Tuesday, December 17–Jim Wyckoff’s Morning Markets Report
Asian stock indexes were mostly higher overnight, while European shares were mixed to weaker. The U.S. stock indexes are pointed toward modestly lower openings when the New York day session begins. U.S. and U.K. stock indexes hit record highs Monday amid keener risk appetite in the global marketplace following news of a partial U.S.-China trade agreement.
European shares were rattled Tuesday on news U.K. Prime Minister Boris Johnson intends to introduce legislation to bar extension of Brexit talks beyond one year, which many believe is not enough time for a “soft” Brexit. The British pound also fell on the news.
The key “outside markets” today see the U.S. dollar index firmer. Meantime, Nymex crude oil prices are near steady and trading around $60.25 a barrel.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, new residential construction, industrial production and capacity utilization, and the IDB/TIPP economic optimism index.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are slightly lower, in early U.S. trading, on mild profit taking after hitting new highs Monday. Bulls still have the solid overall near-term technical advantage. 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 early today. Today, shorter-term technical resistance comes in at the contract high of 3,202.50 and then at 3,220.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Monday’s low of 3,177.00 and then at 3,159.25. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.0
March Nasdaq index futures: Prices are slightly down and did hit another contract and record high overnight. Bulls have the solid near-term technical advantage. 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 overnight contract high of 8,626.50 and then at 8,650.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at Monday’s low of 8,530.00 and then at 8,500.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are higher in early U.S. trading. Bulls and bears are on a level overall near-term technical playing field amid recent choppy 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 neutral early today. Shorter-term technical resistance is seen at Monday’s high of 158 2/32 and then at 158 11/32. Buy stops likely reside just above those levels. Shorter-term support lies at Monday’s low of 156 24/32 and then at 156 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. Bears have the overall near-term technical advantage. 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 neutral early today. Shorter-term support lies at Monday’s low of 128.13.0 and then at 128.05.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at Monday’s high of 128.30.0 and then at 129.00.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The March U.S. dollar index is firmer in early U.S. trading. Bears have the overall near-term technical advantage. 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 to bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 96.865 and then at 97.000. Shorter-term support is seen Monday’s low of 96.495 and then at last week’s low of 96.295. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
January Nymex crude oil prices are slightly higher in early U.S. trading. Bulls have the near-term technical advantage and are keeping in place an 11-week-old uptrend on the daily bar chart. The shorter-term moving averages 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 (RSI and slow stochastics) are neutral to bullish early today. Look for buy stops to reside just above technical resistance at last week’s high of $60.48 and then at $61.00. Look for sell stops just below technical support at Monday’s low of $59.71 and then at last Friday’s low of $59.27. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
US grain futures prices were slightly lower overnight on downside corrections after hitting multi-week highs on Monday. In the wake of the US-China partial trade deal reached late last week, the technical postures for corn, soybeans and wheat have turned much more positive, especially in soybeans and wheat. Corn also saw a near-term price downtrend negated. Still, grain traders are wondering about the timing of the expected larger agricultural purchases from China. Importantly, the large speculative funds that were significantly short the grain futures markets have been forced to cover those sold positions, with more short covering from them likely to occur in the coming days. The US dollar index fell to a 4.5-month low late last week, and that’s also working in favor of the US grain market bulls—making US grain less expensive to purchase on the world market, in non-US currency. Price action into the end of the year will likely go a long way in determining if the US grain futures markets can sustain price uptrends, or continue to languish. Grain traders are looking more closely at weather in South American crop-growing regions. While there are no major problems at present, there are some dry pockets traders are monitoring to see if the dryness persists.
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