Tuesday, January 18–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly weaker overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins, on keener risk aversion after a three-day holiday weekend. Crude oil prices pushed to a seven-year high overnight after the United Arab Emirates was hit by a deadly drone attack on its capital. While the damage was limited, the strikes by Yemen’s Iranian-backed Houthi rebels reminds how vulnerable oil producers are to attack from drones. Nymex crude oil futures prices and trading around $85.25 a barrel. North Korea is also making geopolitical noise by test-firing missiles.
Bond yields are also on the rise this week. The U.S. Treasury 10-year note is presently yielding 1.818%–the highest level in two years. Traders and investors are sensing that inflationary pressures will get worse before they get better.
In other news, China cut its main interest rates to prop up the world’s second-largest economy. This comes as other major central banks of the world are tightening their monetary policies. China President Xi Jinping at the Davos virtual economic summit warned major industrial nations not to raise interest rates too quickly, which could choke the global economic recovery.
U.S. economic data due for release Tuesday includes the Empire State manufacturing survey, the NAHB housing market index and Treasury international capital data.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are solidly lower in early U.S. trading. Bulls have faded recently. The shorter-term moving averages (4-, 9- and 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical support comes in at the January low of 4,572.75 and then at 4,520.25. Sell stops likely reside just below those levels. Resistance for active traders is seen at the overnight high of 4,671.75 and then at 4,700.00. Buy stops likely reside just above those levels. Wyckoff’s Intra-day Market Rating: 3.5
March Nasdaq index futures: Prices are solidly lower in early U.S. trading. Bulls have the overall near-term technical advantage. Shorter-term moving averages (4- 9-and 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 15,653.25 and then at 15,750.00. On the downside, shorter-term support is seen at the overnight low of 15,270.00 and then at the January low of 15,152.50. Wyckoff’s Intra-Day Market Rating: 3.5.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are lower and hit a contract low in early U.S. trading. Bears have the solid overall near-term technical advantage. Prices have been trending lower for six weeks. 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 to bearish early today. Shorter-term technical resistance is seen at the overnight high of 155 1/32 and then at 155 16/32. Shorter-term support lies at the overnight contract low of 153 29/32 and then at 153 16/32. Wyckoff’s Intra-Day Market Rating: 3.5
March U.S. T-Notes: Prices are lower and hit a contract low in early U.S. trading. 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 bearish early today. Shorter-term resistance lies at the overnight high of 128.01.5 and then at 128.08.0. Shorter-term technical support lies at the overnight contract low of 127.15.0 and then at 121.10.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 3.5
EURO CURRENCY
The March Euro currency futures are lower in early U.S. trading. Bears have the firm overall near-term technical advantage but recent price action suggests a market bottom is in place. 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 bearish early today. The Euro currency finds shorter-term technical resistance at the overnight high of 1.1447 and then at the January high of 1.1496. Shorter-term support is seen at 1.1350 and then at 1.1300. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
February Nymex crude oil prices are higher in early U.S. trading and hit a seven-year high. Bulls have the solid overall near-term technical advantage amid a six-week-old price uptrend in place on the daily 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 the overnight high of $85.74 and then at $86.00. Look for sell stops just below technical support at the overnight low of $83.50 and then at $83.00. Wyckoff’s Intra-Day Market Rating: 7.0
GRAINS
U.S. grain futures are mixed in early U.S. pre-market trading. On tap today is the weekly USDA export inspections report. The corn and soybean bulls have the firm overall near-term technical advantage, but trading has been choppy recently. Wheat prices are still trending lower on the daily bar charts.
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