Friday, February 1–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
European and Asian stock markets were mixed overnight. U.S. stock indexes are also pointed toward mixed openings when the New York day session begins.
The big economic data point Friday’s is the U.S. jobs report for January from the Labor Department. The key non-farm payrolls number is forecast to come in at up 170,000 in the month. Wednesday’s U.S. ADP national employment report came in at up 213,000 in January. That was well above the average trade guess of up 183,000 and hints that the Friday non-farm jobs number could come in stronger than expected. A strong jobs reading today could work to counter the bullish effect many markets experienced following Wednesday’s dovish FOMC statement.
In overnight developments, China got some more downbeat economic news when its unofficial manufacturing purchasing managers index (PMI) came in below expectations. The Chinese manufacturing PMI fell to 48.3 last month. A reading below 50.0 suggests contraction in the sector.
Inflation in the Euro zone remains tame. The European Union Statistics agency reported today the January inflation rate at 1.4%, year-on-year, which is the lowest number in 10 months.
U.S. and China high-level trade talks concluded Thursday, with President Trump late in the day saying they were constructive and China will buy more U.S. products.
The outside markets today see the U.S. dollar index trading slightly lower. Meantime, Nymex crude oil prices are near steady and trading just below $54.00 a barrel.
Other U.S. economic reports due for release Friday includes the U.S. manufacturing PMI, monthly wholesale trade, the University of Michigan consumer sentiment survey, construction spending, the global manufacturing PMI, and domestic auto industry sales.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are slightly down in early U.S. trading, on a corrective pullback after hitting a six-week high on Thursday. Prices are in an uptrend on the daily bar chart. 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 to bearish early today. Today, shorter-term technical resistance comes in at Thursday’s high of 2,713.00 and then at 2,725.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Thursday’s low of 2,675.75 and then at 2,650.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.0
March Nasdaq index December futures: Prices are lower on a corrective pullback after hitting a six-week high on Thursday. Prices are still 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 with the 9-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 6,911.25 and then at Thursday’s high of 6,943.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 6,839.25 and then at 6,800.00. 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 higher in early U.S. trading today. Bulls 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 bullish early today. Shorter-term technical resistance is seen at this week’s high of 147 1/32 and then at 147 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 146 18/32 and then at 146 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
March U.S. T-Notes: Prices are steady in early U.S. trading. Bulls have the firm overall chart advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at this week’s high of 122.19.0 and then at 122.24.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 122.11.0 and then at 122.06.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
U.S. DOLLAR INDEX
The March U.S. dollar index is slightly lower in early U.S. trading. Bulls are fading. 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 bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 95.390 and then at this week’s high of 95.595. Shorter-term support is this week’s low of 94.875 and then at the January low of 94.635. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
March Nymex crude oil prices are near steady in early U.S. trading after hitting a seven-week high on Thursday. 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 bearish early today. Look for buy stops to reside just above technical resistance at $54.00 and then at $55.00. Look for sell stops just below technical support at $53.00 and then at $52.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
Grain futures were higher overnight on the late news Thursday that China says it will buy more U.S. ag products. Corn and wheat bears still have the near-term technical advantage, while the soybean market is in a neutral near-term technical posture.
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