Thursday, January 23–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mostly down overnight. U.S. stock indexes are pointed toward weaker openings when the New York day session begins. There is some risk aversion creeping back into the world marketplace late this week. The coronavirus impacting China has now killed 17 citizens there as China has locked down the city of 10 million people, Wuhan, reports said. At least one case of the virus is in the U.S. President Trump’s trade threats against the European Union in an interview in Davos on Wednesday are also unsettling European traders.
The key European event today will be the regular monetary policy meeting of the European Central Bank, the results of which should be out soon, as of this writing. No change in ECB policy is expected but the press conference from ECB President Lagarde will be closely monitored.
The key outside markets today see crude oil prices down and trading around $56.00 a barrel. The U.S. dollar index is near steady early today.
U.S. economic data due for release Thursday includes the weekly jobless claims report, leading economic indicators, the weekly DOE liquid energy stocks report, and the Kansas City Fed manufacturing survey.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are slightly lower on mild profit taking after hitting a new contract and record high Wednesday. Bulls have the solid near-term technical advantage and there are no early close to suggest a market top is close at hand. 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 neutral to bearish early today. Today, shorter-term technical resistance comes in at the contract high of 3,337.50 and then at 3,350.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at this week’s low of 3,307.25 and then at 3,275.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
March Nasdaq index futures: Prices are slightly higher and close to Wednesday’s contract and record high in early U.S. trading. Bulls have the solid near-term technical advantage to suggest more upside. 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 neutral early today. Shorter-term technical resistance is seen at the contract high of 9,254.00 and then at 9,300.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at this week’s low of 9,114.75 and then at 9,100.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are higher in early U.S. trading. Bulls are having a good week, so far. 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 bullish early today. Shorter-term technical resistance is seen at the January high of 159 19/32 and then at 160 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 158 25/32 and then at Wednesday’s low of 158 5/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
March U.S. T-Notes: Prices are higher 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. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at the overnight high of 129.26.5 and then at 130.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 129.17.5 and then at 129.10.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The March U.S. dollar index is near steady in early U.S. trading. Bulls have the slight overall near-term technical advantage. Prices have been trending higher for more than three weeks. The shorter-term moving averages for the dollar index 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 for the dollar index are neutral to bearish early today. The dollar index finds shorter-term technical resistance at last week’s high of 97.485 and then at 97.750. Shorter-term support is seen at this week’s low of 97.225 and then at 97.000. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
March Nymex crude oil prices are lower and hit a six-week low in early U.S. trading. A fledgling price downtrend is in place on the daily bar chart. The shorter-term moving averages 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 (RSI and slow stochastics) are bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $56.27 and then at $57.00. Look for sell stops just below technical support at the overnight low of $55.57 and then at $55.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
US grain futures are mixed in early US pre-market trading Thursday. Corn is 1/4 to 1/2 cent higher, soybeans around 4 cents lower and wheat is 2 to 3 cents higher. Trading has turned choppy and a bit more volatile recently. Soybean bulls have faded badly recently and the corn market is languishing just below a strong chart resistance level. The wheat market bulls remain technically strong amid price uptrends in place and prices this week hitting multi-month highs. However, just above the wheat markets lie strong technical resistance levels that have halted rallies in previous years. Grain traders are still monitoring the coronavirus in China that has killed at least 17, with a case also on the US west coast. US grain futures traders will continue to monitory daily and weekly USDA export sales figures, mainly looking for more purchases coming from China. This week’s weekly USDA export sales report is out Friday morning, delayed by one day due to a US holiday on Monday. Some limited buying interest in the grains this week is tied to notions the Chinese will not be doing much buying of grains in the near term, as their big Lunar New Year holiday begins this weekend and lasts for a week. Soybean futures are also seeing selling pressure from ideas of big South American soybean crops that have seen few weather problems so far in the growing season.
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