Monday, January 13–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mixed to firmer overnight. U.S. stock indexes are pointed toward modestly higher openings when the New York day session begins. Trader and investor risk appetite is more robust to start the trading week, as the U.S. stock indexes hover close to last week’s record highs.
The U.S.-Iran conflicted has, at least for the time being, died down and the U.S. and China are this week set to sign a partial trade deal, which is likely to stimulate global economic growth in 2020.
The marketplace is keeping an eye on major protesting in Iran following the admission from the Iranian government that its military mistakenly shot down a passenger airliner last week.
The key outside markets today see crude oil prices near steady and trading around $59.00 a barrel. The U.S. dollar index is modestly up early today.
U.S. economic data due for release Monday is light and includes the employment trends index and the monthly Treasury budget statement.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are firmer and very near last Friday’s contract and record high in early U.S. trading. Bulls have the solid near-term technical advantage and there are no early close to suggest a market top is close at hand. 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 bullish early today. Today, shorter-term technical resistance comes in at the contract high of 3,287.00 and then at 3,300.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at the overnight low of 3,265.50 and then at 3,250.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.5
March Nasdaq index futures: Prices are higher and near Friday’s contract and record high in early U.S. trading. Bulls have the solid near-term technical advantage to suggest more upside. 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 bullish early today. Shorter-term technical resistance is seen at the contract high of 9,055.50 and then at 9,100.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 8,979.00 and then at 8,950.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are weaker 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 neutral to bearish early today. Shorter-term technical resistance is seen at the overnight high of 157 23/32 and then at 158 even. Buy stops likely reside just above those levels. Shorter-term support lies at Friday’s low of 156 20/32 and then at last week’s low of 155 29/32. 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. 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 bearish early today. Shorter-term resistance lies at the overnight high of 129.03.5 and then at 129.08.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at last week’s low of 128.17.5 and then at 128.10.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The March U.S. dollar index is modestly higher in early U.S. trading. Bulls and bears are on a level overall near-term technical playing field. The shorter-term moving averages for the dollar index 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 dollar index are bullish early today. The dollar index finds shorter-term technical resistance at last week’s high of 97.300 and then at 97.405. Shorter-term support is seen at 96.955 and then at 96.750. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
February Nymex crude oil prices are slightly down and hit a four-week low in early U.S. trading. Recent price action suggests a near-term market top is in place. The shorter-term moving averages are bearish early today as the 4-day is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are bearish early today. Look for buy stops to reside just above technical resistance at $60.00 and then at $60.31. Look for sell stops just below technical support at the overnight low of $58.59 and then at $58.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
US grain futures were steady to lower in early U.S. pre-market trading. Corn is near steady, while soybeans and wheat are both around 4 to 5 cents down. The main event for the grain markets this week will be the U.S. and China signing their partial trade agreement on Wednesday in Washington, D.C. Grain futures prices have been supported by this matter in recent weeks, but it appears the signed trade deal has now been factored into grains’ price structures. Last Friday’s USDA supply and demand report was deemed neutral to a bit bearish for corn and soybeans and friendly for wheat. USDA raised U.S. corn and soybean production despite the adverse weather and planting and harvest delays during the growing season. USDA also said U.S. winter wheat plantings fell to 30.8 million acres, which is the lowest in over 100 years. Last Friday’s CFTC commitments of traders report showed funds net short 80,887 corn futures contracts, net long 1,159 soybean futures contracts, and net long 27,687 wheat contracts.
Limiting buying interest to start the trading week were disappointing weekly U.S. exports sales data for corn, soybeans and wheat, issued last Friday. A big drop in crude oil prices recently and a rebound in the U.S. dollar index are negative “outside market” factors for the grain futures markets early this week.
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