Tuesday, January 5–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly firmer overnight. U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins. Monday’s price action in the U.S. stock indexes hints the bulls are now exhausted. The S&P 500 and Nasdaq pushed to new record highs early on but by the end of the day finished near their daily lows, scoring bearish “outside days” down on the daily bar charts. And if there is follow-through selling pressure Tuesday, then more significantly bearish “key reversals” down would be confirmed in both markets, which would be one technical clue that market tops are in place. Keep in mind these potentially bearish chart patterns have occurred in the very recent past, only to see the stock indexes push to new highs.
Focus in the U.S. Tuesday is on the two U.S. Senate seats in Georgia that are being voted upon today, with big implications. If both seats go to the Democrats, they would control the Senate. Outcomes of the elections may not be known until later this week. The stock market fares better in gridlock, which would be more likely if the Democrats did not control the Senate. The commodity markets would likely get a lift if the Senate is controlled by the Democrats, as government spending would likely increase.
The U.S. dollar index is lower today and not far above Monday’s 2.5-year low in early U.S. trading. The other important outside market sees February Nymex crude oil futures prices higher and trading around $48.50 a barrel. Oil prices hit a nine-month high on Monday. The yield on the benchmark 10-year U.S. Treasury note futures is currently around 0.93%.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the ISM New York report on business, the ISM report on business manufacturing and domestic auto industry sales.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are slightly higher in early U.S. trading. Bulls still have the overall near-term technical advantage but a bearish “key reversal” down on the daily bar chart would be confirmed if prices close lower today. A near-term price uptrend is still in place 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. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at the overnight high of 3,705.00 and then at 3,730.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at Monday’s low of 3,652.50 and then at 3,625.00. Wyckoff’s Intra-day Market Rating: 5.0
March Nasdaq index futures: Prices are near steady in early U.S. trading. Bulls still have the overall near-term technical advantage but a bearish “key reversal” down on the daily bar chart would be confirmed if prices close lower today. Bulls still 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 to bearish early today. Shorter-term technical resistance is seen at the overnight record high of 12,727.50 and then at 12,800.00. On the downside, shorter-term support is seen at 12,600.00 and then at Monday’s low of 12,522.50. Wyckoff’s Intra-Day Market Rating: 5.0.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are lower in early U.S. trading. Bears have the firm overall near-term technical 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 neutral to bearish early today. Shorter-term technical resistance is seen at Monday’s high of 173 11/32 and then at 173 24/32. Shorter-term support lies at Monday’s low of 172 4/32 and then at 171 16/32. Wyckoff’s Intra-Day Market Rating: 4.0
March U.S. T-Notes: Prices are weaker in early U.S. trading. 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 Monday’s high of 138.05.5 and then at 138.08.0. Shorter-term technical support lies at Monday’s low of 137.26.0 and then at 137.20.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
EURO CURRENCY
The March Euro currency futures are higher in early U.S. trading and near last week’s two-year high. Bulls are in solid technical control. The shorter-term moving averages for the Euro 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 Euro are bullish early today. The Euro currency finds shorter-term technical resistance at the December high of 1.2330 and then at 1.2350. Shorter-term support is seen at the overnight low of 1.2265 and then at 1.2200. Wyckoff’s Intra Day Market Rating: 6.5
NYMEX CRUDE OIL
February Nymex crude oil prices are higher in early U.S. trading. Bulls have the solid overall near-term technical advantage amid a price uptrend in place on the daily chart. 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 neutral to bullish early today. Look for buy stops to reside just above technical resistance at $49.00 and then at Monday’s high of $49.83. Look for sell stops just below technical support at $48.00 and then at Monday’s low of $47.18. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
US grain futures are again solidly higher in early U.S. pre-market trading and hit contract highs. Same story: The grain markets bulls have the solid overall near-term technical advantage amid price uptrends in place on the daily charts. The supply and demand fundamentals in the grains continue to favor the bulls, especially a huge appetite from China. Dry weather in South American growing regions is also bullish for corn and soybeans. Speculators are now keenly interested in playing the long side in 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