Wednesday, February 13–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Asian and European stock markets were higher overnight. U.S. stock indexes hit 2.5-month highs overnight and are pointed toward slightly higher openings when the New York day session begins, following good gains on Tuesday. Risk appetite in the marketplace this week remains keener, what with no major geopolitical events in play at present.
Focus of the marketplace this week is on U.S.-China high-level trade talks taking place in Beijing. U.S. Treasury Secretary Mnuchin and U.S. Trade Representative Lighthizer are attending the talks, with them participating late this week. Reports today said China President Xi Jinping may meet with the U.S. delegation on Friday, as a show of good will. Many traders and investors are upbeat that a deal can be reached by the March 1 deadline. President Trump said on Wednesday he could extend that deadline a bit if the talks were progressing well.
The key economic data point of the day is the U.S. consumer price index report for January, which is forecast to come in at up 0.1% from December and up 1.5% from January of 2018. The U.K. inflation rate in January was today reported up 1.8%, year-on-year. An important theme in the world marketplace the past few months has been tamped down inflationary pressures. At mid-year in 2018 many market watchers were worried about problematic inflation arising.
In overnight news, the Euro zone reported its industrial output down 0.9% in December from November, and down 4.2%, year-on-year. That’s the worst monthly reading in nine years. Economic news coming out of the Euro zone continues a downbeat tone.
The key outside markets today see the U.S. dollar index slightly higher. The USDX this week hit a two-month high. Nymex crude oil prices slightly are firmer and trading just below $55.00 a barrel. The oil market has been trading sideways for two weeks, as stiff chart resistance at and just above $55.00 has stalled an uptrend.
U.S. economic reports due for release Wednesday include the weekly MBA mortgage applications survey, the CPI report, real earnings, the monthly Treasury budget statement, and the weekly DOE liquid energy stocks report.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are slightly higher and hit a 2.5-month high in early U.S. trading. Prices are in an uptrend on the daily bar chart and the bulls have the 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 neutral to bullish early today. Today, shorter-term technical resistance comes in at 2,775.00 and then at 2,800.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at 2,725.00 and then at this week’s low of 2,700.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
March Nasdaq index December futures: Prices are higher and hit a 2.5-month high in early U.S. trading. Prices are 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 the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral to bullish early today. Shorter-term technical resistance is seen at 7,100.00 and then at 7,169.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 7,000.00 and then at this week’s low of 6,896.25. 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 near steady in early U.S. trading today. Bulls still have the firm overall near-term technical advantage but trading has been choppy the past month. 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 technical resistance is seen at Tuesday’s high of 146 18/32 and then at 147 1/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 145 24/32 and then at 145 16/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
March U.S. T-Notes: Prices are near steady in early U.S. trading. Bulls still have the firm overall chart advantage but trading has been choppy. 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 Tuesday’s high of 122.06.5 and then at this week’s high of 122.13.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 121.26.5 and then at 121.19.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.0
U.S. DOLLAR INDEX
The March U.S. dollar index is firmer in early U.S. trading. Bulls still have some upside momentum after prices hit a two-month high on Tuesday. The shorter-term moving averages for the dollar index 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 for the dollar index are neutral to bullish early today. The dollar index finds shorter-term technical resistance at Tuesday’s high of 97.000 and then at the December high of 97.195. Shorter-term support is at this week’s low of 96.440 and then at 96.000. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
March Nymex crude oil prices are higher 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 even with the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral to bullish early today. Look for buy stops to reside just above technical resistance at this week’s high of $54.05 and then at $55.00. Look for sell stops just below technical support at Tuesday’s low of $52.29 and then at this week’s low of $51.23. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
Grain futures were mixed overnight. The recent surge in the U.S. dollar index is holding back buying interest in the grains. Also, U.S. export demand needs to pick up to provide a boost to the grains. Corn and wheat bears have the overall near-term technical advantage, while the bean bulls and bears are on neutral ground.
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