Friday, March 1–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Asian and European stock markets were mostly up overnight. U.S. stock indexes are also pointed toward firmer openings when the New York day session begins. Despite some geopolitical speed bumps this week—U.S. President Trump walking out of the U.S.-North Korea nuclear talks and the India-Pakistan military strikes—traders and investors are mostly upbeat and in the mood to buy equities over hard assets. The keener risk appetite in the market place is partly due to notions the U.S. and China—the world’s two largest economies—are close to a deal that would end their trade war.
Adding to the positive tone in the world markets Friday is positive economic news coming out of the European Union. The Euro zone jobless number fell by 23,000 in January, with the overall unemployment rate unchanged from December, at 7.8%. Meantime, inflation rose slightly in the Euro zone in February, to 1.5% from 1.4% in January, year-on-year. The European Central Bank would like to see a Euro zone inflation rate of around 2.0%. However, the Euro zone manufacturing purchasing managers’ index fell slightly in February, it was reported today.
Fed Chairman Jerome Powell gave a speech in New York Thursday night, in which he reiterated the Fed’s monetary policy will remain on hold due to the modest increase in risks to continued U.S. economic expansion. Markets did not react significantly to Powell’s remarks, as he just concluded two days of testimony on economic policy to Congress.
The key outside markets today see the U.S. dollar index firmer. However, overall the greenback bulls have faded this week. Nymex crude oil prices are slightly up and trading around $57.50 a barrel.
U.S. economic reports due for release Friday include personal income and outlays, the U.S. manufacturing PMI, the global manufacturing PMI, the University of Michigan consumer sentiment survey, the ISM manufacturing report on business, and domestic auto industry sales.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are higher and near this week’s nearly three-month high, in early U.S. trading. Prices are in an uptrend on the daily bar chart and the bulls have the firm 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 bullish early today. Today, shorter-term technical resistance comes in at this week’s high of 2,819.50 and then at 2,825.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 2,780.50 and then at last week’s low of 2,768.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
June Nasdaq index December futures: Prices are higher and near this week’s three-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 bullish early today. Shorter-term technical resistance is seen at this week’s high of 7,195.00 and then at 7,250.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,128.00 and then at this week’s low of 7,079.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are lower and hit a four-week low in early U.S. trading today. Bulls have faded badly late this week, including seeing a bearish monthly low close on Thursday. Bulls still have the slight 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. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 144 18/32 and then at 145 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 144 9/32 and then at 144 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
June U.S. T-Notes: Prices are lower and hit a five-week low in early U.S. trading. Bulls have faded badly this week, including seeing a bearish monthly low close on Thursday. 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 bearish early today. Shorter-term resistance lies at the overnight high of 122.00.0 and then at 122.05.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 121.24.0 and then at 121.20.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The June U.S. dollar index is modestly up in early U.S. trading. Bulls still have the overall near-term technical advantage, but have faded recently. The shorter-term moving averages for the dollar index 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 dollar index are neutral to bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 95.790 and then at 96.000. Shorter-term support is at this week’s low of 95.240 and then at 95.000. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
April Nymex crude oil prices are firmer in early U.S. trading and hit a 3.5-month high overnight. Bulls made a good recovery this week following solid losses on Monday. 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 early today. Look for buy stops to reside just above technical resistance at the overnight of $57.88 and then at $58.00. Look for sell stops just below technical support at $57.00 and then at $56.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
Grain futures were narrowly mixed overnight. Bulls have been disappointed by the low level of Chinese purchases of U.S. ag products, after that country pledge to purchase more U.S. goods in the recent trade talks with the U.S. Also, general worldwide demand for U.S. grains remains anemic, which is keeping the bears in overall control of the grain markets.
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