Thursday, December 3–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed overnight. U.S. stock indexes are pointed toward narrowly mixed openings when the New York day session begins, as they pause after the S&P 500 and Nasdaq indexes hit record highs this week. Risk appetite remains upbeat late this week. Reports say President-Elect Joe Biden is now also pushing a bi-partisan pandemic financial aid package for Americans, which would total just under $1 trillion.
The marketplace is overlooking record U.S. daily Covid-19 deaths and near-record daily new infections. Many health experts said the death and infection numbers in the U.S. will remain high through the winter. European countries are also reeling from the virus and its impact on people and businesses. Evidence of a struggling Euro zone economy was seen Thursday when the bloc’s November composite purchasing managers index (PMI) came in at 45.3 compared to a reading of 50.0 in October. A reading below 50.0 suggests contraction in an economy.
The U.S. economic data point of the week is Friday morning’s U.S. employment situation report from the Labor Department. The key non-farm payrolls number in that report is expected to come in at up 440,000 workers. Wednesday’s U.S. ADP national employment report was a miss to the downside.
The U.S. dollar index is weaker early today and hit another 2.5-year low overnight. Commodity market traders are watching the depreciating greenback closely, as it’s a bullish element. Most major raw commodities traded on the world market are priced in U.S. dollars. When the dollar weakens it makes those commodities cheaper to purchase in non-U.S. currency. The other important outside market sees January Nymex crude oil futures prices weaker and trading around $45.00 a barrel. The OPEC oil cartel is meeting late this week and is reported to be discussing raising its oil output quotas, with Russia doing the same. The yield on the benchmark 10-year U.S. Treasury note futures is currently trading at 0.93%.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, the U.S. and global services PMIs, the ISM report on business services, and monthly chain store sales.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are near steady in early U.S. trading and seeing a pause after hitting a record high this week. Bulls have the solid overall near-term technical advantage. 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 neutral early today. Today, shorter-term technical resistance comes in at the contract and record high of 3,669.00 and then at 3,700.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at Tuesday’s low of 3,618.00 and then at this week’s low of 3,583.75. Wyckoff’s Intra-day Market Rating: 5.0
March Nasdaq index futures: Prices are slightly higher in early U.S. trading and near this week’s record high. Bulls 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 bullish early today. Shorter-term technical resistance is seen at the contract and record high of 12,507.00 and then at 12,600.00. On the downside, shorter-term support is seen at Wednesday’s low of 12,319.00 and then at this week’s low of 12,082.00. Wyckoff’s Intra-Day Market Rating: 5.0.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are firmer in early U.S. trading, on a corrective bounce from this week’s solid losses. Bears have the firm near-term technical advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at Wednesday’s high of 173 6/32 and then at 174 even. Shorter-term support lies at 172 even and then at this week’s low of 171 22/32. Wyckoff’s Intra-Day Market Rating: 5.5
March U.S. T-Notes: Prices are modestly higher in early U.S. trading, on a corrective bounce from this week’s losses. Bears have the firm near-term technical advantage. Shorter-term moving averages (4- 9- 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. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term resistance lies at Wednesday’s high of 137.21.0 and then at 137.28.0. Shorter-term technical support lies at the overnight low of 137.14.0 and then at this week’s low of 137.08.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
EURO CURRENCY
The March Euro currency futures are higher in early U.S. trading and hit another 2.5-year high overnight. 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 overnight high of 1.2170 and then at 1.2200. Shorter-term support is seen at 1.2100 and then at Wednesday’s low of 1.2072. Wyckoff’s Intra Day Market Rating: 6.5
NYMEX CRUDE OIL
January Nymex crude oil prices are weaker in early U.S. trading. Bulls have the solid overall near-term technical advantage. The shorter-term moving averages are bullish early today as the 4-day is above the 9-day and 18-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 the overnight high of $45.48 and then at this week’s high of $45.92. Look for sell stops just below technical support at this week’s low of $43.92 and then at $43.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
US grain futures are mixed in early U.S. pre-market trading. The bulls are fading this week and need to step up and show more power very soon. The grain market bulls still have the overall near-term technical advantage. However, closes on Friday at or near their weekly lows would be a bearish signal to suggest near-term market tops are in place. Wheat and corn are especially in technical trouble this week. 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