Monday, December 3–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Risk appetite is back in full force to start the trading week, following the weekend news out of the G20 meeting in Argentina that the U.S. and China have agreed on a cease-fire in their trade war. Asian and European stock markets rallied sharply, while crude oil and gold prices were also posting good gains on hopes for better world economic growth if the two largest economies stop their trade hostilities. U.S. stock indexes are pointed toward sharply higher openings when the New York day session begins.
The U.S. dollar index is weaker as secondary world currencies were boosted Monday, including the Chinese yuan, on the U.S.-China truce.
The positive outcome of the weekend U.S.-China trade meeting was not completely unexpected by the marketplace, as expectations on the results had varied widely. Still, the outcome was at the least better than many expected. The U.S. and China gave each other 90 days to make further progress on their trade tiff.
The U.S.-China trade cease-fire gave traders and investors a double-barrel shot of upbeat news, following last week’s surprisingly dovish comments coming from Federal Reserve Chairman Jay Powell.
In other news, the OPEC oil cartel meeting is getting under way in Vienna, Austria. Reports said Qatar plans to pull out of the cartel in January. Oil prices were also lifted in part on comments from Russian and Saudi Arabian officials that they want to extend production cuts.
The death of former U.S. President George H.W. Bush over the weekend gives the U.S. financial markets an unexpected mid-week closure on Wednesday, for a national day of mourning.
U.S. economic data due for release Monday includes the U.S. manufacturing purchasing managers index (PMI), construction spending, the ISM manufacturing report on business, the global manufacturing PMI and domestic auto industry sales.
–Jim
U.S. STOCK INDEXES
March S&P 500 e-mini futures: Prices gapped sharply higher on the daily bar chart, hit a three-week high, and are posting solid gains in early U.S. trading Monday. The 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 is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are bearish early today. Today, shorter-term technical resistance comes in at the November high of 2,824.50 and then at 2,850.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,819.00 and then at 2,800.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 6.5
March Nasdaq index December futures: Prices gapped higher on the daily bar chart today and are trading sharply higher and hit a three-week high. 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 the overnight high of 7,169.00 and then at 7,200.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 7,100.00 and then at the overnight low of 7,040.50. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 6.5.
U.S. TREASURY BONDS AND NOTES
March U.S. T-Bonds: Prices are weaker in early U.S. trading today, on a corrective pullback from good gains Friday that saw prices hit a two-month high. Prices Friday a saw bullish weekly and monthly high close. 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 140 even and then at Friday’s high of 140 11/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 139 14/32 and then at 139 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 today, on a downside correction from good gains Friday that saw prices hit a 2.5-month high and close at a bullish weekly and monthly high close. 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 bearish early today. Shorter-term resistance lies at the overnight high of 119.12.0 and then at 119.16.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 119.04.5 and then at 119.00.0. 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 weaker in early U.S. trading. Bulls still 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 neutral early today. The dollar index finds shorter-term technical resistance at the November high of 96.930 and then at 97.500. Shorter-term support is seen at last week’s low of 96.000 and then at 95.690. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
January Nymex crude oil prices are sharply higher today on a corrective bounce after last week hitting a 13-month low of $49.41. Bears are still 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 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 (RSI and slow stochastics) are bullish early today. Look for buy stops to reside just above technical resistance at the overnight high of $53.85 and then at $54.00. Look for sell stops just below technical support at $51.00 and then at $50.00. Wyckoff’s Intra-Day Market Rating: 6.5
GRAINS
Grain futures prices are set to open higher today on the U.S.-China trade ceasefire. The question this week will be if the short-covering rebound can be sustained, or will the rally fizzle. 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