Wednesday, February 20–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Asian and European stock markets were mostly firmer overnight. U.S. stock indexes are pointed toward slightly lower openings when the New York day session begins. The U.S. stock indexes remain in near-term price uptrends and they are near their recent 2.5-month highs.
At mid-week there appears to be slightly more optimism in the ongoing U.S.-China trade talks, taking place this week in Washington, D.C. President Trump on Tuesday said there could be flexibility on the early-March deadline for more U.S. trade tariffs to be imposed on China. Ideas are still widely mixed on whether any final deal will be reached any time soon. China’s state media Wednesday said there would be catastrophic economic consequences if the U.S. slapped new sanctions on China.
The U.S. economic data point of the day is the Federal Reserve’s FOMC minutes that are due out in the afternoon. The minutes will be closely scrutinized by traders and investors. The recent change in Fed policy stance to one of more accommodative monetary conditions has been a significantly bullish underlying factor for several commodity markets, including the precious metals. It’s also been bullish for world stock and bond markets.
The U.K. Brexit saga continues to play out, as four MP’s that were aligned with Prime Minister Theresa May dropped their affiliation with her. There is still no deal in place as the late-March deadline approaches for the U.K. to leave the European Union.
The key outside markets today see the U.S. dollar index slightly higher after seeing a corrective pullback Tuesday, after hitting a two-month high last Friday. Nymex crude oil prices are slightly lower after hitting a three-month high on Tuesday. Prices are in a good uptrend from the Dec. 24 low of just above $42.50 a barrel.
Other U.S. economic reports due for release Wednesday include the MBA mortgage applications survey, and the weekly Johnson Redbook and Goldman Sachs retail sales reports.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are slightly weaker in early U.S. trading after hitting a 2.5-month high Tuesday. Prices are in an uptrend on the daily bar chart and the bulls have the near-term technical advantage. The shorter-term moving averages (4-, 9- and 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Today, shorter-term technical resistance comes in at Tuesday’s high of 2,787.50 and then at 2,800.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Tuesday’s low of 2,766.00 and then at 2,750.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
March Nasdaq index December futures: Prices are slightly weaker but near last week’s 2.5-month high in early U.S. trading. Prices are in an uptrend on the daily bar chart. Shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at last week’s high of 7,095.25 and then at 7,169.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 7,000.00 and then at last Friday’s low of 6,975.25. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are higher in early U.S. trading today. Bulls have the firm overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at the overnight high of 147 5/32 and then at 147 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 146 26/32 and then at Tuesday’s low of 146 12/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
March U.S. T-Notes: Prices are firmer in early U.S. trading. Bulls have the firm overall chart advantage. Shorter-term moving averages (4- 9- 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term resistance lies at 122.15.0 and then at the February high of 122.19.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 122.06.0 and then at Tuesday’s low of 121.30.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The March U.S. dollar index is firmer in early U.S. trading. Bulls still have the firm overall near-term technical advantage. 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 early today. The dollar index finds shorter-term technical resistance at Tuesday’s high of 96.930 and then at last week’s high of 97.230. Shorter-term support is at Tuesday’s low of 96.250 and then at 96.000. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
March Nymex crude oil prices are weaker but not far below Tuesday’s three-month high. The shorter-term moving averages are neutral early today as the 4-day is above the 9-day. The 9-day is even with 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 Tuesday’s high of $56.33 and then at $57.00. Look for sell stops just below technical support at Tuesday’s low of $55.29 and then at $55.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
Grain futures were again mixed overnight. The recent surge in the U.S. dollar index is holding back buying interest in the grains. Thursday and Friday see the USDA Ag Outlook Conference. Friday USDA will release some more backed-up export sales reports. Thursday and Friday could be busier trading days for the grain futures.
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