Monday, January 4–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly firmer overnight. U.S. stock indexes are pointed toward higher openings and record highs when the New York day session begins. Trader and investor risk appetite remains upbeat on this first trading day of the new year. The marketplace continues to look over the horizon at what is hoped will be a better second-half of 2021, in both economic and human health terms. The incoming Biden administration is expected to roll out more economic aid to the public and businesses. Also, Americans began receiving their U.S. government stimulus funds late last week, which gives many struggling Americans a bit of a temporary life line.
A feature in the marketplace Monday is sharp gains in gold and silver prices, with gold notching a seven-week high of $1,941.00, basis February Comex futures. Safe-haven demand amid surging Covid-19 cases in the U.S., Europe and other parts of the world are supporting the precious metals. Also, the specter of rising and possibly problematic price inflation appears to be gaining some steam and boosting the raw commodity sector.
Commodity markets are also getting a lift early this week in part on some notions the U.S. Senatorial elections in Georgia could see the Democrats win a majority in the Senate, which would make the Senate and the Congress in control of the Democrats. Such would suggest higher spending that would also likely help to stoke price inflation. However, many think it is still unlikely both Democratic senatorial candidates will win in Georgia. The vote is Tuesday.
In overnight news, the Euro zone December manufacturing purchasing managers index (PMI) came in at 55.2 versus 53.8 in November, but was a bit below market expectations. A reading above 50.0 suggests growth in the sector.
The U.S. dollar index is lower and hit another 2.5-year low in early U.S. trading. The other important outside market sees February Nymex crude oil futures prices firmer and trading around $49.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note futures is currently around 0.925%.
U.S. economic data due for release Monday includes the manufacturing purchasing managers index (PMI), construction spending and the global manufacturing PMI.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are higher and hit a contract and record high in early U.S. trading. A near-term price uptrend is in place on the daily bar chart. 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 bullish early today. Today, shorter-term technical resistance comes in at the overnight record high of 3,773.25 and then at 3,800.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at the overnight low of 3,738.25 and then at 3,700.00. Wyckoff’s Intra-day Market Rating: 7.0
March Nasdaq index futures: Prices are higher and hit a contract and record high in early U.S. trading. Bulls have the solid overall 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 bullish early today. Shorter-term technical resistance is seen at the overnight record high of 12,959.75 and then at 13,000.00. On the downside, shorter-term support is seen at 12,900.00 and then at the overnight low of 12,825.25. Wyckoff’s Intra-Day Market Rating: 7.0.
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 neutral early today. The 4-day moving average is above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at last week’s high of 173 8/32 and then at 173 14/32. Shorter-term support lies at the overnight low of 172 9/32 and then at 172 even. Wyckoff’s Intra-Day Market Rating: 4.0
March U.S. T-Notes: Prices are slightly lower 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 neutral to bullish early today. Shorter-term resistance lies at last week’s high of 138.03.5 and then at 138.08.0. Shorter-term technical support lies at the overnight low of 137.26.5 and then at 137.20.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
EURO CURRENCY
The March Euro currency futures are solidly higher in early U.S. trading and near last week’s two-year high. Bulls are in solid technical control. 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 bullish early today. The Euro currency finds shorter-term technical resistance at the December high of 1.2330 and then at 1.2350. Shorter-term support is seen at the overnight low of 1.2249 and then at 1.2200. Wyckoff’s Intra Day Market Rating: 6.5
NYMEX CRUDE OIL
February Nymex crude oil prices are near steady in early U.S. trading after hitting a nine-month high overnight. Bulls have the solid overall near-term technical advantage amid a price uptrend in place on the daily 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 early today. Look for buy stops to reside just above technical resistance at the overnight high of $49.83 and then at $50.00. Look for sell stops just below technical support at $48.00 and then at last week’s low of $47.50. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
US grain futures are solidly higher in early U.S. pre-market trading and hit contract highs. The grain markets bulls have the solid overall near-term technical advantage amid price uptrends in place on the daily charts. This bull run in the grains is a major run and one that only occurs once or twice in a decade. The supply and demand fundamentals in the grains continue to favor the bulls, especially a huge appetite from China. Dry weather in South American growing regions is also bullish for corn and soybeans. On tap Monday morning 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