Tuesday, November 17–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed overnight, while U.S. stock indexes are pointed toward mixed to lower openings when the New York day session begins. The Dow and S&P 500 stock indexes had record-high closes Monday. However, more and more U.S. states are imposing restrictions on businesses and public gatherings, as Covid-19 rages and many hospital beds are full or close to it. This atmosphere in the U.S. and in Europe cannot help but dent trader and investor risk appetite heading into holidays that are likely to see families separated. Despite the very encouraging news on the vaccine front seen recently, there are dark days that lie ahead for the U.S., Europe and other countries hard hit by the pandemic.
It could also be that trader/investor sentiment has been somewhat dented by reports the Trump administration is planning to take a very hard line on China over the next two months, before Trump leaves office, including reportedly taking some steps that the incoming Biden administration would find hard to roll back. Just today, the U.S. Securities and Exchange Commission (SEC) came out with a plan to require Chinese companies traded on U.S. stock exchanges to have auditors overseen by the U.S. If the Chinese firms won’t comply they get shut out of U.S. stock exchanges.
It’s a big U.S. reports day, highlighted by retail sales for October that are forecast to be up 0.5% from September.
It’s worth mentioning that the “softs” futures markets (coffee, cocoa, sugar, orange juice and cotton) all had big upside days Monday, with most of those markets hitting multi-month highs. Part of those gains may be due to analysts at Citibank making a call that the U.S. dollar will decline by up to 20% in 2021. Most raw commodities for sale on the world market are priced in U.S. dollars. When the greenback declines, it makes those commodities cheaper to purchase in non-U.S. currency—possibly leading to more demand. Analysts at Citibank believe the Federal Reserve will maintain a very easy monetary policy even if inflation rises alongside the U.S. economy’s expected recovery, which in turn would prompt U.S. government bond and note yields to rise. Keep in mind these hotshot prognosticators like Citi and Goldman Sachs don’t have any better track records at calling major market moves than the other banks or brokers/analysts. The only difference may be that the big wheels front-loaded their trades and then made their calls public.
The U.S. dollar index is lower again early today. The other important outside market sees crude oil prices near steady and trading around $41.30 a barrel. The yield on the benchmark 10-year U.S. Treasury note futures is currently trading at 0.89%.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, retail sales, import and export prices, industrial production and capacity utilization, the NAHB housing index, manufacturing and trade inventories, and Treasury international capital data.
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are weaker in early U.S. trading. Bulls have the solid overall near-term technical advantage and prices are not far below the recent spike high. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Today, shorter-term technical resistance comes in at this week’s high of 3,637.00 and then at the November high of 3,668.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at this week’s low of 3,586.50 and then at 3,550.00. Wyckoff’s Intra-day Market Rating: 4.5
December Nasdaq index futures: Prices are firmer in early U.S. trading. Bulls have the solid overall near-term technical advantage. 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 overnight high of 12,096.25 and then at the October high of 12,249.00. On the downside, shorter-term support is seen at this week’s low of 11,851.75 and then at 11,775.00. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are higher in early U.S. trading, on short covering. Bears still have the solid 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 below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at this week’s high of 172 22/32 and then at 173 even. Shorter-term support lies at this week’s low of 171 9/32 even and then at 171 even. Wyckoff’s Intra-Day Market Rating: 5.5
December U.S. T-Notes: Prices are a bit higher in early U.S. trading. Bears have the firm 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 below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term resistance lies at the this week’s high of 138.08.0 and then at 138.16.0. Shorter-term technical support lies at this week’s low of 137.27.0 and then at 137.20.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
The March Euro currency futures are higher in early U.S. trading. The shorter-term moving averages for the Euro 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 for the Euro are bullish early today. The Euro currency finds shorter-term technical resistance at the overnight high of 1.1919 and then at the November high of 1.1954. Shorter-term support is seen at this week’s low of 1.1849 and then at 1.1800. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
December Nymex crude oil prices are near steady in early U.S. trading. Bulls have the near-term technical advantage. The shorter-term moving averages are bullish early today as the 4-day is above the 9-day and 18-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 $42.09 and then at the November high of $43.06. Look for sell stops just below technical support at $41.00 and then at this week’s low of $40.15. Wyckoff’s Intra-Day Market Rating: 5.0
US grain futures are mixed to firmer in early U.S. pre-market trading. Not much new. Corn and soybean futures last week hit contract highs amid continued strong export demand for U.S. grains. The grain market bulls have the solid overall near-term technical advantage amid price uptrends in place in all three markets. There are no strong, early technical clues that market tops are close at hand in 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.