Friday, January 29–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly weaker overnight. U.S. stock indexes are pointed toward modestly lower openings when the New York day session begins. It’s been a very interesting week on Wall Street. Veteran market watchers have never seen anything like the GameStock/Reddit ordeal that is playing out in the U.S. stock market, which has pitted the little guys against the big hedge funds, and the little guys are coming out on top—so far. “The retail traders, they are new actors in the market that people cannot ignore,” said one broker. There appear to be much bigger implications at play than just the GameStock shares rising sharply. Other stocks that are favorites of short-sellers have rallied this week, such as airline stocks. Yet other stocks have seen selling pressure possibly related to the GameStock matter, due to risk-off trading moves and a “sell what you can” mentality” for some worried hedge fund managers. Many traders were infuriated Thursday when some brokers changed their rules on trading Gamestock and other shares. There’s an old adage on Wall Street and in the commodity markets that says major trending price moves come to an end when the fundamentals markedly change, or the rules of the trading game are changed. The record-breaking bull run in the U.S. stock indexes has been both powerful and resilient. Many chart signals that appeared to be bearish and signal market tops have been repeatedly brushed aside by the confident bulls. So much money in the financial system at present and recent history shows the best game in town for that money is the stock market. There’s another old saying: Markets are the most very bullish at the very top in prices. This 35-year market watcher believes the seemingly unstoppable bull market run in equities now has its days numbered, and that hard assets like raw commodities and real estate will come into better favor for traders and investors in the coming months. What do you think? Send me an email at jim@jimwyckoff.com, as I always enjoy hearing from my valued readers.
The key “outside markets” today see the U.S. dollar index modestly higher. Meantime, Nymex crude oil futures prices are higher and trading around $52.50 a barrel. The yield on the benchmark 10-year U.S. Treasury note stands at 1.07%.
U.S. economic data due for release Friday includes personal income and outlays, the employment cost index, the Chicago ISM business survey, pending home sales, and the University of Michigan consumer sentiment survey.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are weaker in early U.S. trading, on profit taking after hitting a record high earlier this week. Bulls still have the firm overall near-term technical advantage. However, a near-term price uptrend on the daily bar chart has at least temporarily been negated. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-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 3,777.25 and then at 3,800.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at the overnight low of 3,721.50 and then at this week’s low of 3,703.50. Wyckoff’s Intra-day Market Rating: 4.5
March Nasdaq index futures: Prices are lower in early U.S. trading on profit taking after hitting a record high Tuesday. Bulls still have the firm 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 the overnight high of 13,188.00 and then at 13,300.00. On the downside, shorter-term support is seen at 13,000.00 and then at this week’s low of 12,884.75. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are lower in early U.S. trading. Bears have the firm overall near-term technical advantage and have regained some momentum late this week. 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 bearish early today. Shorter-term technical resistance is seen at the overnight high of 169 29/32 and then at 170 16/32. Shorter-term support lies at the overnight low of 168 28/32 and then at 168 16/32. 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 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 bearish early today. Shorter-term resistance lies at the overnight high of 137.10.5 and then at 137.16.0. Shorter-term technical support lies at the overnight low of 137.02.0 and then at 136.28.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
EURO CURRENCY
The March Euro currency futures are slightly up 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. The 9-day is below the 18-day moving average. Short-term oscillators for the Euro are bullish early today. The Euro currency finds shorter-term technical resistance at 1.2182 and then at last week’s high of 1.2203. Shorter-term support is seen at the January low of 1.2067 and then at 1.2000. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
March Nymex crude oil prices are slightly higher in early U.S. trading. Bulls still have the firm overall near-term technical advantage but a price uptrend in place on the daily chart has turned sideways. The shorter-term moving averages are neutral early today as the 4-day is below the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral early today. Look for buy stops to reside just above technical resistance at this week’s high of $53.58 and then at the January high of $53.94. Look for sell stops just below technical support at today’s low of $51.93 and then at last week’s low of $51.44. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
U.S. grain futures are higher in early U.S. pre-market trading. The bulls this week have regained upside momentum and power to suggest more price gains in the near term. This week’s lows in the grains are now the latest “reaction lows” in near-term price uptrends and are very important technical support levels that the bulls must defend.
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