Friday, February 26–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly lower overnight. U.S. stock indexes are pointed toward weaker openings when the New York day session begins. Bearish weekly and monthly low closes in the stock indexes today would be an ominously bearish signal that the indexes may have put in at least near-term tops if not major tops.
Marketplace attention is squarely on the strong rise in government bond yields this week, which saw the benchmark U.S. Treasury yield push above 1.6% at one point late this week. The 10-year yield has backed off a bit Friday and is fetching 1.475%. Higher bond yields are throwing a scare into the stock market bulls who have had a seemingly free pass to higher and higher share prices in recent months. However, the rising bond yields, if they continue to do so, will erode some investor interest in the stock market. The technology sector of stocks is already spooked as seen by bigger losses this week.
Bond yields are climbing on notions the major global economies will break out of their pandemic shackles in strong fashion during the second half of this year. Also, U.S. Democrats are ready to push a $1.9 trillion Covid-19 relief package through the U.S. House Friday. That win is expected despite a setback that means a minimum wage boost is unlikely to be in the final version that reaches President Biden. A near party-line vote seemed certain on the relief measure in the House.
Gold, which pays no dividend, has been hit hard by the rising government bond yields and on Friday the safe-haven metal fell to an eight-month low.
The markets are paying little attention to a U.S. military precision strike against Iranian- backed camps in Syria overnight. U.S.-Iran tensions were already elevated and the U.S. military action may prompt retaliation from Iran.
The key “outside markets” today see Nymex crude oil futures prices weaker and trading around $63.00 a barrel after hitting a 13-month high on Thursday. The U.S. dollar index is solidly higher early today on a corrective bounce from recent selling pressure.
U.S. economic data due for release Friday includes personal income and outlays, the advance economic indicators report, the Chicago ISM business survey, and the University of Michigan consumer sentiment survey.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices lower and hit a three-week low in early U.S. trading. Bulls still have the overall near-term technical advantage but are fading late this week. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-day. The 9-day is even with the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 3,847.50 and then at 3,875.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at 3,800.00 and then at 3,775.00. Wyckoff’s Intra-day Market Rating: 4.0
March Nasdaq index futures: Prices are lower and hit a seven-week low in early U.S. trading. Bulls still have the overall near-term technical advantage but have faded badly this week. Shorter-term moving averages (4- 9-and 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 12,915.00 and then at 13,000.00. On the downside, shorter-term support is seen at the overnight low of 12,662.25 and then at 12,500.00. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are higher in early U.S. trading on a corrective bounce from recent strong selling pressure that saw prices hit a contract low on Thursday. Bears have the strong 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 bullish early today. Shorter-term technical resistance is seen at 161 even and then at Thursday’s high of 161 24/32. Shorter-term support lies at the overnight low of 159 1/32 and then at 158 even. Wyckoff’s Intra-Day Market Rating: 5.5
March U.S. T-Notes: Prices are higher in early U.S. trading on a corrective bounce after hitting a contract low on Thursday. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below 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 resistance lies at 134.00.0 and then at the overnight high of 134.08.0. Shorter-term technical support lies at the overnight contract low of 133.10.5 and then at the contract low of 133.02.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
EURO CURRENCY
The March Euro currency futures are solidly lower in early U.S. trading on profit taking aftert hitting a six-week high on Thursday. Bulls still have the overall near-term technical advantage amid a price uptrend in place on the daily chart. 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 bearish early today. The Euro currency finds shorter-term technical resistance at 1.2150 and then at the overnight high of 1.2188. Shorter-term support is seen at the overnight low of 1.2096 and then at 1.2050. Wyckoff’s Intra Day Market Rating: 3.5
NYMEX CRUDE OIL
April Nymex crude oil prices are lower on profit taking after hitting a 13-month high on Thursday. Bulls still have the solid overall near-term technical advantage amid a price uptrend firmly 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 to bearish early today. Look for buy stops to reside just above technical resistance at this week’s high of $63.81 and then at $64.00. Look for sell stops just below technical support at $62.00 and then at $61.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
U.S. grain futures are solidly lower in early U.S. pre-market trading. Risk aversion is hitting the grains late this week. Bulls still have the firm overall near-term technical advantage as prices are mostly trending up—both on a near-term and longer-term basis.
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