Friday, December 14–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
European and Asian stock markets were mostly lower overnight, following some dour economic news out of China. U.S. stock indexes are pointed toward solidly lower openings when the New York day session begins. The S&P 500 is poised to close at a new for-the-move low close today.
It appears the U.S. trade tariffs slapped on Chinese imports are significantly hurting China’s economy. November readings on industrial production were weaker than expected, while retail sales were down to the lowest level in 15 years. China’s industrial output rose 5.4% in November, year-on-year, after a rising at a rate of 5.9% in October. Retail sales were up 8.1% in November, year-on-year, following a rise of 8.6% in October.
However, there continues to be upbeat news coming from the U.S. and China, regarding their talks on resolving their trade dispute. Reports said China has lifted tariffs on U.S. auto imports.
There was also weak economic data coming out of the European Union today. The Euro zone composite purchasing managers index (PMI) came in at 51.3 in December versus 52.7 in November. A December reading of 52.7 was expected. The weak data put pressure on the Euro currency, which in turn supported the U.S. dollar.
In other overnight news, the Russian ruble gained after Russia’s central bank slightly raised its interest rates.
The key outside markets early today find the U.S. dollar index solidly higher and hitting a nearly two-year high, on some safe-haven buying heading into the weekend. Meantime, Nymex crude oil prices are slightly down and trading around $52.50 a barrel.
U.S. economic data due for release Friday includes retail sales, industrial production and capacity utilization, manufacturing and trade inventories, and the U.S. flash and services purchasing managers indexes.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are lower in early U.S. trading today, and poised to close at the lowest level since last winter. Bears are in firm technical command. 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 2,652.75 and then at Thursday’s high of 2,675.25. Buy stops likely reside just above those levels. Downside support for active traders today is located at the October low of 2,609.50 and then at this week’s low of 2.586.75. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.0
March Nasdaq index December futures: Prices are lower in early U.S. trading. Bears are in firm technical control. 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 bearish early today. Shorter-term technical resistance is seen at the overnight high of 6,786.25 and then at Thursday’s high of 6,684.75. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 6,675.25 and then at 6,600.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0.
U.S. TREASURY BONDS AND NOTES FUTURES
March U.S. T-Bonds: Prices were higher overnight. Bulls are in solid near-term technical control. 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 to bullish early today. Shorter-term technical resistance is seen at the overnight high of 143 5/32 and then at 143 11/32. Buy stops likely reside just above those levels. Shorter-term support lies at this week’s low of 142 10/32 and then at 142 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
March U.S. T-Notes: Prices are higher in early U.S. trading. Bulls have the solid chart advantage. 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 to bullish early today. Shorter-term resistance lies at the overnight high of 120.19.0 and then at 120.24.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at 120.10.0 and then at this week’s low of 120.06.5. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The March U.S. dollar index is solidly higher and hit a nearly two-year high overnight. Bulls have the solid 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 bullish early today. The dollar index finds shorter-term technical resistance at 97.250 and then at 97.500. Shorter-term support is seen at 96.750 and then at today’s low of 96.555. Wyckoff’s Intra Day Market Rating: 6.5
NYMEX CRUDE OIL
January Nymex crude oil prices are slightly lower in early U.S. trading today. Bears are in firm overall near-term technical control. There are still no early clues that a market bottom is close at hand. 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 this week’s high of $53.27 and then at the December high of $54.55. Look for sell stops just below technical support at $51.00 and then at $50.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
Grain futures prices were lower overnight, amid the “risk-off” trader and investor attitudes today. The grain market bears still have the overall near-term technical advantage.
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