Monday, January 31–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly up overnight. U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins. Markets in China and South Korea were closed for a holiday Monday. China’s markets are closed all week for the Lunar New Year holiday. Stock indexes are poised to close out January with solid losses on the month. Inflation worries are high and the Federal Reserve appears behind the curve on controlling it, Covid is still causing global economic problems two years into the pandemic, and Ukraine and Russia remain in a stare-down at their shared border. All of the above are making for reduced trader and investors risk appetite in the marketplace.
In overnight news, there was another drone attack against the United Arab Emirates, for the third week in a row. Iran-backed Houthi terrorists were likely responsible. Markets showed no major reactions to the news.
The key outside markets today see crude oil prices firmer and trading around $87.50 a barrel. The U.S. dollar index is weaker today. The U.S. Treasury 10-year note yield is presently fetching 1.789%.
U.S. economic data due for release Monday includes the Chicago ISM business survey and purchasing managers index, and the Texas manufacturing survey.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are weaker in early U.S. trading. Prices are trending lower on the daily chart, to suggest a market top is in place. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical support comes in at 4,375.00 and then at 4,350.00. Sell stops likely reside just below those levels. Resistance for active traders is seen at last week’s high of 4,446.25 and then at 4,475.00. Buy stops likely reside just above those levels. Wyckoff’s Intra-day Market Rating: 4.5
March Nasdaq index futures: Prices are firmer in early U.S. trading. Prices are trending lower on the daily chart to suggest a market top is in place. Shorter-term moving averages (4- 9-and 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at last week’s high of 14,639.75 and then at 14,800.00. On the downside, shorter-term support is seen at the overnight low of 13,353.25 and then at 14,200.00. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are slightly lower in early U.S. trading. Bears have the solid overall near-term technical advantage. Prices have been trending lower for two months. 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 early today. Shorter-term technical resistance is seen at the overnight high of 155 30/32 and then at 156 16/32. Shorter-term support lies at 155 even and then at 154 15/32. Wyckoff’s Intra-Day Market Rating: 4.5
March U.S. T-Notes: Prices are slightly lower in early U.S. trading. 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 early today. Shorter-term resistance lies at the overnight high of 128.00.5 and then at 128.08.0. Shorter-term technical support lies at the overnight low of 127.24.5 and then at 127.20.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
EURO CURRENCY
The March Euro currency futures are slightly higher in early U.S. trading. Bears have the solid overall near-term technical advantage. The shorter-term moving averages for the Euro 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 Euro are neutral to bullish early today. The Euro currency finds shorter-term technical resistance at 1.1200 and then at 1.1253. Shorter-term support is seen at the January low of 1.1130 and then at 1.1100. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
March Nymex crude oil prices are a bit higher in early U.S. trading. Bulls have the solid overall near-term technical advantage amid a two-month-old 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 January high of $88.84 and then at $89.00. Look for sell stops just below technical support at $86.00 and then at $85.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
U.S. grain futures are higher in early U.S. pre-market trading. The corn and soybean markets are supported by very dry weather in South American growing regions. Corn and bean bulls have the solid overall near-term technical advantage. Wheat prices have rebounded again amid worries about Russia invading Ukraine and bulls have the overall near-term technical advantage. The “inflation trade” is working in favor of all the grain market bulls. On tap today 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