Tuesday, December 18–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
European and Asian stock markets were mostly weaker overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins, on a tepid rebound after the indexes fell to new lows for the year on Monday. The small-cap Russell 2000 index is now in bear market territory—down 20% from its high.
In overnight news, China’s President Xi Jinping gave a hawkish speech on national television Tuesday, suggesting to some that China could take a harder line with the U.S. on trade and intellectual property issues that have the world’s two largest economies at loggerheads. Others think the Xi speech as just rhetoric aimed at shoring up his own reputation among the Chinese people.
The U.S. Federal Reserve’s Open Market Committee (FOMC) meets Tuesday and Wednesday to discuss monetary policy, while the U.S. government could be shut down at the end of the week if Congress and President Trump cannot agree on a budget plan. Most expect the FOMC to raise interest rates by 0.25% on Wednesday afternoon, at the conclusion of their meeting. The expectations for a rate hike are despite proclamations from President Trump, his closes economic advisors and noted market analysts and traders that the Fed should leave interest rates alone.
A heavy slate of U.S. economic data is also due out later this week, including the first estimate of third-quarter gross domestic product.
The key outside markets today see the U.S. dollar index weaker on a further corrective pullback after hitting a nearly two-year high last Friday. Meantime, Nymex crude oil prices are lower and hit a 15-month low of $47.84 a barrel overnight. There are still no early chart clues the crude oil market is near a bottom.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, new residential construction, and the FOMC meeting begins.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are firmer in early U.S. trading today, on a corrective bounce after hitting a new low for the year on Monday. Bears are in solid technical command. The shorter-term moving averages (4-, 9- and 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. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at 2,586.75 and then at 2,600.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,552.25 and then at Monday’s low of 2.533.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 5.5
March Nasdaq index December futures: Prices are firmer after hitting a new low for the year Monday. Bears are in solid technical control. Shorter-term moving averages (4- 9-and 18-day) are bearish early today. The 4-day moving average is below the 9-day and 18-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at 6,600.00 and then at Monday’s high of 6,656.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 6,485.50 and then at Monday’s low of 6,423.25. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are higher and near the recent high. Bulls are in solid near-term technical control. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at the December high of 143 31/32 and then at 144 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 143 6/32 and then at 143 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5
March U.S. T-Notes: Prices are higher in early U.S. trading and near the recent contract high. Bulls have the solid 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 bullish early today. Shorter-term resistance lies at the December high of 120.30.0 and then at 121.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 120.19.5 and then at Monday’s low of 120.10.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5
U.S. DOLLAR INDEX
The March U.S. dollar index is lower again in early U.S. trading, on a downside correction after hitting a nearly two-year high last Friday. Bulls still have the solid overall near-term technical advantage. The shorter-term moving averages for the dollar index 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 dollar index are bearish early today. The dollar index finds shorter-term technical resistance at the overnight high of 96.645 and then at Monday’s high of 97.940. Shorter-term support is seen at the overnight low of 96.155 and then at 96.000. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
January Nymex crude oil prices are lower and hit a 15-monrh low in early U.S. trading today. Bears are in solid overall near-term technical control and have gained more power this week. There are still no early clues that a market bottom is close at hand. 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 bearish early today. Look for buy stops to reside just above technical resistance at the overnight high of $49.59 and then at $50.00. Look for sell stops just below technical support at the overnight low of $47.84 and then at $47.00. Wyckoff’s Intra-Day Market Rating: 3.5
GRAINS
Grain futures prices were firmer overnight, on more short covering. The grain market bears still have the overall near-term technical advantage. Grain traders are awaiting fresh U.S. export demand, including buys from China, as that nation had promised recently.
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