Monday, February 1–Jim Wyckoff’s Morning Markets Report
The feature in the marketplace to start the trading week and the month of February is that silver prices popped to an eight-year high above $30 an ounce today as retail traders are looking for a “short squeeze” in the market. Social media lit up during the weekend, especially on Reddit, as the growing retail band of traders looked to slay another market–this time silver–that they claim is dominated and manipulated by the “big boys” on Wall Street. This follows the GameStop saga that played out last week, whereby the smaller retail traders put the squeeze on big hedge funds that had shorted the troubled business. The silver is a much bigger beast to take on than is a smaller individual stock. Still, the “Redditors” have put a scare into many on Wall Street, especially the big hedge funds that like to short stocks they feel will be in some trouble either at present or in the future. While the gains in silver are certainly strong, they are not the epic moonshot price advances that some social media sites were predicting during the weekend. However, the trading week is still young and much can still happen. Importantly, the gold and silver markets had a bit of a tailwind behind them before the Redditor trade kicked in. Many veteran market watchers were already reckoning the “inflation trade” would boost raw commodity markets, including the metals, what with major central banks and governments pumping so much liquidity into financial systems in order to jumpstart major world economies that have been crippled by the Covid-19 pandemic.
Global stock markets were mostly firmer overnight. U.S. stock indexes are pointed toward higher openings when the New York day session begins, after opening lower in Sunday evening trading. Declines in the rate of Covid-19 infections and deaths in the U.S. are positive elements for trader and investor sentiment.
In other overnight news, the Euro zone January manufacturing purchasing managers index (PMI) came in at 54.8 versus 55.2 in December. A reading above 50.0 suggests growth in the sector.
The key “outside markets” today see the U.S. dollar index higher. Meantime, Nymex crude oil futures prices are higher and trading around $52.65 a barrel. The yield on the benchmark 10-year U.S. Treasury note stands at 1.076%.
U.S. economic data due for release Monday includes the U.S. manufacturing PMI, the ISM report on business manufacturing, the global manufacturing PMI and construction spending.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are higher in early U.S. trading after hitting a four-week low overnight. Bulls still have the overall near-term technical advantage. However, a near-term price uptrend on the daily bar chart has at least temporarily been negated. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-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 Friday’s high of 3,777.25 and then at 3,800.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at 3,700.00 and then at the overnight low of 3,656.50. Wyckoff’s Intra-day Market Rating: 6.0
March Nasdaq index futures: Prices are higher in early U.S. trading after hitting a two-week low overnight. Bulls have the firm overall near-term technical advantage. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-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 Friday’s high of 13,188.00 and then at 13,300.00. On the downside, shorter-term support is seen at 13,000.00 and then at 12,900.00. 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. Bears have the firm overall 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 and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 169 12/32 and then at Friday’s high of 169 29/32. Shorter-term support lies at the overnight low of 168 22/32 and then at last week’s low of 168 13/32. Wyckoff’s Intra-Day Market Rating: 4.5
March U.S. T-Notes: Prices are weaker in early U.S. trading. 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 bearish early today. Shorter-term resistance lies at the overnight high of 137.08.5 and then at 137.12.0. Shorter-term technical support lies at the overnight low of 137.02.0 and then at last week’s low of 136.28.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
EURO CURRENCY
The March Euro currency futures are lower in early U.S. trading. 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 bearish early today. The Euro currency finds shorter-term technical resistance at the overnight high of 1.2147 and then at Friday’s high of 1.2168. Shorter-term support is seen at the January low of 1.2067 and then at 1.2000. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
March Nymex crude oil prices are higher in early U.S. trading. Bulls have the firm overall near-term technical advantage but a price uptrend in place on the daily chart has turned sideways. The shorter-term moving averages are neutral early today as the 4-day is above the 9-day. The 9-day is even with 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 last week’s high of $53.58 and then at the January high of $53.94. Look for sell stops just below technical support at today’s low of $51.64 and then at $51.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
U.S. grain futures are higher in early U.S. pre-market trading. The bulls have upside momentum and power to start the trading week and the trading month, to suggest still more price gains in the near term. Near-term price uptrends have been restarted. On tap Monday is the weekly USDA export inspections report.
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