Monday, December 2–Jim Wyckoff’s Morning Markets Report
Asian and European stock markets were mostly firmer overnight. The U.S. stock indexes are pointed toward higher openings when the New York day session begins, and are at or near their record and contract highs. Trader and investor risk appetite is upbeat to start the trading week, on some positive economic data coming out of China and on hopes for a partial U.S.-China trade deal coming soon.
For the first time in seven months factory activity in China saw expansion. The purchasing managers’ index (PMI) rose to 50.2 in November versus 49.3 in October, and was expected to come in at 49.5. A reading above 50.0 suggests growth in the sector.
Meantime, the Euro zone manufacturing PMI came in at 46.9 in November versus 45.9 in October. A reading of 46.6 was expected for November.
The upbeat manufacturing data coming out of China and the Euro zone—the number two and three economies in the world—worked to lift world equity markets and crude oil prices Monday, but put pressure on safe-haven assets gold and U.S. Treasury markets.
President Trump has just tweeted Monday morning that the U.S. will slap some more tariffs on South American countries he says are trading unfairly with the U.S.
The key “outside markets” today see the U.S. dollar index modestly up. Nymex crude oil prices are higher and trading around $56.50 a barrel.
U.S. economic data due for release Monday includes the U.S. manufacturing PMI, the ISM manufacturing report on business, construction spending, and the global manufacturing PMI.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are firmer in early U.S. trading and hit a record high overnight. 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 and 18-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 overnight contract high of 3,159.75 and then at 3,175.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Friday’s low of 3,141.75 and then at 3,125.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
March Nasdaq index futures: Prices are higher in early U.S. trading and close to last week’s record high. Bulls have the solid 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 early today. Shorter-term technical resistance is seen at the contract high of 8,479.25 and then at 8,500.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 8,425.00 and then at 8,400.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices are sharply lower and hit a two-week low in early U.S. trading. Bears have gained technical momentum to start the week. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at 158 even and then at 158 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 157 6/32 and then at 157 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
March U.S. T-Notes: Prices are solidly lower and hit a two-week low in early U.S. trading. Bears have gained downside momentum early this week. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term support lies at the overnight low of 128.23.5 and then at 128.16.0. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at 129.00.0 and then at the overnight high of 129.09.0. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The March U.S. dollar index is slightly firmer in early U.S. trading. Bulls have the 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 neutral to bullish early today. The dollar index finds shorter-term technical resistance at last week’s high of 98.045 and then at 98.250. Shorter-term support is seen at last week’s low of 97.680 and then at 97.500. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
January Nymex crude oil prices are solidly higher in early U.S. trading on a corrective bounce after solid losses last Friday. Bulls have the slight near-term technical advantage. The shorter-term moving averages are neutral early today as the 4-day is below the 9-day. The 9-day is even with 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 $57.50 and then at $58.00. Look for sell stops just below technical support at the overnight low of $55.42 and then at the November low of $54.85. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
US grain futures prices were steady to firmer overnight. Grain trader attitudes are still somewhat upbeat to start the trading week, on some positive economic data coming out of China and the European Union, and on continued hopes for a partial U.S.-China trade deal coming soon. For the first time in seven months factory activity in China saw expansion. The purchasing managers’ index (PMI) rose to 50.2 in November versus 49.3 in October, and was expected to come in at 49.5. A reading above 50.0 suggests growth in the sector. Meantime, the Euro zone manufacturing PMI came in at 46.9 in November versus 45.9 in October. A reading of 46.6 was expected for November. President Trump has just tweeted Monday morning that the U.S. will slap some more tariffs on South American countries he says are trading unfairly with the U.S. The highlight of day Monday will be weekly USDA export inspections data. Weather in the US Corn Belt has now become a back-burner matter for grain traders, as the U.S. corn and soybean harvest is wrapping up. Focus now is on South American weather in corn and soybean regions there.
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