Wednesday, January 20–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed but mostly higher overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. The highlight of the U.S. trading day will be the presidential inauguration of Democrat Joe Biden. Look for Biden to hit the ground running by reversing many of outgoing President Trump’s executive orders. Biden and his Democrat-controlled Congress are also set to roll out big spending plans that could further lay the seeds for problematic price inflation down the road. Incoming U.S. Treasury Secretary Janet Yellen on Tuesday told lawmakers that going “big” on spending is needed to begin to repair the severe economic damage caused by the pandemic.
Aside from the inauguration, it’s a big corporate earnings week in the stock market.
In overnight news, the Euro zone December consumer price index came in at up 0.3% from November and down 0.3%, year-on-year. Those numbers are not anywhere close to suggesting rising inflation, and even hint that deflation may become the problem.
The key “outside markets” today see the U.S. dollar index slightly lower as bulls are fading this week following the recent good rebound from a 2.5-year low scored earlier this month. Meantime, Nymex crude oil futures prices are higher, trading around $53.50 a barrel and near a 10-month high. The yield on the benchmark 10-year U.S. Treasury note stands at 1.12%.
U.S. economic data due for release Wednesday is light and includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the NAHB housing market index.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are firmer in early U.S. trading and not far below the recent record high. Bulls 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 below the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Today, shorter-term technical resistance comes in at the record high of 3,824.50 and then at 3,850.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at Tuesday’s low of 3,740.50 and then at 3,700.00. Wyckoff’s Intra-day Market Rating: 6.0
March Nasdaq index futures: Prices are higher in early U.S. trading and close to the record high. Bulls 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 even with 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 the record high of 13,125.00 and then at 13,250.00. On the downside, shorter-term support is seen at 13,000.00 and then at 12,800.00. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are weaker 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 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 to bearish early today. Shorter-term technical resistance is seen at Tuesday’s high of 169 8/32 and then at 169 22/32. Shorter-term support lies at Tuesday’s low of 168 10/32 and then at 168 even. Wyckoff’s Intra-Day Market Rating: 4.0
March U.S. T-Notes: Prices are lower in early U.S. trading. 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 resistance lies at Tuesday’s high of 136.31.5 and then at 137.06.0. Shorter-term technical support lies at Tuesday’s low of 136.21.0 and then at 136.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
EURO CURRENCY
The March Euro currency futures are weaker in early U.S. trading. Bulls have faded recently. 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 bearish early today. The Euro currency finds shorter-term technical resistance at the overnight high of 1.2174 and then at last week’s high of 1.2239. Shorter-term support is seen at 1.2100 and then at Tuesday’s low of 1.2067. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
March Nymex crude oil prices are firmer 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. 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 January high of $53.94 and then at $54.50. Look for sell stops just below technical support at the overnight low of $53.05 and then at Tuesday’s low of $51.81. Wyckoff’s Intra-Day Market Rating: 6.5
GRAINS
U.S. grain futures are solidly lower in early U.S. pre-market trading, on good follow-through selling pressure from Tuesday’s losses. The grain markets bulls still have the solid overall near-term technical advantage. However, more selling pressure this week would be a clue that markets have topped out. Trading the rest of this week will be extra important.
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