Wednesday, December 8–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed but mostly up in overnight trading. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. The Omicron fears seen over the past nearly two weeks have quickly faded as trader and investor risk appetite is robust at mid-week. Pfizer has just reported three vaccine doses neutralize the Omicron variant, while two doses likely still prevent serious effects from the variant.
As Omicron moves off the front burner of the marketplace, focus is on other matters such as new ideas the Federal Reserve will move even more quickly to end its bond-buying program, so it can start raising U.S. interest rates. The Fed’s FOMC meets next week. The marketplace now expects the Fed to hike rates in May of next year. The Fed recently abandoned its notion that inflation is just “transitory.”
In other news, China’s stock markets have been pressured this week as property giant Evergrande missed a bond payment deadline Monday.
Traders are also monitoring the Russia-Ukraine border situation, where Russia has amassed troops. U.S. President Biden and Russian President Putin discussed the matter on the telephone Tuesday, but no progress was made on a de-escalation of the apparent Russian intentions of invading Ukraine and even annexing it. It appears this situation will get more tense before it gets better, and that means safe-haven assets are likely to come more into favor in the near term, including gold, silver, the U.S. dollar and U.S. Treasuries.
The key “outside markets” today see Nymex crude oil prices firmer and trading around $72.50 a barrel. This week’s strong gains in crude oil suggest the market last week put in a near-term bottom. The U.S. dollar index is slightly lower. Meantime, the yield on the U.S. Treasury 10-year note is presently fetching 1.461%.
U.S. economic data due for release Wednesday is light and includes the weekly MBA mortgage applications survey and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are higher in early U.S. trading and back near the contract and record high. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Today, shorter-term technical resistance comes in at the contract high of 4,735.00 and then at 4,775.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at 4,650.00 and then at 4,625.00. Sell stops likely reside below those levels. Wyckoff’s Intra-day Market Rating: 6.0
March Nasdaq index futures: Prices are higher in U.S. trading. Bulls have momentum. Shorter-term moving averages (4- 9-and 18-day) are still 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 neutral to bullish early today. Shorter-term technical resistance is seen at 16,500.00 and then at 16,600.00. Buy stops likely reside just above those levels. On the downside, shorter-term support is seen at 16,300.00 and then at 16,200.00. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are firmer in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at the overnight high of 162 26/32 and then at 163 even. Buy stops likely reside just above those levels. Shorter-term support lies at this week’s low of 161 23/32 and then at 161 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
March U.S. T-Notes: Prices are higher in early U.S. trading. 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 above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance is seen at the overnight high of 130.24.5 and then at 131.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at this week’s low of 130.08.5 and then at 130.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
EURO CURRENCY
The March Euro currency futures are firmer 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. 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 this week’s high of 1.1341 and then at last week’s high of 1.1417. Buy stops likely reside just above those levels. Shorter-term support is seen at last week’s low of 1.1257 and then at the November low of 1.1221. Sell stops likely reside just below those levels. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
Nymex crude oil prices are higher in early U.S. trading. Bulls have momentum. The shorter-term moving averages are neutral early today as the 4-day is above the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are bullish early today. Look for buy stops to reside just above technical resistance at $74.00 and then at $75.00. Look for sell stops just below technical support at the overnight low of $70.91 and then at $70.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
U.S. grain futures were mostly weaker in overnight trading. Not much new so far this week. There is keener risk appetite in the marketplace this week and that is bullish for the grains. Grain traders will continue to look to the key outside markets for direction—crude oil and the U.S. stock indexes. Big gains in crude this week should support buying interest in the grains. Traders are looking ahead to Thursday’s USDA monthly supply and demand 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