Tuesday, November 24–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly higher overnight. U.S. stock indexes are pointed toward higher openings when the New York day session begins. Risk sentiment remains upbeat this U.S. holiday-shortened trading week. There will be at least three very successful Covid-19 vaccines coming to market in the coming weeks or few months, including a powerful drug cocktail being released to help those who have the virus defeat it. Monday there was a surprisingly upbeat U.S. purchasing managers survey and President Trump agreed to President-Elect Joe Biden’s request for government assistance that is normally given presidents-elect. Also, Biden on Monday tabbed former Fed Chair Janet Yellen, a monetary policy dove, as his Treasury Secretary. All of the above have traders and investors in a risk-on state of mind. There is a growing general consensus in the marketplace that by the second half of 2021 the pandemic will be tamped down and economies will be well on the road to returning to normal.
Attitudes are generally upbeat despite the pandemic epidemic that is presently getting worse and once again crimping businesses and the general public in the U.S. and in Europe. Recent economic data from the Euro zone has been downbeat, suggesting a double-dip recession.
A feature in the marketplace this week is plummeting gold prices, which hit a nearly five-month low of $1,803.50 overnight, basis December Comex futures. The keener risk appetite just recently is denting buyer interest in the safe-haven metal. A few are proclaiming the recent big gains in Bitcoin, at the same time gold’s price drops, as making the digital currency the “new gold.” Most veteran market watchers reckon that notion is hogwash, as a main reason for gold being a safe-haven store of value is that an investor can store physical gold in a safe place—even at home. Gold’s value and sustainability do not depend on the viability of “the grid.” Those digital currency owners who consider their asset to be the new safe-haven replacement for gold might get this question from a veteran gold bug: “When the grid goes down, will you show me your digital currency?” One final note on gold’s descent this week: Many smart-money traders will be viewing gold as a value-buying opportunity, figuring that when global economies are back to firing on all cylinders in the coming months, and with those economies already awash in cash from central banks’ stimulus programs, very strong consumer demand will occur, resulting in price inflation being ignited–and maybe with a vengeance.
The U.S. dollar index is lower early today. Prices Monday hit a seven-week low. The other important outside market sees January Nymex crude oil futures prices firmer, hitting a nearly three-month high overnight and trading around $43.50 a barrel. The yield on the benchmark 10-year U.S. Treasury note futures is currently trading at 0.86%.
U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and Goldman Sachs retail sales reports, the U.S. monthly and quarterly house price indexes, the S&P Core-Logic house price index, the weekly chain store sales index, the Richmond Fed business survey, and the consumer confidence index.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are higher in early U.S. trading. Bulls have the solid overall near-term technical advantage and prices are not far below the recent high. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Today, shorter-term technical resistance comes in at last week’s high of 3,637.00 and then at the contract high of 3,668.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at the overnight low of 3,575.25 and then at last week’s low of 3,542.25. Wyckoff’s Intra-day Market Rating: 6.5
December Nasdaq index futures: Prices are firmer in early U.S. trading. Bulls have the firm overall near-term technical advantage, but stiff resistance layers lie just above the market. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is even with the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at last week’s high of 12,096.25 and then at the October high of 12,249.00. On the downside, shorter-term support is seen at Monday’s low of 11,808.25 and then at 11,700.00. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are slightly lower in early U.S. trading. Bears have the near-term technical 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 neutral early today. Shorter-term technical resistance is seen at 174 even and then at last week’s high of 174 9/32. Shorter-term support lies at the overnight low of 173 1/32 and then at 172 16/32. Wyckoff’s Intra-Day Market Rating: 4.5
December U.S. T-Notes: Prices are near steady in early U.S. trading. Bears have the near-term technical 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 neutral to bullish early today. Shorter-term resistance lies at Monday’s high of 138.17.5 and then at last week’s high of 138.20.0. Shorter-term technical support lies at the overnight low of 138.06.5 and then at 138.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
EURO CURRENCY
The March Euro currency futures are higher in early U.S. trading. 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 neutral to bullish early today. The Euro currency finds shorter-term technical resistance at Monday’s high of 1.1940 and then at the November high of 1.1954. Shorter-term support is seen at the overnight low of 1.1872 and then at Monday’s low of 1.1833. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
January Nymex crude oil prices are higher and hit a nearly three-month high in early U.S. trading. Bulls have the firm overall near-term technical advantage. The shorter-term moving averages 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 (RSI and slow stochastics) are bullish early today. Look for buy stops to reside just above technical resistance at the overnight high of $43.74 and then at the August high of $44.59. Look for sell stops just below technical support at the overnight low of $42.82 and then at Monday’s low of $42.29. Wyckoff’s Intra-Day Market Rating: 6.5
GRAINS
US grain futures are lower in early U.S. pre-market trading, on profit taking from recent good gains. The grain market bulls still have the firm near-term technical advantage amid price uptrends in place in all three markets. There are no strong, early clues to suggest that market tops are close at hand.
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