Friday, February 8–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
European and Asian stock markets were mixed overnight. It’s been a quieter trading week this week, what with Chinese markets and some other Asian markets closed for the Lunar New Year holiday. U.S. stock indexes are pointed toward weaker openings when the New York day session begins.
Underlying themes still in play for the markets include perceptions of slowing world economic growth, with maybe the U.S. being the outlier after its strong jobs growth reported last Friday. European Union and Chinese economic reports lately have been mostly downbeat. The other matter on the front burner for traders and investors is the U.S.-China trade war, which sees a March 1 deadline for either getting a resolution on the matter, or ratcheting up of sanctions between the world’s two largest economies.
A feature in the marketplace this week is the resurgent U.S. dollar, which hit a five-week high overnight. Raw commodity market bulls don’t want to see a strong greenback because it makes those commodities priced in U.S. dollars on the world market more expensive to purchase in non-U.S. currency.
The other key outside market today sees Nymex crude oil prices slightly weaker trading around $52.50 a barrel. Prices have backed down from this week’s 2.5-month high of $55.75 a barrel.
The only major U.S. economic reports due for release Friday are a slew of USDA reports backed up from the government shutdown.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are lower on a corrective pullback after hitting a seven-week high on Tuesday. Prices are still in an uptrend on the daily bar chart. The shorter-term moving averages (4-, 9- and 18-day) are still 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 bearish early today. Today, shorter-term technical resistance comes in 2,715.00 and then at this week’s high of 2,737.75. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 2,685.50 and then at 2,665.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
March Nasdaq index December futures: Prices are lower on a pullback after hitting a two-month high Tuesday. Prices are still in an uptrend on the daily bar chart. Shorter-term moving averages (4- 9-and 18-day) are bullish early today. The 4-day moving average is above with the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 6,903.50 and then at 7,000.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 6,800.00 and then at 6,750.00. 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 are slightly higher in early U.S. trading today. Bulls have the firm overall 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 bullish early today. Shorter-term technical resistance is seen at 147 1/32 and then at 147 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 146 11/32 and then at 146 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
March U.S. T-Notes: Prices are slightly higher in early U.S. trading. Bulls have the firm overall chart 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 bullish early today. Shorter-term resistance lies at 122.16.0 and then at 122.19.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 122.06.0 and then at 122.00.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The March U.S. dollar index is slightly higher and hit a five-week high in early U.S. trading. Bulls are having a very good week. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is above the 9-day and 18-day. The 9-day is below 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 the overnight high of 96.490 and then at 96.800. Shorter-term support is at Thursday’s low of 95.155 and then at 96.000. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
March Nymex crude oil prices are slightly weaker in early U.S. trading. The shorter-term moving averages are neutral early today as the 4-day is below the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are bearish early today. Look for buy stops to reside just above technical resistance at $53.00 and then at $54.00. Look for sell stops just below technical support at this week’s low of $51.80 and then at $51.00. Wyckoff’s Intra-Day Market Rating: 4.5
GRAINS
Grain futures were slightly firmer overnight. Traders will closely examine today’s big slew of backed-up USDA data coming out at 11:00 a.m. CST. The grain markets could be the most active they’ve been in weeks following the onslaught of data.
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