Thursday, February 28–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Risk aversion is back in the marketplace Thursday, as
Asian and European stock markets were lower overnight. U.S. stock indexes are also pointed toward weaker openings when the New York day session begins. Gold prices are moderately higher.
The U.S.-North Korea nuclear summit in Vietnam has ended abruptly with no agreement after North Korea’s leader Kim Jong Un demanded an end to sanctions on his country and would not agree to U.S. President Trump’s demands to de-nuclearize.
There is another geopolitical development that has the attention of the world marketplace late this week. India and Pakistan this week exchanged military strikes on each other. India bombed what it said was a terrorist camp in Pakistan, with Pakistan retaliating by shooting down two Indian aircraft. This news has Asian stock and financial markets jittery. Any escalation of this situation will prompt more safe-haven demand for gold and silver.
There was weak manufacturing data coming out of China today, as its official purchasing managers’ index fell to 49.2 in February, down from 49.5 in January. A reading below 50.0 shows contraction in the sector. U.S. trade sanctions on China have hurt its economy.
On an upbeat note, U.S. Trade Representative Lighthizer told a congressional committee on Wednesday that the U.S. and China are moving closer to a trade deal and that any new U.S. tariffs on China would be delayed from the March 1 original implementation.
The key outside markets today see the U.S. dollar index lower. The greenback bulls are fading a bit this week. Nymex crude oil prices are weaker and trading around $56.50 a barrel.
U.S. economic reports due for release Thursday include the weekly jobless claims report, fourth-quarter gross domestic product, the ISM Chicago business survey, and the Kansas City Fed manufacturing survey.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are weaker on a corrective pullback after hitting a nearly three-month high on Monday. Prices are still in an uptrend on the daily bar chart and the bulls have the firm near-term technical advantage. The shorter-term moving averages (4-, 9- and 18-day) are still 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 bearish early today. Today, shorter-term technical resistance comes in at this week’s high of 2,819.50 and then at 2,825.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 2,780.50 and then at last week’s low of 2,768.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
June Nasdaq index December futures: Prices are lower on more profit taking after hitting a three-month high on Monday. Prices are still in an uptrend on the daily bar chart. Shorter-term moving averages (4- 9-and 18-day) are still 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 bearish early today. Shorter-term technical resistance is seen at Wednesday’s high of 7,156.00 and then at this week’s high of 7,195.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at this week’s low of 7,079.50 and then at 7,000.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are near firmer in early U.S. trading today, on a corrective bounce from solid losses on Wednesday. Trading has been choppy recently. Bulls still have the overall near-term technical advantage. 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 technical resistance is seen at the overnight high of 145 12/32 and then at 146 even. Buy stops likely reside just above those levels. Shorter-term support lies at this week’s low of 144 24/32 and then at 144 13/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
June U.S. T-Notes: Prices are higher in early U.S. trading. Bulls have the overall chart advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is even with 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 the overnight high of 122.15.0 and then at 122.20.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 122.09.0 and then at this week’s low of 122.05.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The June U.S. dollar index is lower and hit a three-week low in early U.S. trading. Bulls still have the overall near-term technical advantage, but have faded recently. The shorter-term moving averages for the dollar index are bearish early today, as the 4-day is below the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 95.560 and then at Tuesday’s high of 95.835. Shorter-term support is at 95.000 and then at 94.750. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
April Nymex crude oil prices are slightly lower in early U.S. trading. The shorter-term moving averages 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 (RSI and slow stochastics) are neutral early today. Look for buy stops to reside just above technical resistance at the February high of $57.81 and then at $58.00. Look for sell stops just below technical support at $56.00 and then at $55.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
Grain futures were mixed overnight. Traders will closely examine today’s weekly USDA export sales report. General worldwide demand for U.S. grains remains anemic, which is keeping the bears in overall control of the grain markets.
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