Tuesday, February 26–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Asian and European stock markets were mostly weaker overnight, on corrective pullbacks from recent gains. U.S. stock indexes are also pointed toward slightly lower openings when the New York day session begins. The U.S. indexes hit three-month highs on Monday amid generally upbeat trader and investor attitudes, and with no major geopolitical fires presently burning.
The U.S. economic news of the day Tuesday will be Federal Reserve Chairman Jerome Powell’s morning testimony on the U.S. economy to the Senate Banking Committee. He speaks to the House of Representatives on Wednesday. Most market watchers reckon Powell will sound a more dovish tone on monetary policy than he has in the past.
In overnight news, the British pound was supported by reports Prime Minister Theresa May will work on another Brexit deal and may delay the March 29 European Union exit date, including possibly holding another referendum on the matter in order to avoid a “no-deal Brexit.”
The key outside markets today see the U.S. dollar index slightly lower. Nymex crude oil prices are slightly down and trading around $55.50 a barrel. Oil prices fell sharply Monday, in part on a tweet from President Trump saying oil prices are too high and could hurt the global economy.
U.S. economic reports due for release Tuesday include the weekly Goldman Sachs and Johnson Redbook retail sales reports, new residential construction, the S&P/Case-Shiller home price index, the consumer confidence index and the monthly and quarterly U.S. house price indexes.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are weaker on a corrective pullback after hitting a nearly three-month high on Monday. Prices are in an uptrend on the daily bar chart and the bulls have the firm 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 bearish early today. Today, shorter-term technical resistance comes in at Monday’s high of 2,819.50 and then at 2,825.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at last week’s low of 2,768.50 and then at 2,750.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-day Market Rating: 4.5
June Nasdaq index December futures: Prices are lower on profit taking after hitting a three-month high on Monday. 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 bearish early today. Shorter-term technical resistance is seen at Monday’s high of 7,195.00 and then at 7,225.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 7,100.00 and then at 7,050.00. Sell stops are likely located just below those levels. Wyckoff’s Intra-Day Market Rating: 4.5.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are slightly up in early U.S. trading today. Trading has been choppy recently. Bulls still have the overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is belowh the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 145 30/32 and then at last week’s high of 146 17/32. Buy stops likely reside just above those levels. Shorter-term support lies at Monday’s low of 145 8/32 and then at last week’s low of 144 29/32. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
June U.S. T-Notes: Prices are firmer in early U.S. trading. Bulls have the overall chart advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is even with the 9-day. The 9-day is also even with the 18-day moving average. Oscillators (RSI, slow stochastics) are neutral early today. Shorter-term resistance lies at the overnight high of 122.17.5 and then at last week’s high of 122.21.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at Monday’s low of 121.08.0 and then at last week’s low of 122.03.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 5.5
U.S. DOLLAR INDEX
The June U.S. dollar index is weaker in early U.S. trading. Bulls still have the firm overall near-term technical advantage, but have faded a bit recently. The shorter-term moving averages for the dollar index 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 for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at Monday’s high of 95.985 and then at last Friday’s high of 96.135. Shorter-term support is at last week’s low of 95.610 and then at 95.250. Wyckoff’s Intra Day Market Rating: 4.5
NYMEX CRUDE OIL
April Nymex crude oil prices are slightly firmer and seeing a mild upside bounce after strong losses Monday. The shorter-term moving averages are still 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 neutral to bearish early today. Look for buy stops to reside just above technical resistance at $56.00 and then at $57.00. Look for sell stops just below technical support at $55.00 and then at $54.00. Wyckoff’s Intra-Day Market Rating: 5.0
GRAINS
Grain futures were lower overnight. The U.S.-China trade deal hopes have not given the bulls a lift due to the uncertainty of specifics regarding China’s purchases of U.S. ag products. Also, general worldwide demand for U.S. grains remains anemic.
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