Tuesday, January 8–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
European stock markets were mostly higher overnight, but Asian shares were slightly down. U.S. stock indexes are pointed toward higher openings when the New York day session begins. Traders and investors have keener “risk-on” attitudes the first full week of the new year. Perceived progress on U.S.-China trade talks presently taking place in Beijing, ideas of a more dovish Federal Reserve monetary policy in 2019, and a solid U.S. jobs report last week have perked up the marketplace so far this week.
The upbeat attitudes in Asia were somewhat dented today after technology giant Samsung said its fourth-quarter profits will drop 29% due to “mounting macro uncertainties.” The downbeat Samsung news follows a dour outlook issued by Apple last week.
The U.S. government shutdown is into its third week, but the matter is garnering less attention from the marketplace and is not a front-burner issue. President Trump will address U.S. citizens in a speech on a U.S. southern border wall Tuesday evening.
The key outside markets today see the U.S. dollar index higher on a corrective bounce after hitting a two-month low on Monday. The USDX has been trending sideways to lower on the daily chart for three weeks. Meantime, Nymex crude oil prices are higher and trading just above $49.00 a barrel. There are chart clues the oil market has bottomed out, but the bulls still have heavy lifting to do to suggest a price uptrend can be sustained.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales report, the NFIB small business optimism index, the international trade report (not issued because of government shutdown), and the World Bank global economic prospects report.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are higher in early U.S. trading today and hit a three-week high overnight. There are early chart clues the index has put in a bottom. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bullish early today. Today, shorter-term technical resistance comes in at 2,585.00 and then at 2,600.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,549.25 and then at Monday’s low of 2,523.25. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
March Nasdaq index December futures: Prices are higher in early U.S. trading and hit a three-week high overnight. There are early technical clues the index has bottomed out.
Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at 6,600.00 and then at 6,650.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 6,491.00 and then at Monday’s low of 6,402.50. Sell stops are likely located 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 weaker in early U.S. trading today, on profit taking from recent good gains. Prices last Friday hit a contract high. Bulls are still in firm near-term technical control. Shorter-term moving averages (4- 9- 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at 147 even and then at Monday’s high of 147 17/32. Buy stops likely reside just above those levels. Shorter-term support lies at 146 even and then at 145 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
March U.S. T-Notes: Prices are lower in early U.S. trading, on profit taking after hitting a contract high last Thursday. Bulls still have the firm chart advantage. 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 bearish early today. Shorter-term resistance lies at the overnight high of 122.01.5 and then at 122.08.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 121.24.0 and then at 121.20.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The March U.S. dollar index is slightly up in early U.S. trading. The bulls are fading as prices hit a two-month low Monday and have been trending lower on the daily chart for three weeks. The shorter-term moving averages for the dollar index 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 for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at the overnight high of 95.535 and then at Monday’s high of 95.730. Shorter-term support is seen at Monday’s low of 95.195 and then at 95.000. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
February Nymex crude oil prices are higher in early U.S. trading. Strong longer-term technical support at the $42.00 area appears to have put in a market bottom. The shorter-term moving averages are neutral early today as the 4-day is above the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are bullish early today. Look for buy stops to reside just above technical resistance at Monday’s high of $49.79 and then at $50.00. Look for sell stops just below technical support at the overnight low of $48.31 and then at $47.50. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
Grain futures were firmer overnight. There are increasing hopes the U.S. and China will reach a trade deal in the coming weeks, which is supporting gains in the grains. Rising oil prices are also bullish for grains and the rest of the raw commodity sector.
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