Successful Covid vaccine rallies stock markets

Monday, November 9–Jim Wyckoff’s Morning Markets Report

Asian and European stock markets were mostly up overnight. U.S. stock indexes are set to open the New York day session strongly higher. News just out that Pfizer has announced a Covid-19 vaccine trial of over 44,000 subjects that is 90% effective gave the stock markets a solid boost from earlier overnight gains. While the stock market is soaring, the bond market sees yields pushing solidly up and gold prices dropping. It seems this could finally be the good news the global marketplace has been awaiting for months—during a grim period when the pandemic appears to be worsening in places like the U.S. and Europe.

The marketplace is also calmer to start the trading week. Joe Biden was declared the winner of the U.S. presidential election on Saturday, and it appears his margin of victory is growing by the day, as the ballot-counting continues. The marketplace still reckons control of the U.S. Congress will be split, with Democrats having the majority in the House of Representatives and the Senate tilting slightly to the Republicans—even though there is a chance the Democrats could take the Senate due to still-contested Senate seats. Stock markets tend to like gridlock and no major shifts in fiscal policy.

While the specter of more U.S. government regulation of businesses under a Biden administration is a negative for the stock market, that is being offset by notions Biden will be a more stable force on the U.S. global policy front. The Chinese yuan hit a more-than-two-year high Monday on ideas the U.S.-China relations will improve under Biden.

The U.S. dollar index is near steady early today after hitting a nine-week low overnight. The other important outside market sees crude oil prices sharply higher and trading around $40.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note is currently fetching 0.8%.

U.S. economic data due for release Monday is light and includes the employment trends index.

–Jim

U.S. STOCK INDEXES

December S&P 500 e-mini futures: Prices are sharply higher and hit a new contract high. Bulls have the solid overall near-term technical advantage and gained more power today. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bullish early today. Today, shorter-term technical resistance comes in at today’s contract high of 3,651.25 and then at 3,675.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at 3,541.00 and then at the overnight low of 3,515.75. Wyckoff’s Intra-day Market Rating: 8.0

December Nasdaq index futures: Prices are sharply higher and hit a nine-week high in early U.S> trading. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above 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 the September high of 12,444.75 and then at 12,500.00. On the downside, shorter-term support is seen at the overnight low of 12,122.00 and then at 11,868.25. Wyckoff’s Intra-Day Market Rating: 6.5.

U.S. TREASURY BONDS AND NOTES FUTURES

December U.S. T-Bonds: Prices are sharply lower in early U.S. trading. Bears have regained the near-term technical advantage. 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) bearish early today. Shorter-term technical resistance is seen at 172 even and then at 173 even. Shorter-term support lies at the November low of 170 7/32 and then at 170 even. Wyckoff’s Intra-Day Market Rating: 3.0

December U.S. T-Notes: Prices are sharply down in early U.S. trading. Bears have regained technical control. 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 bearish early today. Shorter-term resistance lies at 138.00.0 and then at 138.16.0. Shorter-term technical support lies at the November low of 137.20.5 and then at 137.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 3.5

EURO CURRENCY

The December Euro currency futures are higher and hit a seven-week high in early U.S. trading. The shorter-term moving averages for the Euro are neutral early today, as the 4-day is above 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 the overnight high of 1.1909 and then at 1.1950. Shorter-term support is seen at the overnight low of 1.1868 and then at 1.1800. Wyckoff’s Intra Day Market Rating: 6.0

NYMEX CRUDE OIL

December Nymex crude oil prices are sharply higher and hit a three-week high in early U.S. trading. 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 the overnight high of $40.82 and then at $41.00. Look for sell stops just below technical support at $39.00 and then at $38.00. Wyckoff’s Intra-Day Market Rating: 7.0

GRAINS

US grain futures are higher in early U.S. pre-market trading, on the Covid-19 vaccine news. Much better risk appetite in the marketplace is fueling upside action in the grains today. The grain market bulls have the solid overall near-term technical advantage amid price uptrends in place in all three markets.

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