Thursday, December 2–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed to weaker in overnight trading. The U.S. stock indexes are pointed to higher openings when the New York day session begins. The U.S. stock indexes overnight recovered some of their late-Wednesday losses that came after news that a case of Omicron was discovered in California. That news was not surprising but still rattled the stock market. Overnight news that the World Health Organization said vaccinations would offer at least some protection against the new strain helped assuage worries on the matter. Also, reports say Omicron is no more severe than the other coronavirus strains and may be milder. However, by no means has the marketplace reached calm on the matter. Don’t be surprised to see more markets volatility in the near term as more becomes known about Omicron.
In overnight news, the Euro zone reported its October producer price index at up 5.4% from September and up 21.9%, year-on-year. Those hot numbers were even hotter than the elevated PPI numbers that were forecast.
The Bank of America staff of commodity market analysts has forecast the price of Brent crude oil to possibly reach $120 a barrel by the middle of next year. Prices are trading around $70.00 at present. Meantime, OPEC officials said Wednesday that oil markets face a surplus in the first quarter of next year. If I have learned one thing in being in the commodity markets news and analysis business for nearly 40 years, it’s that forecasting future price levels for a commodity is mostly an exercise in futility that sets the prognosticating analysts up for future embarrassment. Still, many of us do it out of being compelled or even required to do so.
The key “outside markets” see Nymex crude oil prices higher and trading around $66.75 a barrel, after hitting a three-month low of $64.43 on Tuesday. The U.S. dollar index is slightly lower. Meantime, The yield on the U.S. Treasury 10-year note is presently fetching 1.492%.
The marketplace is awaiting the U.S. employment situation report for November from the Labor Department on Friday morning. The key non-farm payrolls figure is expected to come in at up 573,000 compared to a rise of 531,000 in October.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, and the monthly retail chain sales index. Several Federal Reserve officials are also scheduled to speak today.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are higher in early U.S. trading on a corrective bounce after hitting a six-week low on Wednesday. Bulls have faded badly recently to suggest a near-term market top is in place. 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 the overnight high of 4,552.00 and then at 4,600.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at the overnight low of 4,508.00 and then at this week’s low of 4,497.75. Sell stops likely reside below those levels. Wyckoff’s Intra-day Market Rating: 6.0
March Nasdaq index futures: Prices are slightly higher in early U.S. trading. Prices Wednesday hit a six-week low to suggest a market top is in place. 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 even with the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at 16,000.00 and then at 16,150.00. Buy stops likely reside just above those levels. On the downside, shorter-term support is seen at this week’s low of 16,825.25 and then at 15,700.00. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are up in early U.S. trading. Bulls have momentum. 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 neutral early today. Shorter-term technical resistance is seen at this week’s high of 163 1/32 and then at 163 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 162 4/32 and then at 161 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
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 and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance is seen at the overnight high of 131.04.0 and then at this week’s high of 131.10.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 130.19.0 and then at 130.12.0. 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. Bears have the solid overall near-term technical advantage. 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 bullish early today. The Euro currency finds shorter-term technical resistance at this week’s high of 1.1417 and then at 1.1450. Buy stops likely reside just above those levels. Shorter-term support is seen at this week’s low of 1.1271 and then at the November low of 1.1221. Sell stops likely reside just below those levels. Wyckoff’s Intra Day Market Rating: 4.0
NYMEX CRUDE OIL
Nymex crude oil prices are near steady in early U.S. trading. Bears have the near-term technical advantage as prices are trending lower. 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 the overnight high of $67.36 and then at $68.00. Look for sell stops just below technical support at this week’s low of $64.43 and then at $64.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
U.S. grain futures were higher in overnight trading on more corrective buying after strong losses posted Tuesday. There is less risk aversion in the marketplace late this week and that is giving the grain market bulls some strength. However, as long as some Omicron uncertainty exists in the general marketplace, gains in the grains will likely be constrained. On tap today is the weekly USDA export sales 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