Wednesday, December 20–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
World stock markets were mixed overnight. U.S. stock indexes are pointed toward higher openings when the New York day session begins. The U.S. House and Senate passed the highly anticipated tax-reform bill Wednesday. Now the bill heads back to the House for final approval and then a signature by President Trump. Lower U.S. tax rates coming in 2018 have added to the upbeat attitudes among traders and investors worldwide.
In overnight news, reports said China is expected to soon launch a Chinese yuan-based crude oil futures market. China wants to take at least some of crude oil’s market-making out of London and New York. China is the world’s largest importer of crude oil. A successful China crude oil futures market would challenge the dominance of the U.S. dollar in world crude oil pricing. However, many energy market watchers say the Chinese have a long way to go before a China oil futures market would seriously challenge those in New York and London.
Look for trading activity in most markets to dwindle as this week progresses, ahead of the upcoming Christmas holiday weekend.
The key outside markets on Wednesday morning find the U.S. dollar index near steady and Nymex crude oil prices slightly firmer. A major U.S. pipeline is shut down and U.S. crude oil inventories declined in the latest week.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, existing home sales, and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
March S&P 500 December e-mini futures: Prices are firmer and near this week’s contract and record high. Bulls have the solid overall near-term technical advantage. There are still no strong, early chart clues to suggest a market top is close at hand. 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 high of 2,698.00 and then at 2,715.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 2,682.50 and then at 2,675.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
March Nasdaq index December futures: Prices are higher in early U.S. trading and near this week’s contract and record high. The 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 and 18-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 high of 6,545.75 and then at 6,575.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at this week’s low of 6,479.75 and then at 6,446.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES
March U.S. T-Bonds: Prices are near steady in early U.S. trading. After Tuesday’s big down day, bears now have the overall 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 even with the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is seen at the overnight high of 151 28/32 and then at 152 even. Buy stops likely reside just above those levels. Shorter-term support lies at Tuesday’s low of 151 11/32 and then at 151 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
March U.S. T-Notes: Prices are near steady in early U.S. trading after dropping to a contract low on Tuesday. Bears have the solid overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below 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 resistance lies at the overnight high of 123.26.5 and then at 124.00.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at Tuesday’s contract low of 123.20.0 and then at 123.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
U.S. DOLLAR INDEX
The March U.S. dollar index is near steady in early U.S. trading. Trading has turned choppy and sideways. The shorter-term moving averages for the dollar index are neutral as the 4-day is below the 9-day. The 9-day is above with the 18-day moving average. Short-term oscillators for the dollar index are neutral to bearish early today. The dollar index finds shorter-term technical resistance at this week’s high of 93.555 and then at the December high of 93.825. Shorter-term support is seen at last week’s low of 92.860 and then at 92.500. Wyckoff’s Intra Day Market Rating: 5.0
NYMEX CRUDE OIL
February Nymex crude oil prices are slightly higher in early U.S. trading. Bulls have the overall near-term technical advantage. Look for buy stops to reside just above technical resistance at $58.00 and then at 58.60. Look for sell stops just below technical support at this week’s low of $56.88 and then at $56.50. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
Grain futures markets were narrowly mixed overnight. Corn and wheat market bears remain in solid technical control, with soybean bears also having the near-term chart advantage. Look for continued low daily price volatility for the grain futures into the end of year, with a downside bias.