Friday, February 14–Jim Wyckoff’s Morning Markets Report
Asian and European shares were narrowly mixed overnight. U.S. stock indexes are pointed toward modestly higher openings and new record highs when the New York day session begins. Traders are tentative on this last trading day of the week and as U.S. market participants head into a three-day weekend, with the President’s Day holiday on Monday.
Here is the latest on the coronavirus outbreak: About 65,000 people around the globe have been afflicted with the virus, with China’s total now above 60,000. China’s hardest-hit Hubei province saw cases rise by over 4,800 on Friday. Some global shipping rates have fallen to record lows amid the outbreak, as some ships are being turned away at ports. One report said the Capesize index, which tracks freight rates for the largest carriers of dry bulk commodities, fell into negative territory last week for the first time since its creation over 20 years ago.
The annual London Metals Exchange (LME) Week Asia 2020 seminar has been postponed and the LME Asia Dinner has been cancelled due to the outbreak.
China’s central bank said in a statement Friday the effects of the coronavirus outbreak will only be temporary. The bank encouraged foreign investors to set up businesses in China.
The U.S. government on Thursday charged the big Chinese telecommunications giant Huawei with racketeering. The ramifications of this on U.S.-China relations and/or the U.S.-China trade deal signed in January, if any, are not clear.
The U.S. Treasury sold its 30-year bonds at a record-low yield of 2.061% Thursday, beating the previous record low auction yield of 2.17% set last fall. The lowest yield the 30-year bond has ever reached in daily trading is 1.941%, set last summer.
In other overnight news, the Eurozone fourth-quarter GDP was reported up 0.1% from the third quarter and up 0.9%, year-on-year. Those numbers were very close to market expectations.
The key outside markets today see crude oil prices higher and trading around $52.00 a barrel. Meantime, the U.S. dollar index is slightly up in early U.S. trading and hit a multi-month high overnight.
U.S. economic data due for release Friday includes retail sales, import and export prices, industrial production and capacity utilization, manufacturing and trade inventories and the University of Michigan consumer sentiment survey.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are slightly up and hit another new record high in early U.S. trading. The bulls have the solid technical advantage. There are no early chart clues 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 and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at the overnight contract high of 3,388.50 and then at 3,400.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at Thursday’s low of 3,348.50 and then at 3,325.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
March Nasdaq index futures: Prices are modestly up and hit a contract and record high 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 early today. Shorter-term technical resistance is seen at the overnight contract high of 9,659.25 and then at 9,700.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 9,600.50 and then at 9,550.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are higher in early U.S. trading. Bulls have the overall near-term technical advantage amid recent choppy 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 neutral to bullish early today. Shorter-term technical resistance is seen at the overnight high of 162 15/32 and then at Thursday’s high of 162 26/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 161 26/32 and then at this week’s low of 161 15/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
March U.S. T-Notes: Prices are higher in early U.S. trading. Bulls have the overall near-term technical 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 above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at the overnight high of 130.31.5 and then at Thursday’s high of 131.05.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 130.23.5 and then at this week’s low of 130.19.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The March U.S. dollar index is slightly higher and hit a contract high in early U.S. trading. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages for the dollar index 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 dollar index are neutral to bullish early today. The dollar index finds shorter-term technical resistance at the contract high of 99.040 and then at 99.250. Shorter-term support is seen at Thursday’s low of 98.745 and then at this week’s low of 98.490. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
March Nymex crude oil prices are higher in early U.S. trading. A price downtrend on the daily bar chart is now in jeopardy. The shorter-term moving averages 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 (RSI and slow stochastics) are bullish early today. Look for buy stops to reside just above technical resistance at the overnight high of $52.30 and then at $53.00. Look for sell stops just below technical support at the overnight low of $51.32 and then at $51.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
US grain futures are steady to firmer in early US pre-market trading Friday. Corn is near steady, soybeans around 1 cent higher and wheat is 2 to 3 cents up. Grain traders are tentative on this last trading day of the week and as US market participants head into a three-day weekend, with the US President’s Day holiday on Monday. Here is the latest on the coronavirus outbreak: About 65,000 people around the globe have been afflicted with the virus, with China’s total now above 60,000. China’s hardest-hit Hubei province saw cases rise by over 4,800 on Friday. Some global shipping rates have fallen to record lows amid the outbreak, as some ships are being turned away at ports. One report said the Capesize index, which tracks freight rates for the largest carriers of dry bulk commodities, fell into negative territory last week for the first time since its creation over 20 years ago. That’s a negative for grain markets. China’s central bank said in a statement Friday the effects of the coronavirus outbreak will only be temporary. The bank encouraged foreign investors to set up businesses in China. The U.S. government on Thursday charged the big Chinese telecommunications giant Huawei with racketeering. The ramifications of this on U.S.-China relations and/or the U.S.-China trade deal signed in January, if any, are not clear. The wheat markets have faltered this week and technical damage has been inflicted to suggest the wheat markets have put in a least near-term tops. Soybean bulls have made a decent recovery this week but the charts are still overall bearish. Corn bears also have the near-term chart advantage amid sideways and choppy trading at lower levels. Another negative element for US grain markets is the strength of the US dollar on the foreign exchange markets. The US dollar index Friday hit a multi-month high.
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
Great content! Super high-quality! Keep it up! 🙂