Thursday, February 21–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Asian and European stock markets were mixed overnight. U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins. The U.S. stock indexes remain in near-term price uptrends and they are near their recent 2.5-month highs.
There are new reports out today that the ongoing U.S.-China trade talks, taking place this week in Washington, D.C., are going well. That’s allowing a bit more trader and investor risk appetite to be present in the marketplace. Reuters reported late Wednesday that U.S. and China officials are outlining a deal to end the trade war. The report said agreements in principle are being drawn up in six major areas. Reports also said U.S. President Trump and Chinese President Jinping may hold a summit in March to finalize the deal.
The marketplace has mostly digested the Federal Reserve’s Open Market Committee (FOMC) meeting minutes, released Wednesday afternoon. The minutes expressed some more concern regarding risks to U.S. economic growth, which the Fed says has moderated in recent months. The Fed saw few risks in leaving U.S. monetary policy steady, at present. The minutes also said the Fed will exercise “patience” on future interest rate hikes. Markets showed no significant price reactions to the report.
In overnight news, the European Union received some more downbeat economic news when the February manufacturing purchasing managers’ index (PMI) came in at 49.2 versus expectations for a reading of 50.5. A number below 50.0 suggests contraction in the sector.
The key outside markets today see the U.S. dollar index slightly higher after seeing a corrective pullback this week after hitting a two-month high last Friday. Nymex crude oil prices are firmer and hit another three-month overnight, and are trading around $57.50 a barrel.
U.S. economic reports due for release Thursday include the weekly jobless claims report, durable goods orders, the Philadelphia Fed business survey, the U.S. flash services and manufacturing purchasing managers’ indexes, leading economic indicators, existing home sales and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are slightly higher in early U.S. trading and hit another 2.5-month high overnight. 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 early today. Today, shorter-term technical resistance comes in at 2,800.00 and then at 2,820.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 2,766.00 and then at 2,750.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
March Nasdaq index December futures: Prices are slightly higher and hit a 2.5-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 the overnight high of 7,113.75 and then at 7,169.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at this week’s low of 7,032.25 and then at 7,000.00. 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 lower in early U.S. trading today, on profit taking from recent gains. Bulls still have the firm overall near-term technical advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 146 25/32 and this week’s high of 147 5/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 146 7/32 and then at 146 even. 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, on profit taking. Bulls still have the firm overall chart advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term resistance lies at the overnight high of 122.08.0 and then at this week’s high of 122.12.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at this week’s low of 121.30.0 and then at 121.25.0. 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 slightly up in early U.S. trading. Bulls still have the firm overall near-term technical advantage. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is below the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at the overnight high of 96.540 and then at this week’s high of 96.930. Shorter-term support is at the overnight low of 96.250 and then at 96.000. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
April Nymex crude oil prices are firmer and hit another three-month high overnight. The shorter-term moving averages 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 (RSI and slow stochastics) are bullish early today. Look for buy stops to reside just above technical resistance at $58.00 and then at $59.00. Look for sell stops just below technical support at this week’s low of $55.66 and then at $55.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
Grain futures were higher overnight on the U.S.-China trade deal hopes. Today and Friday see the USDA Ag Outlook Conference. Friday USDA will release some more backed-up export sales reports. Today and Friday could be busier trading days for the grain futures.
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