Friday, January 10–Jim Wyckoff’s Morning Markets Report
Asian stock markets were mixed to firmer overnight and European shares were mostly up. U.S. stock indexes are pointed toward firmer openings and at more record highs when the New York day session begins. After hitting a nasty speed bump a few days ago, the stock market bulls are right back in business and trader/investor risk appetite is robust.
The U.S. and Iran have backed away from further military confrontation—at least for now. And the world’s two largest economies are set to sign a partial trade agreement next week, with Chinese trade officials traveling to Washington, D.C. to do the signing. Most reckon the deal will pave the way for better global economic growth in 2020.
Traders and investors are back to examining economic data and other market fundamentals, including awaiting Friday morning’s December U.S. employment situation report from the Labor Department. Wednesday’s stronger-than-expected ADP national employment report has some leaning toward a stronger non-farm jobs number in Friday’s report, which has been forecast to come in at up 160,000.
The key outside markets today see crude oil prices slightly lower and trading around $59.50 a barrel. The U.S. dollar index is modestly up early today.
Other U.S. economic data due for release includes the monthly wholesale trade report.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are firmer and hit another contract and record high in early U.S. trading. Bulls have the solid near-term technical advantage to suggest another leg up in prices in the near term. 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 3,300.00 and then at 3,320.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at Thursday’s low of 3,257.75 and then at 3,225.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 7.0
March Nasdaq index futures: Prices are firmer and hit another 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 bullish early today. Shorter-term technical resistance is seen at 9,050.00 and then at 9,100.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 9,000.00 and then at Thursday’s low of 8,932.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 7.0.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are modestly up in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is even with the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at 157 16/32 and then at 158 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 156 20/32 and then at this week’s low of 155 29/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
March U.S. T-Notes: Prices are near steady 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 neutral to bearish early today. Shorter-term resistance lies at 129.00.0 and then at 129.08.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at this week’s low of 128.17.5 and then at 128.10.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
U.S. DOLLAR INDEX
The March U.S. dollar index is slightly higher and hit a two-week high in early U.S. trading. Bulls and bears are on a level overall near-term technical playing field. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is above the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators for the dollar index are bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 97.300 and then at 97.405. Shorter-term support is seen at Thursday’s low of 96.955 and then at 96.750. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
February Nymex crude oil prices are slightly up in early U.S. trading. This week’s price action suggests a near-term market top is in place. The shorter-term moving averages are neutral early today as the 4-day is below the 9-day and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral to bearish early today. Look for buy stops to reside just above technical resistance at Thursday’s high of $60.31 and then at $61.00. Look for sell stops just below technical support at this week’s low of $58.66 and then at $58.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
US grain futures were mixed and near steady overnight. Grains have been somewhat supported late this week by risk appetite quickly returning to the global marketplace, on ideas the U.S. and Iran have stepped back from the brink of an escalating military conflict. China and the U.S. set to sign a “Phase 1” trade deal next week is also a positive for grain trader attitudes. Not only will China agree to buy more U.S. ag products, but the partial trade deal between the world’s two largest economies should work to boost global economic growth in 2020. That would mean better demand for grains worldwide. A winter storm on the U.S. east coast delayed the weekly USDA export sales report until Friday. Traders are also awaiting Friday’s USDA’s supply and demand report. Forecasts for corn harvested acres averaged 81.3 million acres, with a U.S. corn yield at 166 bushels per acre. U.S. corn production is estimated at 13.5 billion bushels. U.S. soybean harvested acres are forecast at 75.6 million, with a soybean yield of 46.5 bushels an acre. U.S. soybean production is estimated at 3.5 billion bushels. Average U.S. ending stocks are estimated at 1.776 billion bushels of corn, 431 million bushels of soybeans and 970 million bushels for wheat. Look for the most active trading of the week, and quite possibly some time, following the release of the USDA report. Most grain traders reckon the report will favor the bulls.
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