high of 1.1390 and then at 1.1417. Buy stops likely reside just above those levels. Shorter-term support is seen at this week’s low of 1.1292 and then at the December low of 1.1247. Sell stops likely reside just below those levels. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
Nymex crude oil prices are weaker in early U.S. trading. Prices are still trending up 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 bullish early today. Look for buy stops to reside just above technical resistance at this week’s high of $77.37 and then at $78.00. Look for sell stops just below technical support at $75.00 and then at $74.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
U.S. grain futures were mixed to weaker in overnight trading. Bulls have faded this week. Corn and soybean bulls still have the firm technical advantage, while wheat bulls have faded. The speculative shorts (sellers) in the grain futures have likely been mostly squeezed out of their positions over the past couple weeks of price gains. New speculative longs (buyers) have now entered the markets, especially in corn and soybeans. Grain market bulls now need to beware the rest of this week: The bigger fund traders are trying to press the new and weaker long traders out of the market by taking profits on their better-established long positions, amid the thin holiday trading conditions this week.
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