Wednesday, February 3–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly firmer overnight. U.S. stock indexes are pointed toward modestly higher openings when the New York day session begins and have made strong recoveries after the recent declines. Stock index prices are back near their recent record highs. Risk appetites are more upbeat this week amid generally good corporate earnings reports and ideas Americans will soon get another stimulus package from the government, along with a boost in federal spending in areas such as infrastructure.
In overnight news, the Euro zone January consumer price index rose 0.9% from December, which was higher than the 0.5% rise that was expected. The December CPI was down 0.3%. While the January number was hotter than expected it is nowhere near problematic inflation. Meantime, the Euro zone services purchasing managers index (PMI) came in at 45.4 in January versus a forecast of 45.0. A reading below 50.0 suggests contraction in the sector.
The key “outside markets” today see the U.S. dollar index near steady after hitting a seven-week high Tuesday. Meantime, Nymex crude oil futures prices are higher and near Tuesday’s 12-month high, trading around $55.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note stands at 1.119%.
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 global services PMI, the ISM report on business services, and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are modestly higher in early U.S. trading and have made a strong rebound after hitting a four-week low Monday. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages (4-, 9- and 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-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 overnight high of 3,843.50 and then at the contract high of 3,862.25. Buy stops likely reside just above those levels. Downside support for active traders is seen at 3,800.00 and then at Tuesday’s low of 3,760.00. Wyckoff’s Intra-day Market Rating: 6.0
March Nasdaq index futures: Prices are higher in early U.S. trading and have made a strong rebound after hitting a two-week low Monday. 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 below the 9-day and 18-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at the contract high of 13,599.75 and then at 13,700.00. On the downside, shorter-term support is seen at 13,400.00 and then at 13,300.00. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are lower and hit a three-week low in early U.S. trading. Bears have the solid overall near-term technical advantage and have gained downside momentum this week. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 168 20/32 and then at Tuesday’s high of 169 1/32. Shorter-term support lies at 168 even and then at the January low of 167 11/32. Wyckoff’s Intra-Day Market Rating: 4.0
March U.S. T-Notes: Prices are lower and hit a two-week low in early U.S. trading. 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 bearish early today. Shorter-term resistance lies at the overnight high of 137.00.5 and then at this week’s high of 137.09.5. Shorter-term technical support lies at 136.20.0 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 slightly lower and hit a two-month low in early U.S. trading. 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 bearish early today. The Euro currency finds shorter-term technical resistance at the overnight high of 1.2060 and then at 1.2100. Shorter-term support is seen at 1.2000 and then at 1.1950. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
March Nymex crude oil prices are modestly higher and near Tuesday’s 12-month high in early U.S. trading. Bulls have the solid overall near-term technical advantage and prices have seen a bullish upside “breakout” from the recent trading range at higher levels. 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 bullish early today. Look for buy stops to reside just above technical resistance at Tuesday’s high of $55.26 and then at $56.00. Look for sell stops just below technical support at $54.00 and then at Tuesday’s low of $53.45. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
U.S. grain futures are lower in early U.S. pre-market trading, on more routine profit taking and a pause from recent gains. The bulls still have the overall near-term technical advantage. Supply and demand fundamentals are still bullish for the grains.
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