Wednesday, December 7–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly lower overnight. U.S. stock indexes are pointed toward slightly lower openings when the New York day session begins. The U.S. stock index bulls are fading fast this week and near-term price uptrends on the daily bar charts have been negated.
In overnight news, following recent public protests, China has announced sweeping revisions to its strict Covid measures that ultimately failed. The new guidelines keep some restrictions in place but largely scrap the health code that has been mandatory for entering most public places and roll back mass testing. Health experts now say China is underprepared for the surge in cases it could now see. Beijing has fallen short on preparations like bolstering the elderly vaccination rate, increasing surge and intensive care capacity in hospitals, and stockpiling antiviral medications.
Meantime, China’s trade surplus declined to $69.84 billion in November from $71.7 billion in the same month last year. That’s far below market forecasts of a surplus of $78.1 billion. This was the smallest trade surplus since April, due to weakening global and domestic demand. China’s exports slumped 8.7%, year over year, the second straight month of decline, amid weakening overseas demand due to high inflation and supply disruptions. Imports fell at a faster 10.6%, the second straight month of decrease as domestic demand weakened amid widespread Covid curbs.
In other overnight news, the Euro zone gross domestic product in the third quarter was revised to up 2.3%, year-on-year, compared to the last estimate of up 2.1%. The revised number was slightly better than expected.
The key outside markets today see the U.S. dollar index lower. Nymex crude oil prices are weaker and trading around $74.00 a barrel. Prices overnight hit an 11-month low. Meantime, the yield on the benchmark U.S. 10-year Treasury note is presently 3.535%.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, revised productivity and costs, consumer credit and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are weaker in early U.S. trading. Bulls have the slight overall near-term technical advantage but are fading. A seven-week-old uptrend on the daily bar chart has been negated. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-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 4.000.00 and then at Tuesday’s high of 4,047.50. Support for active traders is seen at Tuesday’s low of 3,952.75 and then at 3,900.00. Wyckoff’s Intra-day Market Rating: 4.5
March Nasdaq index futures: Prices are slightly lower in early U.S. trading. Bulls have lost their slight overall near-term technical advantage. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is below the 9-day and 18-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at 11,800.00 and then at 12,000.00. On the downside, shorter-term support is seen at 11,500.00 and then at 11,300.00. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are weaker in early U.S. trading after hitting a 2.5-month high overnight. 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 early today. Shorter-term technical resistance is seen at the overnight high of 130 17/32 and then at 131 even. Shorter-term support lies at 129 even and then at this week’s low of 128 12/32. 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 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 last week’s high of 114.28.5 and then at 115.00.0. Shorter-term technical support lies at this week’s low of 113.25.0 and then at 113.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
EURO CURRENCY
The March Euro currency futures are firmer in early U.S. trading. Bulls have the firm overall near-term technical advantage. Prices are in a nine-week-old uptrend on the daily bar chart. 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 neutral early today. The Euro currency finds shorter-term technical resistance at this week’s high of 1.0674 and then at 1.0700. Shorter-term support is seen at 1.0500 and then at 1.0450. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
January Nymex crude oil prices are near steady in early U.S. trading and hit an 11-month low overnight. Bears have the firm overall near-term technical advantage and have gained downside momentum this week. The shorter-term moving averages are bearish early today as the 4-day is below the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral to bearish early today. Look for buy stops to reside just above technical resistance at $75.00 and then at $77.00. Look for sell stops just below technical support at the overnight low of $72.75 and then at $72.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
U.S. grain futures were steady to firmer in overnight trading. Corn bears have the overall near-term technical advantage. Wheat bears have the solid near-term technical advantage. Soybean bulls are holding the near-term technical advantage, mainly because meal futures are surging. Grain traders in the near term will focus on the outside markets and on risk appetite in the marketplace. The next big data point for the grain markets is Friday’s monthly USDA supply and demand report.
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