Thursday, January 17–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
European and Asian stock markets were mostly lower overnight. Traders and investors are now lamenting reports out this week that the U.S. and China trade talks may not be going as well as many thought just last week. Adding to the murkiness is reports that U.S. federal prosecutors will file criminal charges of theft of intellectual property against the big Chinese technology firm Huawei. The lingering government shutdown may also be negatively impacting the U.S. equities. The added uncertainty of limited, fresh U.S. economic data is an underlying negative for many markets and maybe also for some big companies.
U.K. Prime Minister Theresa May survived a no-confidence vote from Parliament late Wednesday, but the markets were little impacted on the protracted Brexit drama playing out.
In other overnight news, the Euro Zone’s consumer price index for December came out at unchanged from November and up 1.6%, year-on-year, which was in line with market expectations. This is yet another very tame inflation report coming from a major world economy. This report lends credibility to the recent shift in the thought-process of many market watchers—to more accommodative monetary policies coming from the world’s major central banks in the coming months.
The important outside markets today see the U.S. dollar index slightly higher. Meantime, Nymex crude oil prices are weaker and trading just below $52.00 a barrel.
U.S. economic data due for release Thursday includes the weekly jobless claims report and the Philadelphia Fed business survey. Once again, the federal government’s partial closure is cancelling many economic reports, including some scheduled for today.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are weaker in early U.S. trading, on a corrective pullback after hitting a four-week high on Wednesday. The shorter-term moving averages (4-, 9- and 18-day) are still 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 2,626.25 and then at 2,650.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 2,580.00 and then at this week’s low of 2,567.25. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
March Nasdaq index December futures: Prices are modestly lower in early U.S. trading, on profit taking after hitting a four-week high Wednesday. Shorter-term moving averages (4- 9-and 18-day) are still bullish early today. The 4-day moving average is above the 9-day and 18-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 the overnight high of 6,675.50 and then at this week’s high of 6,737.25. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 6,600.00 and then at this week’s low of 6,521.50. 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 firmer in early U.S. trading today. Bulls have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at the overnight high of 145 24/32 and then at 146 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 145 7/32 and then at 145 even. 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 overall chart 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 even with the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term resistance lies at the overnight high of 121.31.0 and then at 122.06.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at this week’s low of 121.19.5 and then at the January low of 121.16.0. 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 slightly higher in early U.S. trading. Bulls are having a good week. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is above the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators for the dollar index are neutral to bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 95.900 and then at 96.000. Shorter-term support is seen at Wednesday’s low of 95.480 and then at this week’s low of 95.070. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
February Nymex crude oil prices are weaker in early U.S. trading. The shorter-term moving averages are neutral early today as the 4-day is even with the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral to bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $52.36 and then at $53.00. Look for sell stops just below technical support at $51.00 and then at $50.00. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
Grain futures were higher again overnight, on short covering and corrective rebounds from recent selling pressure. Grain markets continue to fluctuate on news reports on the U.S.-China trade talks progress, or lack thereof. The U.S. government closure has created a dearth of fresh fundamental news for the grain markets. The uncertainty over no fresh government data remains bearish. The grain market bears have the overall near-term technical advantage.
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