Friday, January 4–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
European and Asian stock markets were mostly higher overnight. U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins, following big losses Thursday. There are growing hopes the U.S. and China will resolve their major trade dispute in the coming weeks, which has put a bid back into world stock indexes today. China Friday confirmed a meeting between its trade officials and U.S. trade representatives will take place next week.
Traders are awaiting what is arguably the most important U.S. data point of the month: Friday morning’s employment situation report for December from the Labor Department. The key non-farm payrolls number is seen coming in at up 176,000.
The December ADP national employment report, released Thursday morning, came in at up 271,000, which was much higher than the consensus forecast of up 178,000. The December ADP number was the highest growth rate in 2018. This has some market watchers thinking today’s more important jobs number from the Labor Department will come in higher than expected.
In overnight news, China’s central bank eased its monetary policy by cutting the reserve requirement ratio for banks. The move is intended to jumpstart China’s declining economic growth rate.
In other overnight news, the Euro zone inflation rate fell sharply in December. Consumer prices were up 1.6%, year-on-year—down from a rate of up 1.9% in November. The drop in December was mainly due to falling energy prices. Meantime, the producer price index in the Euro zone was down 0.3% in December, month-on-month, and up 4.0%, year-on-year.
The key outside markets today see the U.S. dollar index weaker. Meantime, Nymex crude oil prices are higher and trading just above $48.00 a barrel.
Other U.S. economic data due for release Friday includes the U.S. services purchasing managers index (PMI) and the global services PMI. The weekly DOE liquid energy stocks report is also due for release today.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices are solidly up in early U.S. trading today. Bears still have the overall near-term technical advantage. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bullish early today. Today, shorter-term technical resistance comes in at this week’s high of 2,521.25 and then at 2,550.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,438.50 and then at 2,425.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.0
March Nasdaq index December futures: Prices are solidly higher in early U.S. trading. Bears still have the 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. 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 6,409.25 and then at 6,500.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 6,136.50 and then at 6,100.00. 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 lower on a normal corrective pullback after hitting another contract high overnight. Bulls are still 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 bearish early today. Shorter-term technical resistance is seen at the contract high of 148 27/32 and then at 149 even. Buy stops likely reside just above those levels. Shorter-term support lies at 147 16/32 and then at 147 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
March U.S. T-Notes: Prices are lower in early U.S. trading, on a corrective pullback from the contract high hit on Thursday. Bulls still 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. 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 123.00.0 and then at the contract high of 123.08.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 122.20.0 and then at 122.16.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5
U.S. DOLLAR INDEX
The March U.S. dollar index is slightly lower in early U.S. trading. The bulls still have the overall near-term technical advantage amid recent choppy trading. The shorter-term moving averages for the dollar index are bearish early today, as the 4-day is below the 9-day and 18-day. The 9-day is below 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 96.000 and then at this week’s high of 96.560. Shorter-term support is seen at the overnight low of 95.685 and then at this week’s low of 95.375. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
February Nymex crude oil prices are higher in early U.S. trading. Bears still have the overall near-term technical advantage. However, strong longer-term technical support at the $42.00 area appears to have stopped the bleeding to suggest a market bottom is now in place. The shorter-term moving averages are neutral early today as the 4-day is above the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are bullish early today. Look for buy stops to reside just above technical resistance at $49.00 and then at $50.00. Look for sell stops just below technical support at the overnight low of $46.65 and then at $46.00. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
Grain futures were firmer overnight, on increasing hopes the U.S. and China will reach a trade deal in the coming weeks. The grain market bears still have the overall near-term technical advantage. However, there are ideas among a growing number of traders that the raw commodity sector is poised for an upturn in 2019.
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