Thursday, December 17–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly higher overnight. U.S. stock indexes are pointed toward higher openings and new record highs when the New York day session begins. Trader and investor risk sentiment remains keener this week, following a friendly FOMC meeting and ideas that the U.S. Congress is moving closer to agreement on a financial stimulus package for Americans. And hopes are higher this week that the U.K. and the European Union can come to agreement on a “smooth Brexit.”
The Federal Reserve’s Open Market Committee (FOMC) meeting that ended Wednesday afternoon saw the Fed leave U.S. interest rates unchanged, as expected. The FOMC statement also said there will likely be no change in U.S. interest rates until at least 2023. The Fed upgraded its U.S. economic growth and employment estimates. Meanwhile, the Fed will keep buying at least $120 billion of bonds per month until “substantial further progress has been made toward the committee’s maximum employment and price stability goals.” That marks a subtle change from previous Fed wording that said purchases will continue over the “coming months.” The marketplace deemed the FOMC results as upbeat and just a bit more dovish on monetary policy than expected.
In overnight news, the Euro zone consumer price index for November came in at down 0.3% from October and also down 0.3%, year-on-year. Major global economies are not experiencing any rising inflation concerns. If anything, there are more deflation concerns in the here and now. Still, the “reflation trade” is being embraced by those market watchers that reckon all the record-breaking central bank and government stimulus measures this year will stoke problematic price inflation down the road.
The U.S. dollar index is solidly lower early today and hit another 2.5-year low overnight. The other important outside market sees January Nymex crude oil futures prices slightly higher and trading around $48.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note futures is currently trading around 0.925%.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the Philadelphia Fed business survey, new residential construction and the Kansas City Fed manufacturing survey.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are higher in early U.S. trading and hit a record high. 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 bullish early today. Today, shorter-term technical resistance comes in the contract and record high of 3,717.50 and then at 3,735.00. Buy stops likely reside just above those levels. Downside support for active traders is seen at the overnight low of 3,692.00 and then at 3,660.00. Wyckoff’s Intra-day Market Rating: 6.5
March Nasdaq index futures: Prices are higher in early U.S. trading and hit another 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 bullish early today. Shorter-term technical resistance is seen at the overnight contract high of 12,750.00 and then at 12,850.00. On the downside, shorter-term support is seen at the overnight low of 12,672.00 and then at 12,500.00. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are slightly lower in early U.S. trading. 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 above 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 technical resistance is seen at Wednesday’s high of 173 12/32 and then at this week’s high of 173 31/32. Shorter-term support lies at this week’s low of 172 4/32 and then at 172 even. Wyckoff’s Intra-Day Market Rating: 4.5
March U.S. T-Notes: Prices are near steady in early U.S. trading. Bears have the near-term technical 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 neutral to bearish early today. Shorter-term resistance lies at this week’s high of 138.04.0 and then at last week’s high of 138.07.0. Shorter-term technical support lies at this week’s low of 137.19.5 and then at 137.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
EURO CURRENCY
The March Euro currency futures are higher and hit a nearly two-year high in early U.S. trading. Bulls are in solid technical control. 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 to bullish early today. The Euro currency finds shorter-term technical resistance at the overnight high of 1.2275 and then at 1.2300. Shorter-term support is seen at the overnight low of 1.2219 and then at 1.2200. Wyckoff’s Intra Day Market Rating: 7.0
NYMEX CRUDE OIL
January Nymex crude oil prices are slightly up and hit a nine-month high in early U.S. trading. Bulls have the solid overall near-term technical advantage amid a price uptrend in place on the daily chart. 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 neutral early today. Look for buy stops to reside just above technical resistance at the overnight high of $48.59 and then at $49.00. Look for sell stops just below technical support at Wednesday’s low of $47.17 and then at Tuesday’s low of $46.54. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
US grain futures are mixed in early U.S. pre-market trading. The grain markets are proving resilient amid still-solid worldwide demand for U.S. grains. Grain bulls still have the overall near-term technical advantage. The weaker U.S. dollar index continues to work in favor of the grain market bulls. On tap Thursday morning 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