Asian and European stock indexes were mixed but mostly lower overnight. U.S. stock indexes are pointed toward slightly lower openings when the New York day session begins.
Risk aversion has up-ticked as the trading week progresses. A U.S.-China trade partial agreement now appears farther off after both sides have made comments this week to support that notion. China is reportedly balking at specific amounts of U.S. agricultural products it would be required to purchase in a trade deal. Meantime, President Trump said the U.S. is not going to roll back all of its tariffs on Chinese imports, which is what China is apparently requesting.
There was more downbeat economic data coming out of China Thursday, to support President Trump’s assertions the trade war is hurting China way more than the U.S. China’s industrial output in October was up 4.7% year-on-year—down from a rise of 5.8% in September. Retail sales were up 7.2% in October, also missing on the downside trade forecasts. Other economic data released from China Thursday was a mixed bag.
In other overnight news, the Euro zone third-quarter gross domestic product rose 0.2% from the second quarter and was up 1.2%, year-on-year. Those numbers were very close to market expectations.
Global risk appetite is also dented this week by an escalation of civil unrest in Hong Kong, including police shooting at least one protestor.
The key “outside markets” today see the U.S. dollar index slightly higher. Nymex crude oil prices are higher and trading around $57.70 a barrel.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the producer price index, and the weekly DOE liquid energy stocks report. Several Federal Reserve officials are also slated to speak today.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are slightly lower in early U.S. trading, on some normal profit taking from recent good gains. Bulls still have the solid overall 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 and 18-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Today, shorter-term technical resistance comes in at the contract high of 3,102.00 and then at 3,120.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at this week’s low of 3,075.75 and then at 3,063.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
December Nasdaq index futures: Prices are slightly lower in early U.S. trading, on normal profit taking from recent gains. Bulls still have the solid near-term technical advantage. 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 bearish early today. Shorter-term technical resistance is seen at the overnight high of 8,285.00 and then at the contract high of 8,300.25. Buy stops likely reside just above those levels. On the downside, short-term support is seen at 8,200.00 and then at last week’s low of 8,161.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are higher in early U.S. trading, on more short covering. Bulls have stabilized the market this week, but prices are still in a downtrend on the daily bar chart market. Bears still have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at the overnight high of 158 10/32 and then at 158 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at the overnight low of 157 7/32 and then at 157 even. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 6.0
December U.S. T-Notes: Prices are higher in early U.S. trading, on more short covering. Prices are still is a five-week-old downtrend on the daily bar chart. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term support lies at the overnight low of 128.22.0 and then at Wednesday’s low of 128.10.5. Sell stops likely reside just below those levels. Shorter-term technical resistance lies at the overnight high of 129.05.5 and then at 129.12.5. Buy stops likely reside just above those levels. Wyckoff’s Intra-Day Market Rating: 6.0
U.S. DOLLAR INDEX
The December U.S. dollar index is slightly firmer in early U.S. trading. Bulls have the 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 with 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 this week’s high of 98.300 and then at 98.500. Shorter-term support is seen at this week’s low of 97.970 and then at 97.500. Wyckoff’s Intra Day Market Rating: 5.5
NYMEX CRUDE OIL
December Nymex crude oil prices are higher in early U.S. trading. Prices are in a five-week-old uptrend on the daily bar chart. The shorter-term moving averages 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 (RSI and slow stochastics) are bullish early today. Look for buy stops to reside just above technical resistance at the November high of $57.88 and then at $58.00. Look for sell stops just below technical support at this week’s low of $56.20 and then at $55.76. Wyckoff’s Intra-Day Market Rating: 6.0
GRAINS
US grain futures prices were mixed to firmer overnight, with corn up around 1 cent, soybeans down around 1 cent and wheat around 1 to 2 cents higher. A U.S.-China trade partial agreement now appears farther off after both sides have made comments this week to support that notion. China is reportedly balking at specific amounts of U.S. agricultural products it would be required to purchase in a trade deal. Meantime, President Trump said the U.S. is not going to roll back all of its tariffs on Chinese imports, which is what China is apparently requesting. This is once again limiting buying interest in the grain futures. Also, the near-term technical chart postures for all three grain markets have deteriorated the past few weeks, which is prompting some fresh selling interest from speculators, including the big “funds.” On the positive side is the Midwest US weather, which remains cold and snowy. That is further delaying harvesting of corn and soybeans still in the fields and could cause quality problems for those crops. The weekly USDA export sales report, normally out on Thursday, will be out Friday due to the US holiday on Monday.
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