Friday, January 31–Jim Wyckoff’s Morning Markets Report
This last trading day of the week and of the month finds Asian and European stock markets mostly lower. Mainland China markets remain closed for the Lunar New Year holiday. U.S. stock indexes are pointed toward lower openings when the New York day session begins.
The coronavirus outbreak is back on the front burner of the global market place Friday. Risk aversion is in order on this day as the outbreak has around 10,000 Chinese afflicted and over 210 have died. The World Health Organization is now calling the outbreak an emergency. Add the U.K. to the growing list of countries that have reported the many are calling the “Wuhan virus.” The impact on global economic growth is in question, but nobody has a clear answer at present, as the situation continues to play out.
It’s been an up-and-down trading affair the past week regarding the coronavirus outbreak. One day the marketplace deems the outbreak as overblown and then next day it deems the situation as serious and escalating. The uncertainty of the matter has hit the raw commodity sector hard, led by crude oil prices dropping over $12.00 a barrel from the January high. Safe-haven gold prices have benefitted from the keener anxiety, but it’s also been a choppy trading affair.
In other dour economic news, the European Union collective economy grew a paltry 1.2% in 2019, it was reported Friday, which is the slowest pace in six years. A slumping EU auto sector was partly to blame.
The key outside markets today see crude oil prices modestly up and trading around $52.50 a barrel. Meantime, the U.S. dollar index is slightly higher. The USDX hit a two-month high earlier this week.
U.S. economic data due for release Friday includes personal income and outlays, the employment cost index, the ISM Chicago business survey and the University of Michigan consumer sentiment survey.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are lower in early U.S. trading. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 3,297.50 and then at 3,315.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at 3,250.00 and then at this week’s low of 3,233.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.0
March Nasdaq index futures: Prices are lower in early U.S. trading. Bulls still have the overall 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 to bearish early today. Shorter-term technical resistance is seen at the overnight high of 9,248.75 and then at the contract high of 9,287.25. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 9,000.00 and then at this week’s low of 8,925.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are slightly higher in early U.S. trading and near this week’s 3.5-month high. Bulls have the firm overall near-term technical advantage, amid safe-haven demand. 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 bullish early today. Shorter-term technical resistance is seen at this week’s high of 163 12/32 and then at 163 24/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 162 4/32 and then at 161 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
March U.S. T-Notes: Prices are higher and near this week’s 3.5-month high 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 bullish early today. Shorter-term resistance lies at this week’s high of 131.17.0 and then at 131.24.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 130.30.0 and then at 130.24.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The March U.S. dollar index is slightly higher in early U.S. trading. Bulls have the firm overall near-term technical advantage amid a price uptrend in place on the daily chart. 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 to bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 97.790 and then at November high of 98.045. Shorter-term support is seen at this week’s low of 97.590 and then at 97.400. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
March Nymex crude oil prices are firmer in early U.S. trading. A steep price downtrend is still in place on the daily bar chart. 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 neutral to bullish early today. Look for buy stops to reside just above technical resistance at the overnight high of $53.36 and then at $54.00. Look for sell stops just below technical support at the overnight low of $52.16 and then at this week’s low of $51.66. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
US grain futures are narrowly mixed in early US pre-market trading Friday. Corn is around 1 cent higher, soybeans 1 to 2 cents lower and wheat is around 2 cents down. The coronavirus outbreak is back on the front burner of the global market place Friday. Risk aversion is in order on this day as the outbreak has around 10,000 Chinese afflicted and over 210 have died. The World Health Organization is now calling the outbreak an emergency. Add the U.K. to the growing list of countries that have reported the many are calling the “Wuhan virus.” The impact on global economic growth is in question, but nobody has a clear answer at present, as the situation continues to play out. This uncertainty remains bearish for the grain markets. It’s been an up-and-down trading affair the past week regarding the coronavirus outbreak. One day the marketplace deems the outbreak as overblown and then next day it deems the situation as serious and escalating. The uncertainty of the matter has hit the raw commodity sector hard, led by sector leader crude oil’s prices dropping over $12.00 a barrel from the January high. U.S. export demand needs to improve to get the grain market bulls fired up to sustain price uptrends on the charts. Thursday’s weekly USDA export sales report showed U.S. corn export sales of 1,378,300 million metric tons (MMT), which was above market expectations. U.S. soybean sales were at 471,700 MT–on the low end of expectations. U.S. wheat sales were 647,300 MT, within market forecasts.
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