Thursday, February 4–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed overnight, with Asian shares mostly down and European shares slightly up. U.S. stock indexes are pointed toward modestly higher openings when the New York day session begins and have made strong recoveries after the recent declines. U.S. stock index prices are near their recent record highs as trader/investor risk sentiment is upbeat this week. The Biden administration is working to get fresh stimulus funds to Americans and such will likely occur in the coming weeks.
In overnight news, the United Nations’ Food and Agriculture Organization said its food price index rose to the highest level in nearly seven years. That’s another early clue that consumer and producer price inflation could heat up in the coming months.
On tap today is a busy slate of U.S. economic data highlighted by the weekly jobless claims report, expected to show around 830,000 new claims in the latest week, compared to 847,000 filed last week. Traders are looking ahead to Friday morning’s U.S. employment situation report for January, which is expected to show a non-farm payrolls rise of 50,000 and an unemployment rate of 6.7%.
The key “outside markets” today see the U.S. dollar index higher and hitting a two-month high overnight. Meantime, Nymex crude oil futures prices are higher and near this week’s 12-month high, trading around $56.15 a barrel. The yield on the benchmark 10-year U.S. Treasury note stands at 1.136%.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, preliminary productivity and costs, manufacturers’ shipments and orders, and monthly chain store sales.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are slightly higher in early U.S. trading and have made a strong rebound to see prices near the recent record high. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at this week’s high of 3,843.50 and then at the contract high of 3,862.25. Buy stops likely reside just above those levels. Downside support for active traders is seen at 3,800.00 and then at Tuesday’s low of 3,760.00. Wyckoff’s Intra-day Market Rating: 6.0
March Nasdaq index futures: Prices are modestly higher in early U.S. trading and have made a strong rebound this week to trade near the recent record high. 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 and 18-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at the contract high of 13,599.75 and then at 13,700.00. On the downside, shorter-term support is seen at the overnight low of 13,345.25 and then at 13,230.50. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are weaker and hit a three-week low in early U.S. trading. Bears have the solid overall near-term technical advantage and have gained downside momentum this week. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at Wednesday’s high of 168 20/32 and then at Tuesday’s high of 169 1/32. Shorter-term support lies at the overnight low of 167 11/32 and then at 167 even. Wyckoff’s Intra-Day Market Rating: 4.0
March U.S. T-Notes: Prices are near steady and hit a three-week low in early U.S. trading. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at Wednesday’s high of 137.00.5 and then at this week’s high of 137.09.5. Shorter-term technical support lies at the overnight low of 136.21.0 and then at 136.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
EURO CURRENCY
The March Euro currency futures are lower and hit a two-month low in early U.S. trading. Prices are trending lower and the bears have the near-term chart advantage. 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 1.2052 and then at 1.2100. Shorter-term support is seen at the overnight low of 1.1992 and then at 1.1950. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
March Nymex crude oil prices are modestly higher and near Wednesday’s 12-month high in early U.S. trading. Bulls have the solid overall near-term technical advantage and prices have this week seen a bullish upside “breakout” from the recent trading range at higher levels. 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 bullish early today. Look for buy stops to reside just above technical resistance at Wednesday’s high of $56.33 and then at $57.00. Look for sell stops just below technical support at $55.00 and then at $54.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
U.S. grain futures are mixed to firmer in early U.S. pre-market trading. The bulls have the firm overall near-term technical advantage. Supply and demand fundamentals are still bullish for the grains. On tap today is the weekly USDA export sales 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