Thursday, December 14–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
World stock markets were mixed to weaker Thursday. U.S. stock indexes are pointed toward firmer openings when the New York day session begins.
The marketplace is still digesting Wednesday afternoon’s FOMC statement and press conference from Fed Chair Janet Yellen. The Fed raised U.S. interest rates by 0.25%, as expected. However, market watchers were a bit surprised the Fed is projecting tame inflation prospects for the U.S. in the coming months, or longer. This called into question whether the Fed can be as aggressive as it wants to be on its pace of raising interest rates. Thus, the tone of this FOMC meeting, including Yellen’s press conference, was deemed a bit dovish on U.S. monetary policy. Still, the FOMC statement said more interest rate increases are likely in the coming months.
China’s central bank followed the Fed by slightly raising its interest rates Thursday, in an attempt to offset any U.S. rate hike’s impact on the Chinese economy. The European Central Bank and Bank of England hold their regular monetary policy meetings Thursday. No changes in interest rates are expected from those two central banks.
The U.S. dollar index sold off in the wake of the FOMC statement, which supported a solid rally in gold and silver markets. U.S. Treasuries also rallied after the FOMC statement. The dollar index is slightly firmer on Thursday morning.
The other key “outside market” Thursday morning sees Nymex crude oil futures prices slightly lower. Oil bulls have the overall near-term technical advantage, but there are stiff chart resistance levels just above the market. Today, the International Energy Agency forecast U.S. shale oil production will grow faster than the IEA previously expected. Such a scenario would make it difficult for OPEC to keep curtailing its crude oil production while seeing the U.S. potentially increasing its market share.
U.S. economic data due for release Thursday includes the weekly jobless claims report, import and export prices, retail sales, the U.S. flash manufacturing PMI, and manufacturing and trade inventories.
–Jim
U.S. STOCK INDEXES
March S&P 500 December e-mini futures: Prices are slightly up in early U.S. trading and just below Wednesday’s record high. Bulls have the solid overall near-term technical advantage. There are 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 2,675.50 and then at 2,685.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at Wednesday’s low of 2,659.25 and then at this week’s low of 2,652.25. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
March Nasdaq index December futures: Prices are slightly higher in early U.S. trading. The bulls have the firm overall near-term technical advantage. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day and 18-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at this week’s high of 6,437.75 and then at the contract high of 6,446.50. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 6,400.00 and then at Wednesday’s low of 6,383.00. 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 lower in early U.S. trading. Bulls have the slight overall near-term technical advantage but need to show fresh power soon to keep it. 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 bearish early today. Shorter-term technical resistance is seen at this week’s high of 153 26/32 and then at 154 even. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 153 6/32 and then at 153 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
March U.S. T-Notes: Prices are lower in early U.S. trading. Bears have the firm overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is even with the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at this week’s high of 124.21.0 and then at 124.27.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 124.08.5 and then at 124.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The March U.S. dollar index is slightly lower in early U.S. trading. Bears have gained downside momentum after Wednesday’s losses. The shorter-term moving averages for the dollar index are still bullish as the 4-day is above the 9-day and 18-day. The 9-day is above with the 18-day moving average. Short-term oscillators for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at 93.500 and then at this week’s high of 94.825. Shorter-term support is seen at 92.750 and then at 92.500. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
January Nymex crude oil prices are slightly lower in early U.S. trading. Bulls are fading late this week. Look for buy stops to reside just above technical resistance at $57.00 and then at Wednesday’s high of 57.83. Look for sell stops just below technical support at $56.00 and then at the December low of $55.82. Wyckoff’s Intra-Day Market Rating: 5.5
GRAINS
Grain futures markets were narrowly mixed. Not much new. Corn and wheat market bears remain in firm technical control. Soybean bulls have also lost their chart edge. Traders will examine today’s weekly USDA export sales report. However, look for continued low daily price volatility into the end of year.