Wednesday, February 10–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly higher overnight. China’s Shanghai stock index hit a 5.5-year high, on the last day of trading before the Chinese Lunar New Year holiday begins. U.S. stock indexes are pointed toward higher openings and record highs when the New York day session begins.
Upbeat trader and investor attitudes this week continue to drive share prices up. New Covid-19 cases and hospitalizations in the U.S. are declining, vaccinations are ramping up, and the U.S. Congress is likely to pass a big financial stimulus package for Americans by the time spring arrives. Corporate earnings reports have also been generally positive lately.
The U.S. data point of the day at mid-week is the consumer price index for January, expected to come in at up 0.3% from December and up 1.5%, year-on-year. Despite the “reflation trade” being in favor in the marketplace at present, data from most major economies does not show inflation numbers even close to being problematic.
Another U.S. marketplace feature Wednesday is Fed Chairman Jerome Powell’s speech to the Economic Club of New York at 2:00 p.m. eastern time.
The key “outside markets” today see the U.S. dollar index trading slightly lower. Meantime, Nymex crude oil futures prices are higher and hit another 13-month high overnight, and are trading around $58.70 a barrel. The benchmark 10-year U.S. Treasury note yield is currently fetching 1.16%.
U.S. economic data due for release Wednesday includes weekly MBA mortgage applications survey, the consumer price index, real earnings, the monthly Treasury budget statement and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are higher in early U.S. trading and hit another record high overnight. Bulls have the solid overall 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 and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bullish early today. Today, shorter-term technical resistance comes in at the overnight record high of 3,924.00 and then at 3,950.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at this week’s low of 3,885.50 and then at 3,860.00. Wyckoff’s Intra-day Market Rating: 6.5
March Nasdaq index futures: Prices are higher in early U.S. trading and hit another record high overnight. 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 and 18-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 contract high of 13,769.25 and then at 13,900.00. On the downside, shorter-term support is seen at this week’s low of 13,596.00 and then at 13,500.00. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are lower in early U.S. trading. Bears have the solid 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 to bearish early today. Shorter-term technical resistance is seen at this week’s high of 167 19/32 and then at 168 even. Shorter-term support lies at 166 16/32 and then at the contract low of 166 3/32. Wyckoff’s Intra-Day Market Rating: 4.0
March U.S. T-Notes: Prices are lower in early U.S. trading. 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 bearish early today. Shorter-term resistance lies at this week’s high of 136.26.0 and then at 136.29.5. Shorter-term technical support lies at this week’s low of 136.14.5 and then at 136.10.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
EURO CURRENCY
The March Euro currency futures are slightly higher and hit a two-week high in early U.S. trading, on more short covering. The shorter-term moving averages for the Euro 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 Euro are neutral to bullish early today. The Euro currency finds shorter-term technical resistance at the overnight high of 1.2151 and then at 1.2168. Shorter-term support is seen at 1.2100 and then at Tuesday’s low of 1.2055. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
March Nymex crude oil prices are firmer and hit another 13-month high overnight. Bulls have the solid overall near-term technical advantage. 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 $59.00 and then at $60.00. Look for sell stops just below technical support at this week’s low of $57.00 and then at $56.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
U.S. grain futures are lower in early U.S. pre-market trading. Profit taking is the feature at mid-week. The bulls still have the firm overall near-term technical advantage. Overall supply and demand fundamentals are still bullish for the grains. The key question now for traders is, has all the bullish news been factored into futures prices. Price action the rest of this week will go a long way in helping to answer that question—especially how prices close out the trading week on Friday.
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