Wednesday, December 4–Jim Wyckoff’s Morning Markets Report
Asian equities were weaker and European stock markets were mostly firmer overnight. The U.S. stock indexes are pointed toward higher openings when the New York day session begins.
Amid a lack of other major news developments trader and investor focus remains on the rhetoric coming from the U.S. and China regarding their trade negotiations. For whatever reason, the marketplace at mid-week is more upbeat than Tuesday, on the chances for a trade agreement soon between the world’s two largest economies. It’s hard to imagine the two sides reaching a substantive trade deal soon, given comments coming from both sides. And the U.S. House of Representatives passed a bill late Tuesday requiring U.S. punishment of Chinese officials involved in the repression of Uighur Muslims in the country. China quickly vowed retaliation.
In overnight news, the Eurozone composite purchasing managers’ index (PMI) for November came in at 51.9 versus the consensus forecast for a reading of 51.5. A number above 50.0 suggests expansion.
The key “outside markets” today see the U.S. dollar index near steady. Nymex crude oil prices are higher and trading around $56.80 a barrel.
The U.S. economic data point of the week is Friday’s employment situation report from the Labor Department. The key non-farm payroll number is expected to come in at up around 185,000 jobs.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the ADP national employment report, the U.S. services PMI, the ISM non-manufacturing report on business, the global services PMI, and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are firmer in early U.S. trading. While bulls still have the overall near-term technical advantage, Monday’s price action produced a significantly bearish “key reversal” down on the daily bar chart, which is one technical clue that a near-term market top is in place. 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 early today. Today, shorter-term technical resistance comes in at Tuesday’s high of 3,123.50 and then at 3,145.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 3,083.50 and then at this week’s low of 3,071.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
March Nasdaq index futures: Prices are higher in early U.S. trading. Bulls still have the solid 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 neutral early today. Shorter-term technical resistance is seen at Tuesday’s high of 8,358.00 and then at 8,400.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 8,300.00 and then at the overnight low of 8,242.50. Sell stops are likely located 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 weaker in early U.S. trading, on a corrective pullback from big gains scored Tuesday. Bulls have the slight overall near-term technical advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at 160 even and then at this week’s high of 160 13/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 159 8/32 and then at 159 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
March U.S. T-Notes: Prices are lower in early U.S. trading, on a pullback from solid gains Tuesday. Bulls now have the slight overall 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 above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term support lies at the overnight low of 129.21.0 and then at 129.16.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at 130.00.0 and then at this week’s high of 130.04.5. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The March U.S. dollar index is slightly up in early U.S. trading. Bulls still have the overall near-term technical advantage but are fading. The shorter-term moving averages for the dollar index 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 for the dollar index are neutral to bearish early today. The dollar index finds shorter-term technical resistance at Tuesday’s high of 97.440 and then at this week’s high of 97.865. Shorter-term support is seen at this week’s low of 97.160 and then at 97.000. 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 slight near-term technical advantage. 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 $57.50 and then at $58.00. Look for sell stops just below technical support at the overnight low of $56.28 and then at $56.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
US grain futures prices were higher overnight. Corn was up 1 1/2 cents, soybeans around 3 cents up and wheat 4 to 5 cents higher. Amid a lack of other major news developments, grain trader focus remains on the rhetoric coming from the U.S. and China regarding their trade negotiations. For whatever reason, some traders at mid-week are more upbeat than Tuesday, on the chances for a trade agreement soon between the world’s two largest economies. It’s hard to imagine the two sides reaching a substantive trade deal soon, given comments coming from both sides. And the U.S. House of Representatives passed a bill late Tuesday requiring U.S. punishment of Chinese officials involved in the repression of Uighur Muslims in the country. China quickly vowed retaliation. Traders are awaiting USDA’s weekly export sales report on Thursday morning, especially looking for stepped-up purchases from China.
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