Wednesday, January 6–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed overnight. U.S. stock indexes are pointed toward mixed to weaker openings when the New York day session begins. Tuesday’s vote for two U.S. Senate seats in Georgia sees one Democrat declared the winner and the other Democrat with a very slight lead. If both seats go to the Democrats, they would control the Senate. The U.S. stock indexes are seeing some selling pressure on the news, as a Democrat-controlled Congress would likely lead to higher corporate taxes.
The U.S. economic data point of the day will be the ADP national employment report for December, which is expected to show jobs growth of 60,000 versus a rise of 307,000 in the November report. This report is the precursor to the more important Employment Situation Report issued by the Labor Department on Friday morning. That report is expected to show a U.S. unemployment rate of 6.8% and a non-farm jobs rise of 50,000 in December, versus a rise of 245,000 in November.
The other key economic report today is the afternoon release of the minutes of the last meeting of the Federal Reserve’s Open Market Committee (FOMC).
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 higher, at a 10-month high, and trading around $50.30 a barrel. The yield on the benchmark 10-year U.S. Treasury note futures is currently around 1.02%, a 10-month high. For perspective, the German 10-year government bond (bund) sees its yield currently at -0.54%.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the ADP national employment report, manufacturers’ shipments and inventories, the global services PMI, the weekly DOE liquid energy stocks report, and the FOMC minutes from the last meeting.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are weaker in early U.S. trading. Bulls still have the solid overall near-term technical advantage. A near-term price uptrend is in place on the daily bar chart. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 3,734.75 and then at the record high of 3,773.25. Buy stops likely reside just above those levels. Downside support for active traders is seen at this week’s low of 3,652.50 and then at 3,625.00. Wyckoff’s Intra-day Market Rating: 4.0
March Nasdaq index futures: Prices are sharply lower and hit a two-week low in early U.S. trading. Bulls still have the solid overall near-term technical advantage. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is below the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at 12,700.00 and then at the overnight high of 12,844.25. On the downside, shorter-term support is seen at the overnight low of 12,491.25 and then at 12,400.00. Wyckoff’s Intra-Day Market Rating: 3.0.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are solidly lower and hit a contract low in early U.S. trading. Bears have the solid overall near-term technical advantage amid a price downtrend in place on the daily chart. 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 bearish early today. Shorter-term technical resistance is seen at 171 even and then at 172 even. Shorter-term support lies at the overnight contract low of 170 16/32 and then at 170 even. Wyckoff’s Intra-Day Market Rating: 3.0
March U.S. T-Notes: Prices are sharply down and hit a seven-week low 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 bearish early today. Shorter-term resistance lies at 137.16.0 and then at 137.24.0. Shorter-term technical support lies at the overnight low of 137.06.0 and then at 137.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 3.0
EURO CURRENCY
The March Euro currency futures are higher and hit a two-year high in early U.S. trading. 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 overnight high of 1.2368 and then at 1.2400. Shorter-term support is seen at the overnight low of 1.2292 and then at this week’s low of 1.2249. Wyckoff’s Intra Day Market Rating: 6.5
NYMEX CRUDE OIL
February Nymex crude oil prices are slightly higher in early U.S. trading and hit a 10-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 to bullish early today. Look for buy stops to reside just above technical resistance at the overnight high of $50.59 and then at $51.00. Look for sell stops just below technical support at $49.00 and then at $48.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
US grain futures are again higher to sharply up in early U.S. pre-market trading and are at or near contract highs. The grain markets bulls have the strong overall near-term technical advantage amid price uptrends in place on the daily charts. The steep price gains in the grains recently suggest market tops are likely to occur sooner rather than later.
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