Thursday, December 10–Jim Wyckoff’s Morning Markets Report
Global stock markets were flat to weaker overnight. U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins. The U.S. indexes have this week set more record highs. As the marketplace remains overall upbeat and continues to generally look over the horizon into 2021, when most believe the Covid-19 pandemic will be tamped down, veteran traders wonder if the stock markets will experience a “sell the fact” scenario, whereby all the good news will have been baked into the cake by the time the pandemic actually does fade away—and then the stock markets will have already put in major tops and will be declining.
Traders and investors are now wondering if the U.S. Congress will soon pass a financial aid package for Americans that totals just under $1 trillion. Earlier this week attitudes on the matter were more positive, but have faded late this week as there is still no agreement between Democrats and Republicans.
The marketplace is awaiting the conclusion of the meeting of the European Central Bank Thursday morning, which is expected to see the ECB expand its bond-buying program by 500 million Euros.
Negotiations between the U.K. and European Union regarding a smooth Brexit are ongoing but no agreement has been reached. This continues to create uncertainty and anxiety among European market participants. Reports said a Sunday deadline is in place for reaching an agreement.
In other news, the World Bank reported that gold exchange traded fund (ETF) outflows in November hit a record, due to and improving economic backdrop. Gold ETF’s are the main investment vehicle for those investors wanting to own gold.
The U.S. dollar index is weaker early today and not far above last week’s 2.5-year low. The other important outside market sees January Nymex crude oil futures prices higher and trading around $46.25 a barrel. The yield on the benchmark 10-year U.S. Treasury note futures is currently trading at 0.91%.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the consumer price index, real earnings and the monthly Treasury budget statement.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are near steady in early U.S. trading after hitting a record high Wednesday. Bulls have the solid overall near-term technical advantage. 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 neutral early today. Today, shorter-term technical resistance comes in at the contract and record high of 3,707.00 and then at 3,725.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at this week’s low of 3,651.50 and then at 3,625.00. Wyckoff’s Intra-day Market Rating: 5.0
March Nasdaq index futures: Prices are slightly lower in early U.S. trading after hitting a record high Wednesday. Strong selling pressure in the Nasdaq today would confirm a bearish “key reversal” down on the daily bar chart and would be a clue that a market top is in place. But right now 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. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at 12,400.00 and then at 12,500.00. On the downside, shorter-term support is seen at the overnight low of 12,302.50 and then at 12,200.00. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are firmer in early U.S. trading. Bears have the solid 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 neutral early today. Shorter-term technical resistance is seen at this week’s high of 173 16/32 and then at 174 even. Shorter-term support lies at 172 16/32 and then at 171 30/32. Wyckoff’s Intra-Day Market Rating: 5.5
March U.S. T-Notes: Prices are higher in early U.S. trading. Bears still have the near-term technical advantage. 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 below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at the overnight high of 137.25.5 and then at this week’s high of 137.31.5. Shorter-term technical support lies at 137.15.0 and then at last week’s low of 137.07.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
EURO CURRENCY
The March Euro currency futures are slightly higher 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 neutral early today. The Euro currency finds shorter-term technical resistance at Wednesday’s high of 1.2180 and then at last week’s high of 1.2208. Shorter-term support is seen at this week’s low of 1.2090 and then at 1.2050. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
January Nymex crude oil prices are higher in early U.S. trading. 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 and 18-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 $46.33 and then at last week’s high of $46.68. Look for sell stops just below technical support at the overnight low of $45.52 and then at $45.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
US grain futures are higher in early U.S. pre-market trading. Grain bulls have regained some footing this week. The Covid-19 pandemic in the U.S. and other parts of the world and worries about demand, especially from China, have hurt the grains recently. Traders are awaiting Thursday morning’s latest USDA monthly supply and demand report and the weekly USDA export sales report. Look for more active trading in the grains today.
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