Tuesday, November 23–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly down in overnight trading. The U.S. stock indexes are pointed to slightly lower openings when the New York day session begins. The S$P 500 and Nasdaq stock indexes Monday hit new record highs and then backed off to close lower, nearer their daily lows and scored bearish “key reversals” down on the daily bar charts. Follow-through selling pressure and lower closes on Tuesday would better confirm the bearish key reversals, which are one technical clue that market tops are in place for those indexes.
Rising Covid-19 cases in Europe and Asia have dented risk sentiment in those regions recently. Austria is on lockdown at present and German officials are warning the public the same could soon be the case for Germany. There was some upbeat economic data coming out of the Euro zone today as the flash composite purchasing managers index (PMI) rose to 55.8 in November from 54.2 in October.
There are growing ideas the U.S. Federal Reserve will raise interest rates sooner than many had reckoned just a few weeks ago. During his speech on Monday, after being renominated for Fed chair by President Biden, Powell said the Fed will focus on fighting inflation. Many market watchers believed the Fed and Powell got behind the curve on the inflation front, and now may need to play catch-up–possibly after some prodding of Powell by Biden. U.S. Treasury yields have spiked up this week, due in part to Powell’s renomination and his and Biden’s statements on inflation. The 10-year U.S. Treasury note yield is presently fetching 1.643%. The yield on the two-year U.S. T-Note rose to the highest since March of 2020, at 0.638%.
Traders are also watching trading in the Turkish currency, the lira, which has dropped to a record low versus the U.S. dollar this week. Turkey recently lowered its main interest rate despite rising inflation concerns. The strong U.S. dollar is hurting many secondary currencies.
It may be a quieter rest of the trading week in the U.S. as the Thanksgiving holiday is on Thursday, with an abbreviated trading session Friday being historically one of the lowest-volume days of the year.
The key outside markets today see the U.S. dollar index slightly lower after hitting a 15-month high overnight. Nymex crude oil prices are lower and trading around $76.00 a barrel. Oil prices hit a six-week low Monday as the U.S. Tuesday morning announced it will tap its strategic oil reserve in order to lower the price of gasoline. Other countries may join the U.S. and tap their oil reserves.
U.S. economic data due for release Tuesday includes the Johnson Redbook and weekly chain store sales indexes, the U.S. flash manufacturing PMI, the flash services PMI, and the Richmond Fed business survey.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are slightly down in early U.S. trading. The S$P 500 stock index Monday hit a new record high and then backed off to close lower, nearer the daily low and score a bearish “key reversal” down on the daily bar chart. Follow-through selling pressure and lower closes on Tuesday would better confirm the bearish key reversal, which is one technical clue that a market top is in place. Right now bulls still have the solid overall near-term technical advantage as prices are trending up. 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 bearish early today. Today, shorter-term technical resistance comes in at 4,700.00 and then at the contract and record high of 4,740.50. Buy stops likely reside just above those levels. Downside support for active traders is seen at the overnight low of 4,654.50 and then at 4,625.00. Sell stops likely reside below those levels. Wyckoff’s Intra-day Market Rating: 5.0
December Nasdaq index futures: Prices are weaker in early U.S. trading. The Nasdaq stock index Monday hit a new record high and then backed off to close lower, nearer the daily low and score a bearish “key reversal” down on the daily bar chart. Follow-through selling pressure and lower closes on Tuesday would better confirm the bearish key reversal, which is one technical clue that a market top is in place. 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 bearish early today. Shorter-term technical resistance is seen at 16,500.00 and then at 16,628.50. Buy stops likely reside just above those levels. On the downside, shorter-term support is seen at the overnight low of 16,274.00 and then at 16,200.00. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are lower 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 and 18-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 160 17/32 and then at 161 even. Buy stops likely reside just above those levels. Shorter-term support lies at the November low of 159 18/32 and then at 159 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
December U.S. T-Notes: Prices are lower in early U.S. trading and hit a contract low overnight. 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 is seen at the overnight high of 130.02.0 and then at 130.10.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at overnight contract low of 129.24.5 and then at 129.20.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 3.5
EURO CURRENCY
The December Euro currency futures are slightly up in early U.S. trading and hit a 16-month low overnight. Bears have the solid overall near-term technical advantage. The shorter-term moving averages for the Euro 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 Euro are neutral early today. The Euro currency finds shorter-term technical resistance at 1.1300 and then at 1.1350. Buy stops likely reside just above those levels. Shorter-term support is seen at the overnight low of 1.1230 and then at 1.1200. Sell stops likely reside just below those levels. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
Nymex crude oil prices are lower in early U.S. trading. Bulls have faded badly recently to suggest a market top is in place. The shorter-term moving averages 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 (RSI and slow stochastics) are bearish early today. Look for buy stops to reside just above technical resistance at this week’s high of $77.16 and then at $78.00. Look for sell stops just below technical support at this week’s low of $74.76 and then at $74.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
U.S. grain futures were mixed to weaker overnight. The wheat futures markets are on fire, hitting multi-year highs this week. Wheat is propping up the corn and soybean futures markets.
Soybean meal futures market is trending higher, which also signals a market bottom is in place for soybeans.
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